Myths of Real Estate: #1 The Importance Of Timing The Market
I’m starting a new series for the blog. It will be about the “Myths of Real Estate”.
I am choosing this topic first not because it is the one that I see people hurting themselves with the most, but rather because it is the one that will simply not go away. The most common question people ask me is after all “How’s the market?”.
My hypothesis of why the notion of good markets and bad markets is so firmly entrenched in the public mind is simply because we live in a world where most often people hear about real estate from media outlets or as part of some other sort of “news”. News by definition needs something new to talk about. The fundamentals of real estate change slowly if at all. So, what they hear about most often is not necessarily the most important stuff to understand, it’s just the stuff that has changed lately. Pump it full of drama and it’s ready for public consumption.
I explain my views on this is detail in the series “When To Buy And Sell.” (Go to the oldest post in this section to start.) Having said all this I want to make it clear that I am not suggesting that what the market is doing will have no effect on you or your financial well being. I am saying that this is secondary to your financial standing as well as some other factors in most cases. One can pick these things apart and dissect it into a million peices. I do that a bit in the series mentioned above, and a lot more in my daily working life. In the end, it always comes back to the above for me.
So what is this viewpoint I have for homeowners you may ask? (Or maybe you’re just asking “Why don’t you get to the point already?”) Well, the short of is quite simple. What you can afford is more important than what the real estate market is doing. You have to remember that all the dramas about ups and downs are short term and that in the long term values rise. This simple truth is what makes real estate such a good investment for both homeowners and professional investors. It requires patience though.
When you can understand and appreciate the statement “There are no good markets or bad markets. I all depends on what cards you are holding.” then you are starting to hear where I am coming from. If it still sounds like a Zen koan (riddle) to you, then you need to keep reading.