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Pin The Tail On The Bottom Of The Market

Pin tail Calabasas

I have been working with several would be home buyers here in Calabasas. All of them feel that they should wait until the housing market is at the bottom before they buy a home. I'd like to share my explanation of "the bottom of the market" and how it will effect your buying decision.

Market Graph

This is a graph that represents the Calabasas housing market. The left side of the V represents the market going down, the right side represents the market going up, and of course the bottom of the V represents the bottom of the housing market.

If I asked you to plot on this
graph where you thought the housing
market was right now ...


... would you pick this spot or something close?
So you think that the market is going towards the bottom.  If the market isn't at the bottom yet, how will you know when it does hit the bottom?
How will you know when the housing market hits the bottom?
From experience I can tell you that you won't know that the housing market has hit the bottom until prices start to go back up. It will be difficult to be sure that the market has hit bottom for a few months. Its not a sudden shift, it is a slower more gradual shift. You'll be able to tell that the market has turned when prices reach this point (green arrow).
What is the difference in housing prices between the red arrow and the green arrow?
Not much... but there is another difference and it is major.
If you buy a home on the left side of the graph, it is considered a buyers market. You would be more likely to get concessions from a seller including price reductions, repairs, or maybe even personal property.
If you wait until the market turns and you buy on the upswing, you and every other buyer that has been waiting for the market to hit bottom will be bidding on the same house.
There really is no better time to buy a house than now for a few reasons:
There is a wonderful selection of homes to choose from right now.
Sellers are very willing to negotiate on price, terms and perks.
Interest rates are still at a historical low.
I am suggesting to each and every would be Calabasas buyer to take a good look at the above examples and decide for themselves what percentage the prices will have to drop before they think housing prices have hit bottom and offer that price. For example, if you think that prices will go down another 5%, then submit an offer at 5% below the asking price.
For more information on how to determine when is a good time to purchase a home in Calabasas or a detailed market analysis on the different Calabasas neighborhood sales, please call me at (818) 652-2937. I track Calabasas sales, monthly, and weekly by neighborhoods and have daily information on closings so that you can stay on top of our changing market.

Posted by Tracey Thomas Calabasas, CA Real Estate on 10/09/2007 05:08 PM

Comments (87)

calabasas market, calabasas buyers, buyers, calabasas

This post has been included in California Information Los Angeles County, CA Information Calabasas, CA Information
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87 Comments on Pin The Tail On The Bottom Of The Market

OCT

2007

Excellent post Tracey, this is really quite phenomenally done. I'll give it the old 5!

Hey Jason - We need to start explaining to buyers what to do next. WE are the experts and it is our job.

Tracey

Great point....I've been explaining this to buyers, and even to the media, that right now is a great buying opportunity. I was recently questioned if I supported buying now, and my answer was a resounding 'yes', unless there are factors in your specific area that speak against doing so.

If you don't mind, I think I will copy your little donkey, and of course give you credit for it! :)

This....is terrific! Very well done and to the point. I not only agree... I may share with a few of my buyers. Thank you for this valuable post. ;) Pamela Stetson, Top Ten Realtor, Abbott & Caserta 2014476600 x 007

This is one of the best blogs I have EVER read.......it is such a simple concept, but VERY IMPORTANT for would be buyers to understand ..........Love it and its gotta get a 5 from me too!

I agree. You've described it simply and with a great visual. The only way to know the bottom of the market is to see it in the rear view mirror. Housing statistics are always a month or so old. So, when the bottom is called, it will have occurred sometime in the past.

You can't time it folks. Don't miss the great opportunities out there today.

Great post... great visual and spelling it out like such is a great thing to use to with buyers. The are all playing that waiting game and the media doesn't know which end is up or what side to support. So ultimately its in our laps to convey correct accurate information in our very LOCAL markets. Thanks for sharing

FABULOUS POST. I can't imagine it being explained any better!!!

Thanks for a straightforward, well-done post, Tracey, one that hits head-on the questions we are getting every day!

great post! I like the language you use!!

I wish I had a crystal ball. How do we know when the market has bottomed out ? I think the buyers will tell us.

