Calling The Bottom of the Market
Many prospective real estate buyers have put a lot of mental energy into figuring out when prices will hit “The Bottom” - that is, the low point after which prices will begin rising. The theory is that if they time it just right, they will be able to snag great deals that won’t ever be seen again on desirable property. Trouble is, there won’t be a flash of light or even a consensus of economists to herald that magic moment. The reality is that with very rare exceptions, people will only recognize The Bottom via 20/20 hindsight.
For every 10 sure-fire, never-miss signs that prices continue to fall, there are another 10 just as credible signs that real estate pricing is on the rebound. Some market-watchers crunch numbers. Others track certain consumer purchases. Still others like to rely on what days of the week holidays fall on. No one has a solid answer.
So let’s accept that a clear-cut moment when prices bottom out will be nearly impossible to determine. Here’s a plausible way to win at calling The Bottom:
We know it’s a buyers’ market just now, with plenty of choice and prices well below two years ago. How much lower do you believe prices will fall over the next year or so? Five percent? Ten percent? More?
If you believe the market will fall another 10 percent, then make an offer that is 10 percent off the asking price for that property you’ve had your eye on. Buyers are very motivated to accept offers these days. If you acquire the property, you’ll be enjoying it and/or making income for the year or so the fence-sitters are waiting for the pronouncement that “The Bottom” is here.
Should you be absolutely spot on with your calculation that the market will fall another 10 percent, you’ve made your move well ahead of the pack. If prices move upward starting tomorrow, you’ve once again acted before the field gets crowded.
It’s the proverbial win/win at the call The Bottom game.
