Don't Wait to Buy in a Sellers Market
Category Buyer Advice
The curious thing about so-called buyers’ markets – whether one is selling property, equities, gold or commodities – is that there are usually far fewer buyers in them than one would expect.
So says Berry Everitt, MD of the Chas Everitt International property group, who notes that in real estate, for example, investors and even those who have been longing to buy a home of their own will often not participate in buyers’ market – “either because they’re afraid that prices will keep falling, or because they are hoping that they will fall further and enable them to snap up some really big ‘bargains’.
“And exactly the opposite invariably happens in sellers’ markets. Many who weren’t even thinking of buying a bigger home or an investment property will get caught up in the excitement – usually just as the market is peaking – and jump in because they are afraid of missing out.”
Either way, he says, these buyers are hoping to time the market perfectly, and buy at the exact moment that prices start to rise or sell at the exact moment that they start to fall. “The trouble with this, though, is that real estate market is not by any means homogenous. Macro-economic factors have different effects at different times on various regions, and the under- or over-supply of properties for sale can cause prices to move in totally opposite directions even in adjacent suburbs.
“In other words, it is virtually impossible to ‘time’ the market as such, and definitely not a good idea to follow the herd, as by then it is usually too late to gain any advantage from any major market shifts anyway. Most successful investors in property, as in the stock market, make their own purchasing decisions based on their own research and risk tolerance.”
Which is what prospective homebuyers should be doing right now, Everitt says. “Agents are reporting increased sales and rising prices now in many cities and towns across the country, and evidence is mounting that the real estate market as a whole has genuinely passed the bottom of the curve and is on its way up again.
“This means that the days are numbered for the current buyers’ market, in which the supply of homes for sale still exceeds the demand, and sellers – many of them keen to catch the next wave themselves – are willing to make concessions in order to achieve a sale.
“Consequently, this is not the time for buyers to be sitting on the fence or staying in the ‘safe zone’. The real risk now is not the danger of the market collapsing and prices going into freefall, but of waiting too long to make a purchasing decision, and of being shut out of opportunities as the recovery gathers momentum. As of now, real estate is just going to get more expensive, so they need to move fast while they can still afford it.”
Author: Barry Davies