Billy Yerman: Don't try to time the housing market
Predicting when the bottom of the real estate bust will arrive has been the parlor game of the last half-decade. Some would-be buyers are holding off with the idea of catching lower prices later, while some would-be sellers are waiting in hopes of better times down the road.
Now comes today's guest poster, real estate attorney and broker Billy Yerman, with an argument about when to buy and sell that will be sure to fire up debate.
He's chief executive of the Baltimore-based Strata Group, parent company of real estate businesses such as the Yerman Witman Gaines & Conklin real estate brokerage. He's been in real estate for 22 years.
Take it away, Billy:
It’s more or less accepted wisdom that it’s not a good idea to “time” the stock market. Most professional investment advisers warn against a strategy of betting on spikes in stock prices in the short term (versus a long-term “buy and hold” strategy), for the simple reason that the markets are too complex to predict accurately in the near term. Of course, that doesn’t stop a lot of people from trying to do just that, with varying results.
I would offer the same advice to anyone considering buying or selling a home. The real estate industry generates reams of data every week – much of it contradictory, depending on the basis of the comparisons. Interest rates move up and down weekly, but the overall recent trend is down – to near 50-year lows. The number of homes sold in the Baltimore area started to increase in year-over-year comparisons starting in December, then plummeted recently due to comparisons with the closing months of last year’s federal homebuyer tax credits. On the flip side, the housing affordability index is up …
You get the idea.
Here is my honest advice (for purposes of full disclosure, remember that I am the CEO of a real estate firm) to anyone who wants to buy or sell a home in the near future: The most important numbers you should look at are your own. If you’re a seller, make an honest calculation of the price you think you need – to pay off your mortgage, cover the cost of improvements you have made, moving expenses, and so on. Then work up a realistic price that you would like to get, based on the condition of your home, the neighborhood, etc. Take that price range to an experienced real estate professional, and ask for his or her honest opinion of where your home falls in the current market.
By the same token, potential buyers should make a detailed list of what they need/want in a home, where they think they would like to live, and how much they can realistically afford to invest in a home. Then talk to that same experienced real estate professional and get an expert opinion.
On the bottom line, the only timing that matters is your timeline. And the only numbers that matter are your numbers. If you have a compelling reason to sell or buy a home in the near to mid-term, then your timeline may be different than someone else’s, and that may affect the price that you are willing to accept or pay. Just be sure that you base your decision on your individual situation, rather than market averages that may or may not apply to you. The best time to buy or sell a home is the time that’s best for you, based on all of the factors that only you can fully understand.
Thoughts, questions, arguments? Comment away.
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