Good suggestion for buyers to use their perceived market bottom in writing offers today. That way they should be satisfied with the price they pay, plus it greatly reduces the possibility of them chasing the market back up if it turns sooner than they expected.

This is what I am trying to tell my buyers. But they aren't listening very much. It's been a rough year even though prices haven't dropped much. i think its the ANTICIPATION that a collapse is coming and that huge bargains lie in the future that is driving sellers to hold back.

Awesome Post Tracey-Great Graphics - Very Visual and relate-able Hindsight is 20/20 :)

Tracey, how clever. I absolutely LOVE it. I want to steal it and use it. Priceless!!! Couldn't have said it better, myself!!

Excellent post Tracey. I wish I had a crystal ball the could show my buyers the exact day, hour and minute the market will hit bottom. Currently there is very little urgency on their part.

This is very cool- thank you for the fresh perspective.

Tracey, great post. I just spoke with a client about this tonight and he absolutely understands the concept having read an earlier blog article of mine about not bothering to wait for the bottom.

Bill - You can copy the graphics, just give me credit. Hopefully this will help.

Pamela - I think we all need to use this type of dialogue with our buyers. This is logic and it is the only thing that is going to help us cut through the media hype.

Bruce - Wow! Thanks, its time we all take some action instead of just sitting on the side lines and hoping for the turn. If you're working with buyers, you don't really want the turn, you want now.

Dan - Right, right, rear view mirror. That is another excellent example of how to tell when the market turns.

Desiree - I do think its our responsibility to take the time to explain this concept to our buyers. And once they understood, we need to move to the "feeling" words. My post on Getting Your Buyer Off The Fence explains how to use the dialogue necessary to speak the buyer's language and move them towards making an offer.

Ginger - Thanks, hopefully this will help you get your buyers motivated!

Karen - This comes up every single time I work with a buyer and even at open houses. We all need to educate the buyers. The media is doing a serious job of shoving media hype down their throats....they need the truth.

Ibi - Simple is better and honestly this is a very simple concept. I think its the media that is making this a huge issue. Anyone that invests in anything knows this.

Missy - A crystal ball would help but since mine is in the shop for a tune up, I'm telling my buyers to buy now. Honestly the selection is great and their are some great deals out there. But if you don't put in an offer, you'll never know.

John - Its a simple dialogue that gives the buyer all the control. If that doesn't work, then you can try to explain that a home is a long term investment. There is no money lost if you don't sell. If you're living in the home then its serving a purpose. Its not like a stock or bond that is purely for investment purpose.

Awesome post -- love the graphics and how you made your point.

Hi Tracey,
Yes, yes! The media has the buyers so scared and confused, it is our job to educate and lead.

Tracey - thanks so much for a great post with great visuals - It makes a very strong point!

Ruthmarie - Educating our buyers is the only way we're going to get homes sold now.

Gena - Feel free to use this if you think it will get your buyers buying.

tracey, good post, great graphic. will add this conceptually to something we're doing. the bottom of the market exists for what, a second? or it remains flat? but maybe not. just maybe it starts back up again, and your visual here is as compelling an example for discussion as possible. Still, though, a buyer has to be willing not only to understand it, but to act on it. bookmarked, a 5!

best

Great article1 I have ran similar research for omes in Clintonville Ohio. How can ANYONE know when a market reaches it's bottom?

Joe Jackson, Realtor

Keller Willaims Capital Partners Realty

It's a similar thought to the billboard outside a real estate company locally - if you wait until the media tells you it's time to buy, you've missed it. And you're right - the best choice is now, not on the way back up.

V is for victory! great word smithing, ktm

Gary - I know what you mean, but we have to have some way to open up this dialogue with a buyer. You can even make your arms in the shape of a V and ask your buyer to point to where he thinks we are right now in the market. Then you can work from there.

We need to diffuse this "wait and see" thinking with some type of logic. All of us need to find solutions to help our buyers understand this market and figure out what is best for them. If everyone just buys in to the nightly news hype then we'll be waiting a long time for the so called bottom. Maybe this is just a slight correction. In that case it is time to buy now. (well at least in my area)

Thanks for the comments by the way and I'd love to see what you're working on. Your toothpaste post was part of the inspiration for this one. I thought the $35 toothpaste was the best reasoning for a price reduction that I've ever seen. I have used those concepts many times since I read your post.

