People always want to know if now is a good time to buy or sell a home.
A client of mine, who was getting nervous about selling her home during Covid-19, asked me if now was the right time to sell her home. People were telling her to hold back due to Covid-19, saying things like “now was not the time” to sell. She was getting very concerned that we were making a big mistake.
I set up a conference call with the owner of my brokerage, Ernie Wish. Ernie has been through lots of things in his stellar career and I knew he’d be able to provide some perspective and hopefully ease my client’s mind. Here’s what he said; “If anyone says they know what’s going to happen next in real estate, be very suspicious. You have to figure out what you want, and then make decisions based on what happens and how you feel about it.”
In my opinion, that’s very good advice. In other words, do what you want to do, and then make decisions as the process unfolds. My client instinctively knew this was the truth and we continued on with listing her home, closing escrow shortly thereafter.
Trying to “time the market” perfectly or guess what’s going to happen next in real estate is an exercise in futility. Ask anyone who has sat on the sidelines for years waiting to buy a home, only to see prices continue to go nowhere but up while they watch and wait for exactly the right time.
Or someone who wanted to get the maximum selling price and waited and waited for the exact right moment as prices continued to climb only to be blindsided by an unforeseen event such as the one we are in the midst of right now.
There is no perfect formula to “time the market”. The best we can do is make educated guesses based on facts. However, a quick look at the facts can sometimes be very confusing. Why? Because, real estate prices are based on supply and demand. This sounds simple, but in fact, it’s not. You’ve got to look beneath the surface to really understand.
For example, according to a Wall Street Journal article dated May 5th, 2020, in April 2020, the median price of a home in the United States rose 8% year-over-year. Prices are up despite Covid-19.
The article also said, that at the same time, buyer demand softened which lead to overall home sales declining 8.5% vs. the previous month. So, not as many homes sold.
Wouldn’t it logically follow that home prices would start to fall too? Sales are down, buyer demand has softened…that means lower prices, right?
Not so fast. Prices didn’t fall because the supply of available homes dramatically contracted. There were fewer homes were available to buy. That’s why prices are not falling. Lower demand but even lower supply.
If you’d like to talk more, let’s chat. I’m always here for you.
