Timing the Bottom of the Market...

...is impossible!!! Don't try! Ok, you don't believe me. I understand. But at least let me explain, ok?

In the real estate industry we know that on average the public's opinion of the market has an 8 month lag, and relying on the media for updates is unreliable at best. Of course, the public isn't you, so I won't try and convince you otherwise.

But this assumes that there is such a thing as the "bottom" of the market, which we could mark as the exact day in which prices went from falling to rising. We could stick a pin on the low point of a "V" on a graph and all point to it and say, "Yup, everyone that bought on March 13, 2008 at 1:34pm got the absolute best deal possible, but those suckers on March 14 got taken for a ride."

In reality there's more of an extended time period when seller desperation peaks and presents an opportunity for buyers to take advantage. Remember, this isn't the stock market where transactions take a few seconds to complete and report, and exist somewhere in cyberspace. Real estate escrow often takes 30-45 days to complete, and localized communities experience independent trends that can differ widely from the surrounding area. To say that a market has "bottomed out" would only take into account the general market data of a large area. Even if we could point to a specific time that prices were the lowest everywhere on Earth, once we figured it out all the buyers would have to wait a minimum of a month to close a deal-- and the secret would be out by then!

I'll save my discussion about purchase price and interest rates for another post, but trust me when I say that .3% of an interest rate increase can easily offset a minor reduction in purchase price over the 7-11 years a person generally stays in their home.

MY PREDICTION: All the best deals in prime locations will be gobbled up by home buyers (see "Mini Bidding Wars" post) throughout the year. They will recognize that buying a home isn't all about price, and those people will have a tremendous amount of pride of ownership over the next decade. Rates are still at historic lows, but are expected rise, so those people may even be paying less per month than the "market timer" that got in too late.

MY ADVICE: Buy when the rates are low and the inventory is high. Make sure you can afford the payments and plan on living in the home for a minimum of 3-5 years. Get exactly what you want in a home and don't settle (but still recognize that no home is 100% perfect)! Your buyer's remorse will only last a week or two until you settle into your new home. In five years you won't even remember that you might have been able to save $5000 if you'd only waited three months longer to buy, and instead you'll laugh all the way to the bank because your house doubled in value.