Joe - We won't know until it is on the way up.

Sharon - You are so right. But we need to get this message out there. Its up to us, the agents on the first line. The news is killing us with all of its propaganda.

Kirk - I'm smiling, thanks so much.

Tracey,

Great post and very well explained. I think that we have all come across these buyers ni the market right now. It is all how you explain to them the cycle of Real Estate and there place in it. I have a few clients who wanted to wait for the "bottom" to hit. After discussing their long term goals and the benifits of buying now, waiting or missing out again a few have decided that now is the right time for them to buy and others are still on the fence.

great way to put it...It seems that all of my clients are wanting to offer 10-20k less than the listing price these days..

Joe - In this market, our job is not just Realtor, its educator. We have to stay informed and take the time to explain these concepts to our buyers. It's important that they understand that real estate is cyclical.

Rick - If you don't write the offer, you'll never know. I think it's better to get something on paper and start the negotiation process than to wait and see.

Awesome.......The best description of the current market I have heard thus far. Thank YOU!!!

OCT

2007

Tracey: Great explanation, and anlysis of market mentality. I have told people over and over that timing the bottom of the market is utterly useless, as you so wisely pointed out. By the time you realize you are at the bottom, it is already too late.

Its like seeing a style come to Target. It's over when the masses are buying it at Target!

Tracey, great POST! Definitely illustrated and easy to read. A great analogy.

Ryan - It might be a good description, but now we need to get these buyers off the fence.

Janet - LOL at your Target analogy. It's so true, by the time Target has it, it's way over.

Terry - Thanks for stopping by.

Tracey - this is the absolute best explanation I have seen done - we talk it but your visuals will help others see - none of us have a crystal ball - otherwise all those homeowners wouldn't have paid top dollar last year and be upside down this year. The home buyers and home sellers of Calabasas CA are lucky to have an expert real estate agent like you working for them.

Hi Cyndee, don't you ever sleep? What is it, like 2:00 AM in FL now? Anyway, this post was partially inspired by the Tomato forum question, "What kind of blogs attract buyers ready to buy"? I was hoping that this one would. I guess we'll see.

Thanks for stopping by and go to bed already...its late.

Tracey -- This is amazing!! I am so wanting to print this out for my sellers and of course my buyers!! Great visual presentation!! You have outdone yourself here! Kudos!! Loved it.

Candance - Print it out and get those darn buyers off the fence already. Every single buyer that buys will help us all. We can get these buyers going if we just educate them.

Totally amazing post, Tracey! And congrats on the feature!

I hope and pray that we are close to the bottom...although there are some good things about a down market.

Very well done and to the point. Great visual! Thank you.

I have spent a lot of time explaining to prospects that we only get to look at the market through a rear-view mirror. We won't know it bottomed until it isn't there any more... and pointing out that the pent up demand will shove prices up faster, as well as make finding that right house more difficult.

Tracey- This is one of your best posts ever! I give it a late 5 too, still gets you more points! May I print this out and show some of our buyers? I love it! This is awesome, so simple but yet so vital with all the fence sitters out there! Katerina

Tracey great post. Buyers need to see the current market spelled out in a clear and concise format like this. If you add the risk of rising mortgage rates into the equation, it makes for an even more compelling argument for not waiting and trying to call the bottom.

Patricia - Thanks so much!

Al - There are good things in any market.

Lane - Absolutely, but trying to explain that to a buyer is very difficult.

Katerina - Thanks Katerina. Feel free to print this out and show it to your buyers.

Rob - I think the low mortgage rates are a great reason to buy now.

Tracey,

What a fabulous post! Well put. I love your simple graph...so easy to understand. I will be using this explanation with my buyers. I think all markets are a great time to buy.

Thanks!

