Can You Time The Real Estate Market Comeback?
Analysts, market experts and fortune tellers are all in the same boat when it comes to predicting a real estate crash. Sure there are signs and indicators but knowing the exact stalling point and ensuing free-fall is more of a lucky guess than hard science. When it comes to the up-trends however, the writing on the wall is a bit more obvious. It doesn’t take a genius to see that high inventories of unsold homes, large waves of foreclosures and a stranglehold on loans will continue to keep prices down. When at least two of these three factors turn around, the bounce has begun. This turn-around will be different for the various real estate markets around the country. Some areas will definitely see the recovery sooner than others. The current disaster hit California, Nevada, Phoenix, DC and Florida cities first. These were some of the biggest price gainers between 2000 - 2005, and the quickest to hit the wall. These same cities will also see some of the biggest bounces when the sell-offs, write-offs, and foreclosures are done.
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- Lucky Larson
Comments (2)
Ahhh, great point! And that illustrates exactly what I am saying. Most investors and real estate market watchers knew that many areas of the country were being overbought at an unsustainable level in 2002-2004. Very few people however predicted that 2005 and 2006 would be the exact years of collapse. Those who predicted the bubble early got very cautious and dropped out of the game way before the peak. They missed out on some nice equity gains. Those who didn't see it coming stayed in too long and got killed! Timing a peak exactly, and getting out before the drop is very tough if not impossible. The up-swing is a different story though. There are some very basic fundamental signs of an impending up-trend. I will detail those in the next blog article but they are nothing new for experienced investors like yourself. It is true that "The bigger they are, the harder they fall," but it also follows that "The harder they fall, the bigger the bounce!" Better still, savvy , long-term investors don't even worry about the roller coaster. They just buy and hold solid cashflow properties while watching their equity grow. I am still learning to be that patient. - Lucky Larson
Douglas Larson, over 15 years ago
Hey Lucky - It didn't take a fortune teller to predict that there would be a market crash. I've been calling it since 2001 when I saw prices of homes in California explode . . . and I'm not the only one. As for timing a market comeback . . . that's another story.
Joshua Dorkin, over 15 years ago