Can You Successfully TIME The Real Estate Market?

One of the things we frequently hear from buyers these days, is that they are anticipating a sharp decline in prices and they are waiting until prices bottom out before they purchase a home. We have spent a LOT of time, ink and video tape explaining why we don’t expect a market crash so I won’t go into that here. Feel free to visit our youtube channel for more information on that. 

So why not wait until the market hits bottom before buying? 

The problem is that NO ONE knows they’re buying at the bottom of the market when they buy there. Both the bottom of the market and the top of the market  isn’t typically revealed until 3-4 months after those contracts were signed. By the time most buyers figure out that the market hit bottom, they’re too late to buy there. 

The same holds true for sellers trying to sell at the top of the market. We know that it’s now more expensive to sell a home than it was 6 months ago. Sellers are looking at getting less for their home than in spring of 2022. I’ve seen price reductions in the neighborhood of 15 – 20% since May, which we now know was the top of the market. In addition to lower prices, sellers should also be prepared to offer closing cost concessions to buyers who are coping with higher interest rates. 

However, anyone who has owned their home for more than 2 years is still likely to walk away with a hefty profit. Over the past two years, sellers have seen on average, a 34% increase in value. If you bought 3 years ago, you can expect a nearly 60% increase in value. 5 years, 85% average appreciation. Not bad!

Here’s an example: In 2016, a client bought a home for $355,000. In May of 2022, just before the market shift, a similar home sold for $765,000. In November of 2022, another similar property sold for $650,000. The seller might feel that by not selling in May, they lost $115,000. However, selling today at $650,000 means a profit of approximately 84% since they bought the property in 2016. NOT A BAD RETURN ON INVESTMENT. 

The buyer who “overpaid” for the property in May of 2022 had no idea they were buying at the top of the market. And the sellers who sold at that time, had no idea they were selling at the top of the market. Timing the market it nearly impossible. 

Every home sale or purchase starts with a conversation about your unique needs and how those needs can best be met. Let’s have that conversation to see what’s possible rather than waiting for the mysterious bottom of the market to occur.