Linda Maguire, Bay Area Realtor

Fantastic blog, I love it! The pics are great and if we all could predict the bottom we would be retired!

its a great time to buy a house you want to live in, they should buy the best house, that they cant not live without, that they can afford

timing the market is jibberish

a few local Gov. officials are asking me to share "my" data,Its much better than anything presented to them, I still have no idea, I have some thoughts, no clear idea

the greatest "quants" in the world cant do that

I have no problem with the above post as long as its and end user

Trying to speculate in this kind of market is like grabbing nickels from in front of the steam roller

Market timing is the strategy of making buy or sell decisions of financial assets (often stocks) by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis. This is an investment strategy based on the outlook for an aggregate market, rather than for a particular financial asset.

I leave you with

Whether market timing is ever a viable investment strategy is controversial. Some may consider market timing to be a form of gambling based on pure chance because they do not believe in the possibility of predicting future financial prices. The efficient market theory suggests that financial prices often exhibit random walk behavior and thus can not be predicted with consistency. Some consider market timing to be sensible in certain situations, such as an apparent bubble. However, because the economy is a complex system that contains many factors, even at times of significant market optimism or pessimism, it often remains difficult, if not impossible, to pre-determine the local maximum or minimum of future prices with any precision; a so-called bubble can last for many years before prices collapse. Likewise, a crash can persist for extended periods; stocks that appear to be "cheap" at a glance can often become much cheaper afterwards before either rebounding at some time in the future or heading toward bankruptcy.

hopefully this is not neko ni koban, bandar kya jaane adrak ka swad, "eşek hoşaftan ne anlar.." , duì niú tán qín , lol

Tracey, Not sure that Jeff is aware of links in Comments...perhaps Tracey he asked you first.

Jeff - I welcome all opinions on my blogs and appreciate your stand on this subject, but all the links are a little much. If anyone wants to read your article, they are free to click on your name and read it on your blog. Thanks!

Gena - Didn't ask for permission and I don't delete comments unless they are obscene. If anything, this may spark a conversation on a different point of view. I'm all for that.

those are links to the definition of the words, not trying to drum up business with those links

how can someone have an issue with education, pure and simple?

If we aren't at the bottom of the market we're pretty gosh darn close.

In September, in the town of Sonoma only 19 homes sold. So far this month, only 1 has sold, and it took the better part of a year to sell, and it sold for just over half the original asking price.

In Marvelous Marin County, where home sales for each month usually exceed 300, only 127 sold in the month of September. So far, this month, 45 have sold. Average selling prices, however, in Marin County are at a record high.

But if you look in Novato and Northern San Rafael, it seems like every other house is on the market and people are definitely taking their time. In fact, this afternoon, I am showing property in these two areas once again. Only today, I am betting that I have found the home that my client will want to write an offer on.

I'm feeling optimistic. I think buyers are going to start buying. I think it will take a long time to consume all the inventory. But by Spring 2009, everything should be just fine.

That's my 2 cents.

the level of positive emtion at the top is close to the level of neg. emtion right now, one can do well betting against newspaper headlines at the end of trends

Tracy -- This is a wonderful post. . .it illustrates perfectly that prices are not the only key to evaluating the market. Buyer's have negotiating power now!

Tracy - I think your post is right on the money, the illustrations are simple but compelling. The real gem lies in your observation that the deals will NOT be as sweet going up as they are going down. Thanks for adding some high octane to my engine :-)

Tracy, Great visual and the logic is easy to follow. Now to relay this to my buyers. Thanks

Tracy, love the post.

Tracey,

That is great graph and illustration of our current market. The truth is (and you pointed it out) now is a great time to buy a home. There are so many choices for buyer and sellers will bend over backwards to make a deal work. If you graph doesn't work, try shaking your clients vigorously until the get the point.

Tracey,

Great blog.....and I have this same conversation with my Buyers every day.

Great analogy Tracey, this is truly a wonderful way to explain things to your buyers,

Impressive! Its odd that most usually buy (whether houses or stocks) when prices are going up thinking that that is a better investment period. Good Ol' Buffet does not think so!

Although, I "love," for lack of a better word, the post in its entirety, what are possible rebutles. I want to be throroughly prepared to defend the content of the post.

