Timing the market is everything (sometimes, sort of, but maybe not really)

Reblogger Richard Willard
Real Estate Agent with Asset Realty Group

This argument has been widely circulated but the point is so well taken that we Realtors need to keep hammering the message home. It is impossible to time the market and win, if you happen to do so, you will only know after the fact, and chances are it was just plain lucky timing. 

Thank you Alex Morris from Austin TX for doing a nice job of presenting the facts, concisely and with the charts. 

Buyers in my market, pay attention!  The perfect storm for buyers is upon us now, and it may already be that Obama's announcement of QE2 was the signal that the bottom in rates had already happened! 

Original content by Alex Morris - Austin Real Estate Agent
I hear a lot of people voicing concerns over the timing of their purchase. 

"I just don't know if it's the right time to buy." 

Fair enough. 

But here's the problem folks:  You never know when the bottom hits until it's on the way back up.  Furthermore, if you buy a property you like at a discount, based on the nature of the market, then price/location trumps timing.  Furthermore, I will throw the "rate argument" (the fact that they are at/near historical lows) at you as well.  So now we have
  • price
  • location
  • rate
all working in favor, and working against you:
  • timing (possibly)
So when it's all said and done, the only time you know you timed the market right is...well...tomorrow.  Crystal balls and hindsight are great for quips to make yourself (or others) feel better.  But in my opinion, if you find a deal that is economical, that already is priced at a discount, below current sold comps, then in truth you have a "buffer zone" to allow for the market to dip a little bit more.  And if you are going to be in there for 3+ years, you probably will incur a dip here and there, but like with stocks, you won't lose money until you sell it.
 
Reference the chart below so I can better explain my theory:

JPEG IMAGE
 
Let's call it a tasty side to go along with your Christmas ham, also known as "food for thought".  This is not a guarantee, but a commentary on the "anticipated buyer's remorse" I encounter all too often in the crazy world of real estate.

Realtor, GRI

Blackburn Properties

Austin, TX

(512) 917-0834   AlexMorrisRealtor@gmail.com

"Waving People Home Since 2005"

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Rainmaker
829,738
Dan Edward Phillips
Dan Edward Phillips - Eureka, CA
Realtor and Broker/Owner

Good Morning Richard, excellent post, thank you for putting it back up.

Dec 17, 2010 07:21 PM #1
Rainer
38,646
Rita Norman
Walnut Creek, CA
Your Agent in Walnut Creek CA

Richard: Great points being made with this post and like Dan said, it's just like trying to time the stock market... don't.

Dec 17, 2010 07:32 PM #2
Rainmaker
1,641,670
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

People should be looking more at "Do I love this house" and "Can I comfortably make the payments at today's rates?"

A house is a home - and while it will appreciate over time, it really isn't an investment vehicle.

Dec 17, 2010 07:44 PM #3
Rainmaker
2,036,903
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

Being in the market is better than fence sitting, getting all those splinters in a very painful place. Instead of studying the market and where your area is or is not, listings, marketing, grabbing more market share of whatever market their is is the key. Do you do real video, do you blog on your area not just your property and are your media messages interesting, something helpful folks can use? And do you every day get up with fire in your belly to promote your properties, your area and your brand oozing out from those two components? Work, hard work and creativity is the key, not talking the market to death around the water cooler and wasting all those little dixie paper cups.

Dec 17, 2010 08:58 PM #4
Rainmaker
4,433,283
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

Thank you for the post. No one has a crystal ball and buyers should buy a home if they think it is piced right as the rates are still low.

Dec 17, 2010 10:06 PM #5
Rainer
43,572
Richard Willard
Asset Realty Group - Bellevue, WA
Richard Delane Willard

Dan Rita, Marty, Andrew and Gita, thanks for the comments.  Often it is the real stuff of life that drives a homeowner to make a change--marriage, divorce, death, empty nesters, more babies, illness or injuries, hospital bills, job loss, employee relocation, or as in the present case all of the above or the effects of a recession. 

Homes are what we live in and if it hadn't been for the steep run up in values, people wouldn't be thinking of homes as investments but rather as a necessary cost component of living.  Now with the correction in values, housing is relatively affordable again and especially with such low interest rates as Alex pointed out in this blog article. It is really the best time I have seen since I've been in the business to buy.  The intersection of low interest rates, good selection, decent inventory levels, and corrected values makes it scream GOOD TIME!

I urge people to make their housing changes as their life circumstances dictate, and over time, if they don't overextend themselves, the money part of it will work out.

My best wishes for a great selling season coming into the New Year!

Dec 18, 2010 11:59 AM #6
Rainer
49,087
Alex Morris - Austin Real Estate Agent
Austin, TX

Richard - thanks for re-blogging.  We all need to do the best job we can to educate our clients that it is not simply a case of "buy low, sell high", as there are additional factors in the equation.

Dec 18, 2010 07:30 PM #7
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