Self Fulfilling Prophecy
One of the biggest problems I run into now is everybody from clerks to doctors telling me what the market is going to do. “Prices are going to go down more. I think I’ll wait another six months.” was one I heard today. Really? Well if she knows that she needs to be in real estate because if I knew where the market was going to be tomorrow, next week, or in six months, I’d be a very very rich man. The fact of the matter is nobody can predict the real estate market on a daily, weekly, or monthly basis. The best we can do is make an educated guess.
Everybody watches programs, reads books, and goes to seminars telling them how to play and win in the real estate market and they are automatically experts. I don’t read a book and tell my doctor what is wrong with me or what the newest medical breakthroughs will be in a year, so why do people do that with their biggest asset? The answer is money. Everybody wants to be an expert in all things financial. But what most people don’t realize is that those of us agents out there do nothing but study houses and housing markets. I’m not an expert on cars or aviation, but I am an expert in residential and investment real estate and I didn’t get that way by only going to seminars and watching infomercials.
Let’s look at the case of the person who told me prices were going to go down so she would wait for six months to buy. Let’s say she wanted to buy a $200,000 house and her rate was 6%. With a 100% loan her payment would be $1199 a month, principle and interest. If the rates go up to 7% in six months which is all together possible, to keep her same payment she could only buy a house for $180,218. $20,000 less house because she waited, “knowing” that prices would go down. For her, the prices would need to go down more than 10% in 6 months in order to make that a good idea.
I’m sure she heard some analyst on a TV show somewhere telling her that we have yet to hit bottom. But in this case, somebody who is throwing money away each month by renting, and who had a screaming deal in front of her, is being done a disservice by everybody telling her to hold off. What if prices go up in the next six months? Or the rates go up and the prices stay the same? We have one of the greatest buyers markets in a long time right now and everybody wants more. Here is a hint… the bottom will hit and nobody will know it. We will wake up the next morning and prices will be up, rates will be up, and all the people who wanted to wait for the next best thing will be left buying a much smaller house or renting.
Do you want to turn the housing market around? Take advantage of the unbelievable rates and low prices and buy real estate. The population goes up, but there is only a finite amount of land. It’s simple supply and demand. Barring major catastrophes, prices will continue to rise over time. That’s a sure of a bet as you can have in real estate.
Colin Gumm
Re/Max Professionals
303-378-0034
stickwithgumm@hotmail.com
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