I use to hear this familiar refrain from my elders; since was I kid. Usually it was Grandpa, talking to no one in particular, as the family sedan sped past a particularly attractive property: “I could have bought that house in back in 1987 for only $35,000.”
Then, when you (or your father or mother) responded with the inevitable question, “then why didn’t you, Grandpa?” the answer would vary, but it was usually some form of “because nobody would have believed how much it would be worth later.”
Even though the time scale varies, it’s a safe bet that the “back then” Grandpa was talking about a time very similar to what’s going on today. People knew that house values had fallen precipitously (they always do, sooner or later) and no one could be certain when they would turn around. At least not for sure. Values had changed, the future was uncertain, so it was safest to stand by and wait for the trend to become clearer.
The inevitable drawback to that plan is that once the future becomes certain, the advantage of entering a market when it’s near the bottom will have already largely vanished. And it’s usually, for a very long time.
Certainty means safety, and safety is not only valuable – it’s also costly. In today’s market, that cost has disappeared, and even if it’s beginning to look as if a reversal trend may have begun to surface, the value associated with a more stable market is now in evidence.
The upshot is that comparative values are still in evidence now, and it’s worth noting that tomorrow’s Grandmas and Grandpas might be able to impart their own version of the old refrain. This time it could be, “It’s unbelievable what I bought that house for back in 2013.
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