Add To Your Position!

Add To Your Position!
BY: Joe DiPaola

When the stock market goes south, what do the market analysts tell you to do? View it as a buying opportunity, and add to your position! The same is true for the real estate market. If you believe that the real estate market is fundamentally sound, then look at this downturn as an opportunity to get in and buy cheap.

The big question has become: when will the real estate market hit bottom? My own talking head prediction is the that the real estate market will bottom out, overall, around the end of the third quarter of 2008. After that, I predict a period of what I call "equilibrium" market forces (i.e. a market characterized by no strong buyer or seller dominance, and very modest appreciation).

But why are you trying to predict the bottom? Stock market analysts will tell you that you should be in the market for the long haul. The same is true for real estate. Waiting for the "bottom" of a downturn to buy is a difficult/impossible prediction task, unless you have a crystal ball. You wouldn't do that in the stock market---so why treat the real estate market differently?

There are very good reasons to buy now:

Reason 1: Shop for bargains. While the overall market may not stop sliding until late 2008, certain regions/counties are great bargains now. In my opinion, Sacramento, San Joaquin, Riverside, San Bernadino and San Diego Counties have some great buying bargains now. Buy and hold---especially in Sacramento and San Diego.

Reason 2: When the "bottom" to the real estate market finally comes, borrowing/credit will be extremely tight. As this article is being written (3/1/07), 30 year fixed interest rate purchase-money loans are still being offered at 6.0% to 6.25%. Why wait? Lenders have already started to tighten up standards for borrowers---but there is still time to get in now. By the end of 2008, I predict that rates will be much higher, qualifying will be tougher, and financing the purchase will be difficult if not impossible. So, unless you have cash, when the "bottom" eventually arrives, you won't be able to take advantage of it!

Reason 3: Improve your position. Trade up! In other words, sell your current house, and buy bigger. You are in for the long haul, right? So why not view this downturn as an oportunity to buy a bigger and better house. Yes, your current house will sell for less---but it will cost you less to buy into the larger home, too. And the difference could be in your favor. But be smart---don't buy first, and then expect your existing home to sell in a week (like it would have 18 months ago). Get your current house in escrow before you commit to purchase your replacement home.

Reason 4: Builders are dumping their inventory of new homes--almost in a panic. (Some builders are really desperate: now they're offering realtors large co-operating broker commissions, when just 18 months ago they wouldn't even talk to us! LOL!). Builder panic means incredible uopgrade packages and incentives for you. So, steal a new home from a builder.

The real estate market is fundamentally sound. A market "correction" was both necessary and expected. Buyers shouldn't be afraid of it---they should welcome it! Just like the stock market, the "correction" should be viewed as an opportunity to add to or improve your housing postion.

NCaHome is a full service residential real estate brokerage charging only 1.5% commission. Professional real estate services for California buyers and sellers. Visit us today at www.NCaHome.com or call (707) 693-0200.