If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

Yeah, you could do that.  The lemmings I mentioned in an earlier post would most certainly wait with you!  You and the lemmings might also wait for Santa Claus,  Easter Bunny and Tooth Fairy too.  The bottom of the market - at least as a tangible place  - is a complete myth.

Don’t get me wrong.  There will be a bottom of the market, but we won’t know it was here until it is well and gone.  Think about it - how are you going to know it is the bottom?  In fact, how are you going to know we are even close?  In a society obsessed with the bad news of celebs gone bad, natural disaster and the evils of the Bush administration, there is little incentive to talk about how things might be getting better.

You won’t know the bottom has happened until it has passed you by and things are looking rosy once more.

So, you might ask, “What’s the harm in that?”.  PLENTY.   Let’s take a look at this cute visual:

Market Graph

 

 

Greg Smith (completely fictional buyer, unless - is there a Greg Smith who wants to buy in Glendale?) wants to buy.  He knows the market is going down, but he knows what he can afford and he doesn’t intend to flip this home anytime soon.  He has a bizzillion homes to chose from and sellers ply him with home baked treats, enticing buyer incentives and bend over backwards to show him the home .  When he finds a home that is just right, he makes an aggressive offer and the seller - who does not feel optimistic and is worn out from baking treats, makes a token counter offer and then accepts Greg’s very low offer.  Greg scored an awesome deal at $750,000.

Larry, on the other hand, doesn’t want to be a schmuck and buy as prices are still going down.  He decides to wait.  The market hits that proverbial bottom, stays there a nano second and starts to go up.  Larry is a very savvy guy and reads all the news, web sites and blogs (except, obviously, this blog) and now he starts to seriously look for a home.  Unfortunately for him - all the sellers in Glendale read the same things he does (plus they read this blog) and they know the jig is up!   Larry is shocked to discover that there are few good homes to look at - those homes sold on the way down (Think about it.  When the market is slow, which homes sell?  Right, only the very best).  Eventually, Larry finds a home just like Greg’s, but these sellers look at Larry with scorn.  They do not bake treats, they do not offer incentives - and they refuse to show the home after 5 PM.  In fact, they counter Larry’s aggressive offer at a far higher price and now, suddenly, there are multiple offers!  After an exhausting round of counter offers, Larry finally gets the house - for $750, 000, as is,  and no termite clearance.

Who’s the schmo in this example?

It takes tremendous strength of character to know the truth and act on it.   You know I tell the truth, but you still want to wait.  I get it.  But do you really want to be Larry?

Buy now, buy now, buy now, buy now, buy now.