I had to chuckle when I asked a loan officer friend of mine for a good lending tip. She responded with the age-old axiom “Buy Low, Sell High.”
Well, folks, real estate is not rocket science, so once I finished laughing I got to wondering “if it’s so simple, why do people violate this golden rule of real estate and investing time and time again?”
The reason it seems to me, other than extreme personal and/or financial hardship, is that many consumers don’t take the time or the effort to educate themselves about the real estate market.
2006 seems like yesterday. I was still relatively new in the real estate business but I remember thinking “Why are they all buying when the market is so high? Doesn’t that violate the number two rule in real estate? (The number one rule, in case you don’t remember is location, location, location…)
One argument that I heard and unfortunately believed at that time was that the Albuquerque real estate market would be insulated from the woes of other nearby markets like Phoenix and Las Vegas because of our civilian/military contractors and the related technology jobs and that in spite of what was happening in other real estate markets our prices would continue to increase.
As I looked around and read and heard the reports rolling in from around the country I remained somewhat skeptical, but I went with the flow because I was the newbie.
I regret that I lacked the confidence back then to speak what I truly felt.
Having said all that, here’s what I see going on in the Albuquerque real estate market right now.
Home inventory is shifting. In many areas of the city, home inventory is half of what it was this time last year. Inventory levels are low because we had a surge of sales in the fourth quarter and because many home owners who previously might have tried to sell are turning to what they deem to be a better solution, renting their homes out. Few people say “Hey, I want to be a landlord!” But many have chosen this route because their is a need for rentals out there.
Home inventory is so low that there is a shortage of homes in some areas and in some price ranges. I know this because I pull real estate stats every day (see Albuquerque market stats). I also know this because it has become increasingly difficult to find many of my buyer clients homes that meet their needs.
Combine this shortage of available homes in some areas and some price ranges with the fact that interest rates are as low as they have ever been and you are getting a glimpse at some very promising news for homeowners.
Promising news for homeowners is bad news for home buyers, as eventually the market will make a turn and head in another direction with a full head of steam. Right now here’s what the market feels like to me, like a large cruise ship that is slowly trying to turn. It’s going to take time for the boat to change course but once it does it will move full steam ahead. Don’t be left standing on shore when that happens, considering buying soon while the market is down. Remember the axiom “buy low, sell high.” Otherwise you’ll be like the all the sellers that called me in 2008 and said “Wow, I wish I had sold in 2006 or 2007.”
Don’t misunderstand or misquote me, I said in some areas and in some price ranges there is a shortage of inventory, not in all homes and all areas. And I didn’t say prices were headed up any time soon. Our looming foreclosure inventory will slow down any sudden correction of home values. What I did say is that there are positive signs out there. If you are on the fence considering buying a home, take heed and take action. Don’t wait until it’s too late.