A couple of weeks ago, I had the privilege of giving a seminar for homebuyers. During the class, I ask the attendees why they thought buyers aren't buying. As they shouted out the reasons, I scribbled them down. They must have listed a dozen reasons, but what it all boiled down to was fear.
In today's San Diego real estate market, home loan interest rates are historically low, there are a lot of homes to choose from, sellers are no longer being unreasonable about their asking prices and there are good "deals" to be found if you just take the time to look. So, at first glance, being afraid to buy doesn't seem to make much sense. It's only when you take a deeper look at the issue that you discover that buyers really aren't afraid to buy. They are afraid of making a mistake. They want to buy low so that they can sell high. After all, that's the old rule isn't it? They're just waiting around for prices to hit rock bottom so they can scoop up a deal.
This reminds me of a test I once took when applying for a government job about 30 years ago. It was a test designed to find out if the applicant had some screws loose upstairs. I don't remember very many of the questions, but there were two that I will never forget.
The first asked, "Do you believe that Jesus will return?" Followed by the second, which asked, "Do you know the date?" Surprisingly enough, these are the very same questions that many buyers are hoping to answer about real estate! "Do you believer that prices will hit rock bottom at some point?" "Do you know the date?"
The answer to the first questions is easy. We all know that prices will bottom out at some point and the market curve will start climbing back up again. But nobody knows the date and anyone who thinks they do has just as many screws loose as those who thought they could answer the "date" question in the test I took 30 years ago.
In fact, today could be the day for all we know and prices might have hit rock bottom just as you started reading this article. The one thing we know for sure is that "timing" the market perfectly is not the answer. The only way it can be done is by blind, stupid luck, and I have never known anyone who has managed to do it. No, the answer is not "timing:" it's "time".
If we take a look at the real estate market in Southern California, we will find that homes have appreciated an average of about 6-7 percent per year for more than 50 years. Some years the market was down and other years up. But when averaged over that 50-year time frame, the market has made a steady and reliable climb. So the burning question is not so much when you should by, but how long you should own.
As a general rule of thumb, if you are planning to own a home for at least five to seven years, it doesn't really matter when you buy it. Most likely, you’ll come out smelling like a rose regardless.
So take some advice from and old real estate investor. If you're planning on owning that property for five or more years, get off the fence and make your move. Now is a great time to buy.
Exerpt taken from The
Conquer the fear factor | Joel Persinger