Posted by Rob Minton
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It wasn't the sort of thing you see in the news these days, not ever. But the lead for a New York Times article the other day was "Is this what the bottom looks like?"
The article pointed out that some of the markets across the country that were earliest hit by the real estate bust are finally starting to show signs of life (read the article here). It said some markets, such as Sacramento, Calif., are actually starting to show signs of a rebound.
Did you catch that? I said rebound! That's not a word any prognosicators have been comfortable using yet. But here we are, with news stories starting to pop up that we might be approaching the "bottom" of this housing market.
The New York Times is not alone, either. Two recent USA Today articles have actually hit on bits of good news, as well. One article is about the demand for foreclosure bargains being so high in some markets that homes are starting to get multiple offers, which, the article suggests, could be a sign that the downturn is nearing an end.
In another article, USA Today's Stephanie Armour reports that incentivized first-time home buyers are snatching up homes at today's bargain prices, which is also helping housing markets.
I realize a few positive articles does not mean we are finally at the "bottom." No one can time the bottom -- never have, never will. However, I will say this:
IF YOU HAVE BEEN THINKING ABOUT BUYING A HOME, THEN BUY A HOME NOW!!!
Sorry for yelling, but it's time to get off the fence. If you have been wishy-washy about taking advantage of today's low prices, now is the time to stop being wishy-washy. If you want to buy before the rebound, you should do it now. Because the rebound is coming. We might not be at the bottom, but you can almost see it coming. There are three reasons to think a rebound is near:
1. If the markets that first got hit with foreclosures are starting to rebound, you can bet the other markets will follow. It happened with the crash that way, and it will happen with the upturn. And some of the worst neighborhoods in America in terms of foreclosure are starting to show revitalization. From the USA Today article:
""What I'm seeing is incredible. At ground zero in Florida, my business has tripled overnight," says Suzanne White, an agent at ZipRealty in Tampa. "There isn't grass overgrown and mosquitoes all around in these neighborhoods anymore. First-time home buyers are saying rates are so low they can pay less than rent. The bank-owned properties are getting multiple offers and selling higher than asking price."
Which leads us to Reason No. 2 ...
2. If there are multiple offers and bidding wars, you can bet that prices will start to rise. Bidding wars normally mean more buyers than sellers are out there -- which isn't the case yet -- but competition for the great deals on homes is going to start driving up prices. That, in turn, will bring out even more buyers. For some reason, home buyers buy when everyone else is buying. And when that happens, it will accelerate the price increases.
Which is also why Reason No. 3 is so important ...
3. In this day and age, public sentiment and media hype drive markets. We saw it with the dot.com bubble. We saw it last summer with the ridiculous run-up in oil prices. We saw it with the massive sell-off of financial stocks and even with the huge bounce in the price of gold. With the Internet and 24-hour news channels hungry for sensational headlines and sound bytes, ANY kind of speculation, ANY suggestion of good news or bad, moves markets.
If media stories are starting to pop up about the bottom being here, the markets will react as though it's here. And if one paper is reporting good news, the next one will, then the next one -- just as they attempt to beat each other to the really bad news. And when the media sentiment turns, buyers will return to real estate in droves. How many have been sitting on the sidelines waiting for the news anchors to tell them it's OK to buy a house again? If you are thinking of buying, buy before this rabid pack of buyers gets released into the wild.
There have been plenty of real estate investors who have made money in this down market, despite not trying to figure out or wait for the bottom. There still is money to be made. And if you've been waiting for some sort of sign that it's time for you to make a move, consider this your sign.
I can't tell you the timing of the absolute bottom, but the writing is on the wall. I CAN tell you the timing is right to get off that fence.
Rob, I am in Southern California(Riverside/San Bernardino Çounty) we got slammed last two years, but I am hearing among my colleges that there are homes now getting multiple offers, in fact, our home got 3 offers. So article is correct. In fact I havent seen home prices this low in over 6 years.
Posted by: Carlos | May 11, 2009 at 05:08 PM