Buy? Sell? Wait? I realize that some people may be too preoccupied with job losses, stock market losses or politics, but if you are even thinking about real estate these are at least a few of the questions that are probably running through your head. I'd like to share some of my thoughts with you. If you ask 10 experts you'll get at least 11 opinions. Mine is no better than anyone else's opinion, but here goes:
Should I Buy right now? Well it depends. What is the purpose of your purchase? Flipping? Absolute love? Professional real estate investment returns? If you are buying for love, of course you should buy now. It is a buyer's market on Maui. Let me repeat that. It is a buyer's market on Maui. Inventory levels in various areas on Maui are running anywhere from about 8 months (a slight buyer's market) to 66 months or more...(a raging buyer's market). If you would like to discuss inventory and absorption rates or see some statistics I would be more than happy to provide them to you.
If you want to buy on Maui because you love Maui and you have the money...Please do. Cash is king and negotiate hard. Have we reached a market bottom? Based on the inventory levels, probably not, but remember this, no one ever knows when we've reached the bottom, until after the market is already on the upswing. In addition, interest rates are fairly low now and may not remain so. So buying today at a lower interest rate may be a better deal than buying in a year at a lower price. Planning on flipping? Probably not such a good idea. Looking for investment returns / cap rates? Worth exploring. Cap Rates are rising (that means prices are coming down). The risk here is that as the economic recession hits Maui, vacancies may become a problem. Remember the old adage, a tenant paying a lower or modified rent is better than no tenant at all.
Should I sell right now? Again, it depends. If you are trading into the same market or a less expensive market for a house that suits you better, why wouldn't you. Do you need to sell? I have extremely valuable suggestions for you. Number one. PRICE YOUR PROPERTY WELL. Number two. PRICE YOUR PROPERTY WELL. Number Three. PRICE YOUR PROPERTY WELL. If you have substantial equity or not, the longer you wait, the harder it may be to sell. The cost or pricing your property incorrectly may be the difference between a sale or no sale. If you have room to take a little less than the market, you may want to consider it.
What about waiting to buy or sell? There's an old saying about paralysis by analysis. Ready, Aim, Aim, Aim...You can do that in real estate also. If you are waiting for the market to improve significantly to sell, you may have a long wait. Some times it is better to take a smaller gain, or cut your losses and redeploy your capital / assets elsewhere. On the buy side, if you find a place you love, I recommend that you pursue it aggressively. I have seen too many buyers lose properties that they really wanted in good markets or bad. Here is one potential approach. You've done all of your research. You believe that the market has 10% or so to still fall. What's to stop you from offering the price where you believe where the market will be? I once lost an overpriced property in a rising market! How? I said, the Seller will never accept an offer at the price I perceive to be fair. 6 months later when the property sold, it was recorded at $100,000 less than I thought the value was...I will never fail to act on a property that I really want again!
For a more up to date version and happier version of that story, see my blog from last night on The Maui Real Estate Blog.