May 8th, 2008, posted by Brandon
Perhaps the biggest question in buyers and sellers minds is – should I make a move now or am I doing so at the wrong point in the cycle? To answer this question, we need to look at market cycles better and understand how they work. Take a look at this graph which represents markets over time.
The two diagonal straight lines represent the top and bottom of what I like to call the “safe zone”. The curvy line represents the cyclical peaks and valleys within the market as a whole. The space above the top line of the safe zone, yet below the curve line is the place I like to call the “unlucky buyer zone “(or the very lucky seller zone). This is when the market is the most expensive, and it is right before a correction. If you look below the bottom line of the safe zone to the space above the curved line, you’ll find the “buyer’s lucky zone”, (or the seller’s unlucky zone). All the rest of the space is the safe zone. What this means is there are only very small periods of time when it is really a bad time to buy (right at the peak before a correction) or to sell (right at the bottom, before an upswing). The vast amount of time you’re safe to make a move. Statistically speaking, chances of you buying or selling in the safe zone are far, far greater than buying or selling in the other zones.
You can’t time real estate so waiting for the right moment in the market to make a move doesn’t make sense. When was the last time you “timed” anything intelligently? Did you “time” your career move to be ideal? Did you “time” your marriage or commitment ceremony to be on the day without rain? Did you “time” that stock sale to sell right before the company announced a gigantic loss - intelligently? Most likely not – and you cannot “time” the real estate market either. The period of time of ideal buys and sells are simply too small, and impossible to determine until about 6 months after they have occurred.
Therefore, buy or sell when the market is in the safe zone – and pay no attention to the top or the bottom. It is foolish to rely on luck as a strategy.
One thing is for certain, the market is moving… are you?