Sell now or wait until next year?
So I have noticed a few homes get pulled off the market recently as they are not selling.
And now my buddy just pulled his home off, he thinks the market is too soft and will be better next year.
Any chance of a better price for him next spring/summer? I say he needs to bite the bullet and price it to sell. Next year won't be better IMHO.
What say ye?
And now my buddy just pulled his home off, he thinks the market is too soft and will be better next year.
Any chance of a better price for him next spring/summer? I say he needs to bite the bullet and price it to sell. Next year won't be better IMHO.
What say ye?
Comments
So maybe he waits a year and loses another 5%. Would that be so bad?
If it were me I would choose the latter. And with the recent news about Starbucks and Boeing, and WAMU (and Wachovia) at the top of the "First big banks to collapse" list, I suspect the risk is far greater than a mere 5%.
http://seekingalpha.com/article/83298-t ... ce=d_email
But then, this is even scarier, especially if you follow some of the hyperlinks:
http://www.minyanville.com/articles/GS- ... ex/a/17804
2. We are heading into the trough of the economic cycle.
3. High (and going higher) food, energy, and transportation prices mean less income to spend on housing.
4. The credit crisis is far from over. I expect lending requirements to get stricter in the coming years as more and more people default.
5. I wouldn't buy a house right now. I'm pretty much convinced I'll be able to get it for a lot cheaper in a year or two.
Of course, I could be completely wrong. In situations like this, I'll offer my friend my $.02 and leave it at that.
I like the link in there to Peak Credit. It's a nice play on peak oil. Well, actually it's about as depression as peak oil, but humorous to me.
That fits my model of a bubble.
The longer an observation of a system remains constant the more confident you get that your observation reflects the true state of the system.
Consider the real estate market as a system with sales price being an observation about the value of property.
Different people require different confidence levels to enter or exit the market. When prices first start to rise, the most risk accepting people (who make decisions with low confidence) start buying. Demand increases and prices rise. As prices continue to rise, more people hit their confidence requirement and enter the market. I suspect the market partipant/confidence curve looks like a standard population s-curve. At the end of the flat top of the curve are very risk averse people who don't enter the market until it is general common sense that prices always go up. When the tail flattens out at the high end, demand stops rising and prices stop going up.
As soon as prices stop going up, the people who act on low confidence sell and get out of the market. The process continues in reverse until everyone sells. That poor, cautious fellow who follows the crowd gets taken to the cleaners. That kind of rash, impulsive guy who jumps towards every shadow that looks like it might make money cleans up (although there are plenty more rash, impulsive guys who put their capital into other shadows and couldn't finance the real estate shadow).
Then the cycle repeats itself.
In fact, it is amazing that it actually took some will power on my part to stay out of the market these last two years. The lemming mentality pulls on all of us I guess. But I held my position.
Problem was, this thing started unfolding about two years later than I (and all the other "doomsayers") expected, making us look like we were full of baloney. Well, I read an article on Minyanville about a year ago that included this statement, and I paraphrase:
"These things always take longer to get here than even the doomsayers expect, but when they arrive, they hit harder and faster than even the doomsayers expect."
IOW, when it hits, it is almost a brick wall. One day a little softness in price can get your home sold. The next, NOBODY IS BUYING. That is a bit of an exaggeration, but you get my drift.
The bleeding edge communities (California, Miami, Detroit, et-al) are not the "this is how bad it can get" model. They are merely the first to fall off the cliff, and they are STILL picking up speed. They have not hit the bottom yet. And to be clear, it will unfold even faster in the lagging communities (Seattle, Charlotte, etc.) because they will be viewed from the perspective of "it already happened in other places and the economy is collapsing" The bleeding edge areas at least collapsed in an environment where one could, at first, argue that generally the global environment is fine. Seattle will not have that luxury.
We are living in interesting times.
BTW, to be clear, I am no expert in this sort of stuff. Part of my position was based on good fortune. That is, I had just gotten out of a messy divorce and was forced to rent, and could not buy. If I had really known what I was doing, I would have seen the impact of that first observation (the 50% rule) and bought as many houses as I could. I didn't. The only thing I came up with that was uniquely mine here was the Idea that this could lead to another Great Depression. And FWIW, I have very little doubt now, that it IS what we are gonna end up with. The more the fed tries to delay this (and they're pulling out all the stops), the worse it will be when it comes.
If your friend wants to sell anytime in the next 2 or 3 years he'd may as well do it now. If we have hit bottom, then we won't be seeing much appreciation in the next couple years (i.e. prices always drag along the bottom for a while, once it is reached) so he won't get a substantially better price next year.
If we haven't hit bottom (which I think is by far the stronger possibility), prices will just keep falling for several years.
The only reason to wait till next year to sell is if you really believe prices will skyrocket, but I just can't imagine a scenario where that would happen.
Of course, if your friend likes the home he is in now, then they could consider staying there for an extended period until prices substantially appreciate again (say 4 to 7 years). If they really aren't in any kind of rush to sell, then staying put isn't a bad option.