Real Estate Economics
Today's lesson is in real estate economics. A basic premise of real estate economics is Buy low, Sell high. This is a simplified way of saying that the smart real estate investor will buy when the market is low and prices are depressed. The smart real estate investor will set an objective and sell when prices reach the point where the objective can be reached. The smart investor will not wait until after the market has peaked in an effort not to miss that peak. The really smart investor will not try to sell at peak prices 2 years after that peak has passed.
I know what some of you are saying to yourselves, "but I'm not an investor, I'm a homeowner." Sorry, doesn't matter, these are Universal Economic Laws and they don't care, that's just the way they work. For the rest of you, those that are investors (ultimately every homeowner is an investor), let's look at several pieces of information that are in the news this week. First are a pair of press releases, one from the National Association of Realtors and one from the Maine Association of Realtors. NAR reports that nationwide home sales are down 19.8% from this same period in 2006. They also tell us that the national median sales price is down 4.9%. MAR reports that sales in Maine dropped 16% and that prices here in Lincoln County have dropped by 8.08%. In other words the market is low.
The second piece of news is a quote from former Fed Chairman Alan Greenspan. Speaking at the Midwest ACG Capital Connection conference on Tuesday, Mr. Greenspan expressed optimism that the nation will avoid a recession but that "...the housing thing..." is going to be a major issue over "the next four, five, six months...". In other words the economy is OK but housing is low.
Continuing our lesson, the market right now is low. The economy is OK, there are no major fundamental problems, there is just a slow housing sector. Now is the time for the smart investor to buy. Just as the smart investor doesn't wait for the absolute peak to take his money off the table, the smart investor will not wait for the absolute trough to jump into the market. That's how you miss peaks and troughs.
Now is the time to buy. There are bargains to be had. For the investor or for that person who has been waiting to buy, there is a wide variety of properties available now at prices not seen in the last few years. Saltwater, freshwater, in-town and country. Call one of our brokers today and let them show you how far your money will go.
For those people who have to sell because of considerations that outweigh economics, it is possible to sell. Newcastle Square Realty has sold almost as many homes this year as last. The difference is that there is more competition so as in any case where competition is strong one must put their best foot forward and have reasonable expectations. In other words, stage your house well and price it properly. Call one of our brokers today and discuss your options and where your property stands in todays market.
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