When to time the market?

[Blake Ramsey]

Hey everyone, my name's Blake and I'm an Aerospace Engineering student out of Springfield, Mo. I'm not an investor quite yet, but I am familiar with REI.

I know the saying “time in the market is better than timing the market,” but is that always true? I know it’s probably not ALWAYS true, so what are some signs, statistics, and metrics I should keep an eye out for that might make me want to wait a couple of months before closing on a deal?

[Rick Albert]

I think the better questions are the following:

1. Does it meet your current and financial goals?

2. How long do you plan on keeping the property?

Think about those that bought at the height of 2008. Assuming they kept their properties, the values have not only come back but most likely exceed AND they are almost halfway done with their mortgage payments. They could probably refinance into a 15 year and still be fine.

Every person I have spoken to that has tried to time the market has not only purchased but has now been priced out of their own market. Just make sure you are comfortable with what you are doing and jump in.

The other way to look at it is let's say the average appreciation over the next 2 years, is 10% (5% per year to make math easy). If in two years the market take a 5% dip (which is extremely rare and has only happened more than that in 2008 and in the 1920s), you are still ahead. You still have equity and you are two years in.

I understand this doesn't directly answer your question and I also understand where you are coming from (high prices with high demand). But we need to start thinking that the world is going to do what the world is going to do, whether we act in it or not.