Waiting for the Market to “Bottom Out”
Trying to TIME the Summit County Real Estate market.
Is it Better to Wait to Buy Summit County Real Estate or BUY NOW?
With the beginning of a new year and the inauguration of a new president, market activity in Summit County real estate and Summit County real estate has increased dramatically! There is renewed hope in our economy and the prospects for ALL real estate (especially Summit County RESORT real estate!) to once again be a solid and wise investment. However, with all the renewed interest and activity to purchase Summit County Resort real estate, I am continually hearing from prospective buyers that we think prices for Summit County Resort real estate are going to come down in the future so I’m going to wait until they do – and buy at the bottom of the market! The interesting thing about that statement is that the only way one really knows where the bottom of the Summit County Resort real estate market is, is AFTER IT GOES UP!! It’s like some people trying to play the “interest rate game”. In other words, there are always those “bargain seekers” who want to wait for interest rates to go down “another 1/4%” (or even another 1/8%) even when interest rates are already great – currently just over 5%!! The problem is they try to “time it” so right that they MISS OUT! Instead of going down, the interest rate goes up and they’ve missed “the bottom”!
Sometimes one needs to realize how GOOD CURRENT PRICING REALLY IS! Here in Summit County, the market has remained relatively stable after the ‘Wall Street meltdown’ (there have been over 100 properties sold in the past 60 days!) and, compared to other ski resorts, real estate in Summit County and Summit County is ALREADY AFFORDABLE – because we have not yet reached build-out! However, since prices had gone up so much in 2006 and 2007 (due to EXTREMELY low inventory levels at that time – 2-3%!), sales prices had already ‘adjusted’ earlier in 2008 by approx 5-10% – compared to 2006 and 2007! Therefore, there are some VERY GOOD opportunities to purchase PRIME resort real estate CURRENTLY – AT ALREADY LOW PRICES!
Could pricing go down further? Sure! However, although we did enjoy inventory levels of 3-4% in 2006 and 2007 – that’s why we had 30% appreciation during those years – consider the fact that right now the inventory levels are only about 8% in Summit County and Summit County. Normally a 10-15% inventory level is considered a “normal market”. Therefore, we currently have a VERY healthy market and unless inventory levels go up over 20% (2.5 times current levels!), there is no reason to think that prices will go down that much further than they already have! In 2002 – after the tech stock market bottom fell out AND 9/11 occurred, we had inventory levels swell over 30%! Even with that, prices only fell about 5-10%’and we’ve already experienced that at present! Why would they go down even further? Remember, we are a secondary resort market and most of our owners are professionals, executives and successful business owners who don’t need to sell – for the most part, they WANT TO SELL’when the time is right! With NO PRESSURE from large inventories, there’s NO REASON TO LOWER PRICES!
Therefore, if you’ve even been considering a resort real estate purchase, you may want to stop procrastinating and TAKE ACTION NOW! Also, with loan rates hovering around 5%, how long can they remain there? If one needs a loan, money IS available’one just needs to qualify for it – as it should have been before’then the nation wouldn’t have been in this “financial mess”! Could inventory levels go up further and prices go down’ Sure! But – WHY WAIT and find out that inventory didn’t go up and prices didn’t go down? Just like with the “interest rate game”, you may find out that your timing was off and you “missed the bottom”. If one can find a property that fit your parameters, if the price is “pre-2008″ (5-10% off of peak prices in 2007) and if one can get (and qualify for!) an extremely low rate loan, then my question would be: WHY NOT? Remember the words of Warren Buffet – “If you wait for the robins, spring will be over”!!
As I mentioned in a previous newsletter, Warren Buffett, probably one of the most successful investors of our time, recently said: ‘Be fearful when others are greedy and be greedy when others are fearful. What is likely is that the market will move higher, perhaps substantially, well before either sentiment or the economy turns up. So, if you wait for the robins, spring will be over. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.
His words definitely apply to Summit County and Summit County real estate – there is really “no better time to buy than NOW”!