Is Now The Time To Buy Property?
If you've been thinking about buying property, you're probably asking yourself if this is a good time to buy or will prices fall later in the year?
Good question. Fair question. Sensible question.
Unfortunately, I don't think anybody knows the answer. If you find out what it is, please let me know.
Real estate prices tend to be cyclical. Historically, the longer you own the property the more likely you are to sell it at a profit as prices cycle from high to low and then back to high a few years later. Conversely, if you buy property as a speculative real estate investment that you want to sell quickly at a profit, an unexpected downturn in the cycle may mean you face a net loss. The timing can be tricky. You have to know where you are on the real estate cycle.
Nationally syndicated columnist Kenneth R. Harney recently wrote a column which appeared in the St. Petersburg Times in which he looked at today's real estate market as part of a long-term research project prepared by PMI Mortgage Insurance Company, a big-time loan underwriter who stands to make or lose millions as real estate prices cycle up and down. They looked at real estate prices in 50 major metropolitan areas going back to about 1990. In a nutshell, they discovered that if you buy at the top of a cycle as a short-term speculator and sell during an economic down cycle a couple of years later, you're likely going to lose money (or not make as much as you had hoped). On the other hand, if you live in a property for seven to ten years, the odds are good that you'll come out ahead because you will, presumably, be able to time the sale of your property to the next up-cycle.
Real estate profits, it seems, depend on how long you own the investment and where you are on the cycle at the time you bought the property.
Right now, indications seem to be that we are headed for something of a flattening out of market values. Some guru's even predict falling prices in some markets including some areas in Florida. If that's the case, you may need to hold your property for a longer period of time. If you're a short-term speculator, you may need to change your business model and use your property as a rental investment for several years rather than as a buy-and-flip opportunity. If you're going to reside in the property, you may want to buy something that will meet your needs for a longer period of time and take a longer view of home ownership.
But should you buy now? Yes, I think you should if you approach the purchase along the lines outlined above. I like what American humorist Will Rogers said about real estate many years ago. "Don't wait to buy real estate," advised Rogers. "Buy real estate, and wait."
Good question. Fair question. Sensible question.
Unfortunately, I don't think anybody knows the answer. If you find out what it is, please let me know.
Real estate prices tend to be cyclical. Historically, the longer you own the property the more likely you are to sell it at a profit as prices cycle from high to low and then back to high a few years later. Conversely, if you buy property as a speculative real estate investment that you want to sell quickly at a profit, an unexpected downturn in the cycle may mean you face a net loss. The timing can be tricky. You have to know where you are on the real estate cycle.
Nationally syndicated columnist Kenneth R. Harney recently wrote a column which appeared in the St. Petersburg Times in which he looked at today's real estate market as part of a long-term research project prepared by PMI Mortgage Insurance Company, a big-time loan underwriter who stands to make or lose millions as real estate prices cycle up and down. They looked at real estate prices in 50 major metropolitan areas going back to about 1990. In a nutshell, they discovered that if you buy at the top of a cycle as a short-term speculator and sell during an economic down cycle a couple of years later, you're likely going to lose money (or not make as much as you had hoped). On the other hand, if you live in a property for seven to ten years, the odds are good that you'll come out ahead because you will, presumably, be able to time the sale of your property to the next up-cycle.
Real estate profits, it seems, depend on how long you own the investment and where you are on the cycle at the time you bought the property.
Right now, indications seem to be that we are headed for something of a flattening out of market values. Some guru's even predict falling prices in some markets including some areas in Florida. If that's the case, you may need to hold your property for a longer period of time. If you're a short-term speculator, you may need to change your business model and use your property as a rental investment for several years rather than as a buy-and-flip opportunity. If you're going to reside in the property, you may want to buy something that will meet your needs for a longer period of time and take a longer view of home ownership.
But should you buy now? Yes, I think you should if you approach the purchase along the lines outlined above. I like what American humorist Will Rogers said about real estate many years ago. "Don't wait to buy real estate," advised Rogers. "Buy real estate, and wait."
-30-
posted by Terry Ward at 6:00 AM
0 Comments:
Post a Comment
<< Home