Buy on Bad News & Sell on Good News
This week, Fortune Magazine came out with an article titled “On the Path to a Housing Rebound” illustrating that all the pain being felt now by homeowners and homebuilders is a sign that the market is nearing bottom. As we start to hit the trough of the recovery we will see the decline in prices slow down or stabilize and the glut of negative news will begin to be replaced with positive news. Buying and selling a house is like buying or selling stock in terms of it being counterintuitive . . . buy on bad news and sell on good news. I’m not saying to be a short term trader of San Clemente houses or wherever you decide to buy like you could be with stocks, but all this bad news in the housing market is a sign that things will get better soon as falling prices and reduction in inventory will bring everything back into balance. As first time buyers return to the market and there are no new homes for them to buy due to the decline in housing starts, they will help to clear the glut of inventory in the resale market and prices will stabilize.
So you the San Clemente buyer may ask if there are any other major obstacles the market must get past in order to stabilize? To be honest, the biggest block to this recovery outside of a recession is inflation as this could drive interest rates up and will further pull prices down, however, this means your mortgage could be more expensive resulting in you buying less house. Long-term every one wins by building wealth from owning real estate, however, we are not certain when interest rates will be this cheap again saving you hundreds or even thousands on your home.