Tracey, loved the post. I agree - you will never buy at the bottome of the market and you will never sell at the top. I would love to barrow your idea to help explain this scenario to my clients.

Good Luck with everything - Regards,

Sorry Tracey, just posted the one above without signing in...oops:)

Tracey, you have demonstrated, with a few words and pictures, what it might take an economist a 50 page report to accomplish. This market change can come without any warning.

OCT

2007

Tracy,

Great post and visuals to help those "would be" buyers!

Tracy - what a great post! This is exactly what buyers need to see because they may miss out on a great opportunity - especially when sellers are more flexible. I made an observation a couple of weeks ago that may support your theory - our rental market is HOT right now which historically also means change....once there is no inventory in the rental market, the housing market turns around.

Tracy- What a great post... I've been putting together a post for my other blog.. but not nearly this creative...

OCT

2007

Excellent job and visualization. Great to share with "timers"

OCT

2007

This is a great explanation of the current market. Hearing people say they are "waiting" to buy a house drives me insane! They all say they are waiting for prices to drop more. This is a fantastic way to explain the error of their ways. Thanks so much!

Marlene, Realty Station, Bremerton WA

Tracey,

EXCELLENT! I heard the concept presented a little differently, yet your is better, very clear and easily understood!

OCT

2007

Tracey-

Great post! I love Buyers who think that they can time the market to buy right at the bottom of the V.....amazing....I guess they should not work for a living either since they seem to know everything! :)

This is a wonderful post! The more we educate our buyers the more they will trust us. I think you make a great point on this. Thank you for sharing it with us.

OCT

2007

I just stumbled on to this post and I must say this is extremely well done! Can I use this at my sales meeting?

OCT

2007

Excellent post! I like your visual!

ok wht if the V ends at he Feet? and is as wide as the feet?

Kelly -The real estate market is not a national climate, it's a micro climate. Here in Los Angeles County housing sales are different in every city and town. That't why it's so important to understand your micro market.

Jeff - But the media tends to exaggerate negative emotion, so the public perspective is skewed.

Lori - The name of the game is to turn lemons in to lemonade.

Rick - Good luck with that. We have to overcome so much media hype to get our clients to understand the reality.

Joshua - Thanks so much for stopping by.

Ryan- LOL, I sometimes feel like I should shake my clients, but I thought the V graph might be more politically correct.

Dan - Thanks for stopping by.

Micheael- Thanks! Glad that you enjoyed the blog post.

Tim - Feel free to use this example with your clients. Anything, just get them off the fence. Feel free to use this in your blog, just link back to my post.

Susan - I guess that's why I don't make the big bucks, I don't write with 50 pages of fluff.

Steven - Let's just hope that some buyers get the message and buy now.

Rick & Ines - It's only a matter of time, real estate is cyclical.

Kaye - Thanks for stopping by, I'm glad that you enjoyed this post.

Nancy - We need to work together to find ways to explain the market to our clients. Education is important now.

Marlene - Hope it helps to educate your buyers and get them off the fence.

Lynda - We've been using this with our buyers for a few months, hopefully they will start to listen.

Rick - It's frightening to most people. They don't want to make a poor decision so they just wait.

Alma - It's all about education.

Randal - Absolutely, share this with all of your agents. The more of us that understand this, the more of us will educate our clients. The more buyers will buy and they'll stimulate the market. It's win win for all of us.

Ana - Thanks Ana!

Jeff - It doesn't matter, the real estate market is cyclical. It will eventually

OCT

2007

Tracey-you have put this together perfectly. What a difference this can make for buyers right now. Can I ask you for permission to include this in my marketing packet?

OCT

2007

Tracey,

Excellent post! Very visual and easy to understand. Some buyers objection may be that they want to buy at the intersection at the bottom. However, this is going to be difficult to time.

Dave

NOV

2007

Genius you are! Very clear way to explain things.

JAN

2008

Tracey, I refered to your post and placed a link of your post in my recent post. I have had it bookmarked. Thank you for a wonderful graph and for sharing!

Great post - I just heard a quote on Saturday that we can never REALLY buy at the bottom, nor sell at the top.

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