The home sales market began to slow down almost a year ago, causing many potential buyers to postpone buying and anticipate that prices would drop. In some regions prices did in fact drop but in the western areas of Seattle, San Francisco, and Austin, prices actually increased due to robust technology centers (high paying jobs) and favorable interest rates. Waiting to purchase resulted in higher prices with marginally lower interest rates. This herd mentality tends to depress prices when everyone is negative on the market, but when things pick up (and they will), everyone wants to buy before the run-up in prices creating a supply shortage and driving prices higher. This is the time to be a contrarian- take advantage of an opportunity during a slow market. What better time to buy when there is no competition from other buyers and the market is in a down cycle? But people often think “I’ll wait until the market bottoms, then I will buy”. The problem with this is you only see a market bottom in hindsight, when it has hit a low, and begins to climb. At that point, buyers waiting on the sideline begin to rush in, and the run-up in prices accelerates faster than the preceeding decline. Then you wish you had bought when the market was down.
People seem to feel much more comfortable buying when there are other people out buying and their decision is validated by other buyers’ actions, as well. Everyone knows by now that home markets are cyclical with up, down and balanced markets. We have just come off one of the most robust boom cycles in residential real estate since records have been kept. Builders have all built up excessive inventories on speculation and investors have all bought homes as rentals and for “flipping”. Obviously this overheated and speculative market must go through a correction phase, which is currently under way. Inventories will be absorbed as time goes forward and before the media announces it, there will be a n”up” market. It is impossible to time the market and buy at the absolute bottom. The only confirmation of a bottom is when the markets begin to recover and then we are buying on the uptrend. That is why the homebuyer who is buying on this side of the cycle tends to do better on the long term purchase. The term “The money is made in the buy” was coined years ago and appears to be as revelant as ever.
Mortgages are not unattainable, and those with cash should see a great opportunity here. The key is the selection- choose the most home you can afford, something that may have been out of reach two years ago may now be attainable.
Comments(2)