Jan 23, 2008
Should You Try to "Time the Market"? Only if you can accurately predict the future. Since no one can predict the future, we have to rely on economic indicators and current trends in very localized markets. But here are a few indications of why you should buy a home in 2008.
The current real estate market in Dallas is fantastic for first-time buyers. But most of my clients already have a home and usually need to sell it in order to buy their next one. To buy a home during a slow market, usually means selling one during the slow market, too. But because Dallas has not been hit hard by the currently depressed market, selling isn't very difficult.
The real estate market cycles over time. Since the early 80's, we have had two fairly long expansions with a slight recession in between. If you want to 'time the market' you could end up waiting 6-10 years to for the cycle continue and then buy or sell a home. You could miss out on a significant amount of appreciation by waiting, and end up paying much higher prices.
Markets across the metroplex are generally soft right now - but not in every neighborhood. I'm not seeing big reductions in the Park Cities or Preston Hollow. But it may take all of 2008 for some Dallas areas to bounce back. Why? Foreclosures and other urgent sales by people who bought real estate during the appreciation curve are effecting the current value of many properties. Blame the sub-prime lenders, the economy, or whoever. The market will eventually absorb these properties as buyers snatch up great deals. There is lag effect as these reduced homes sell and become the 'comparables' for new sales, thus driving down overall values going forward. As demand & prices pick up, the market starts appreciating again.
So the big question is: When should you buy? I'd recommend buying when the market is soft - and the interest rates are still good. My prediction: 2008 is a great time to buy real estate.