All the world is in a dither over the credit market ruckus and the stock market swoon. Real estate sales have fallen as have prices. Even coveted Sonoma Valley saw a 15% drop in 2nd quarter median prices compared to 2007. And Buyers are frozen. But just as the deer that freezes in your oncoming headlights should move and move quickly, so should you if you’re thinking of buying.
Think of it this way – Wine country is on sale! You can get virtually the same property for 20%-30% less today than you could in 2005 when Buyers we’re clamoring over each other for their piece of heaven. It didn’t seem foolish then. It feels counterintuitive but it’s certainly not foolish now. Brilliant investors such as Warren Buffett or the recently deceased John Templeton buy stocks and bonds when everyone else is running from them. What if prices fall further you say. After three years of a declining market, that’s not likely. And every student of markets knows that it’s the moment of greatest fear that you get the biggest discount.
Furthermore, interest rates are still stupidly low. With real inflation hovering around 5%, I still can’t understand why anyone would lend money for 30 years at 6% or 7%, but they are! These rates won’t last and neither will the current Seller fear. Please remember that investing in real estate is not like investing in a stock or bond. Buyers should have at least a 5-year time horizon. Buying well and holding on is where the real money is made in real property.
Real estate is the most retail of businesses. Not only are most Buyers amateurs but so are nearly all Sellers. (That’s why agents are needed). But that means that the market is rife with individual and emotional reasoning. Take advantage of it! Get a great agent and comb the market for the best properties (I’ll write about those in another article) held by the most panicked or tapped out sellers and move.
Cheers,
Donald Van de Mark
Pacific Union Real Estate/
Christies Great Estates
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