Every day I hear clients say, "I'm going to wait for the market to hit bottom". The other frustrating comment is, "I like this house but I think prices will go lower. I think I'll wait a little longer". Probably this attitude comes from too frequent references to the "market" in the media. With just a little critical thinking, one might logically ask what have home prices across the nation (including places like Hartford, CT., Lincoln, NB., Globe, AZ.,) got to do with prices in my neighborhood? The short answer is, NOTHING.
Just because prices are falling precipitously in Stockton, CA doesn't mean prices are falling at equal rate and intensity in Granite Bay, CA or in Lake Tahoe. And while these comparrisons may seem extreme, they do make the point. If there are real estate markets at all, they vary widely in stability and price across the nation, across any given state and even within areas or sectors of any given city.
Since we are focusing down to microscopic levels, let's consider only one segment of a medium-large metropolitan city like Sacramento. Specifically, Folsom, CA is a sub-urb of Sacramento and prices and sales rates vary quite a bit. But even within Folsom, some homes sell quickly and for good value while others languish. Why? Simple econ 101 tells us that a market is established anytime a willing and capable buyer and a willing seller come to agreement on a value (price) for a given commodity. In other words, anytime a buyer is willing to pay an amount that is acceptable to the seller, THAT IS THE MARKET.
Therefore we can say that there is a separate individual market for every home that is listed for sale. Since we know that no two homes are exactly alike, there are no two markets that are exactly alike. So, then, why must we compare one market to another?
Another way to look at this is to recognize that as soon as a selling price is agreed upon between seller and buyer, that particular "housing market" has bottomed. Therefore, as long as there are homes closing escrow every day, the "market" (for those homes) is hitting bottom every day.
The saddest thing going on in the real estate industry today are people who, after a lengthy search, find the home of their dreams and then miss it because they think the market will "go lower". Clients should realize first and foremost that they are looking for a home that fits their needs at a price they can afford. If the home happens to appreciate in value over time, so much the better but even if it depreciates for a time, the homeowner should not feel remorse since that home would likely not have been available to them at the lower price, just as it is not now availble to anyone eles since the homeowner purchased it.
John
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