When you hear a Realtor telling you that the market will go up, don't believe him/her. He makes money if he sell you on buying, and he will be long gone if you lose your shirt. Meanwhile since 2004 I was giving out shirts that said it was probably a bubble: 
Sure Realtors might be able to see a 1-3 month window and mini-trends like what happened in Arlington when there were 10x the number of units on the market versus the year before. A high school Supply and Demand class could see that coming. But besides that, we don't really know.
Why don't we know? Well it isn't just us, it happens with all investments. Stocks, Oil, Gold etc. Sure some people are quoted for being dead on, but how many were overlooked and were way off? Most.
I came to this approach when I was reviewing my mother's finances. She had a ton of individual stocks. Some skyrocketed, some tanked, etc etc. And then she had these mutual funds. I looked into them and read fool.com, they like to expose investment myths.
I found that 75% of the time, these funds didn't even beat the index! , the average of the stock market (S&P 500). So a fund manager gets paid $500,000 a year to pick stocks and charges a 1-2% per year management fee and only 25% of the time they beat the average? Um, I'll just take the .01% no cost index fund and if I want to invest in stocks, I'll be fine with the average. Far lower risk, lower fees and an average return (or far above average if you compare it to beating 75% of mutual funds) Disclaimer: I'm not a financial adviser, have him tell you this stuff.
So if money managers can't predict stock values, how can we be expected to predict the short terms direction of the housing market? We can't just look at data since I can find you 5 reports saying things will go down, and another 5 reports saying it will go up. Both make great arguments.
So what do you do?
You stop making your home purchase all about being an investment!
Instead, if you decide to buy, buy what you like and plan to live in for many years, and if you make money after a while, great, more power to you.
New thought:
When a stock brokerage company shows charts on what the fund has done, why are they required to put a disclaimer that "Past performance is not indicative of future results."? Yet NAR and Realtors never once during the bubble thought to use this type of disclaimer.
Love to get your comments, and if I get enough, I can get into the top 20 posts.
- Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6
Videos at YouTube.FranklyRealty.com
Comments(5)