I had a great discussion with a client today about folks who are waiting for the bottom of the market. It was his opinion that waiting would be very foolish. I tend to agree with him because, unfortunately, I have not found anyone who has been able to predict the future accurately. I have learned from many very savvy investors that, if you try to time the market and wait for the bottom, you will miss it every time. The “bottom of the market” is just too elusive.
What is more important is that you are ready to buy a property, have the financial resources to do so, are prepared for what it takes to own a property, and have someone who can help you along the way. If you have these fundamentals in place, then you can make a better decision. It’s important to determine what your goals are, what you want to buy, and where you want to buy. Next, you should do some research to determine what is happening in the submarket in which you are interested. Don’t stop at current market prices. Take a look at where that market has been and also what the plans are for the future. In other words, is the government planning to spend money on infrastructure? Are new homes being built close by? What is the “Walk Score®”? There are a lot of factors that can help you determine value and even predict future value.
Interestingly, one of the problems we are seeing in our marketplace is with the so-called “move-up” buyer. People who already have a home usually need to sell it in order to buy their next one. If a “move-up” buyer wants to buy a home when the market is down, they probably need to sell one at the same time. If this is the case, they need to evaluate how much they are giving up on the first sale in order to take advantage of the lower price on the acquisition side. It can be as simple as a math equation and then shopping until they find the right deal. I have some clients who are in a position to sell and move into temporary housing. If you can do this, then you can afford more time to find the right deal. Whatever the issues, find someone with whom you can talk through your concerns and get as much as information as you can so you can feel great about the decisions you are making.
Right now, interest rates are at all time lows and home prices are relatively flat. There are some areas around the Denver metro area where prices have fallen dramatically; however, there are other areas where we have seen some modest appreciation. I advise clients all the time to be clear about their plans and objectives. Timing the market has always been difficult. Generally speaking, no matter when you decide to jump into the market, whether as a first time home buyer or a seasoned investor, you need to be able to hold property for a period of time. The longer one is able to hold onto property, the more appreciation you will be able to enjoy, and the more comfort you will have about making the decision to buy.
Whatever you do, educate yourself about this market and do not let some of the greatest opportunities we have seen in decades pass you by.