With all the turmoil in the credit markets, following the stock market’s wild gyrations, people are still buying and selling homes on the North Fork. I give you that it was a little slow transaction-wise, but the transactions I saw were good ones by smart sellers and even smarter buyers.
Investing wisely and making money require -besides spreading risk- common sense and thinking just a little bit ahead of the others: and don’t forget to step aside while the lemmings jump off the cliff.
And make no mistake: people are still making a lot of money even in today’s stock market, also when its going down: it’s the movement that creates opportunities….. Following the principle of buying low and selling high -although it may seem like gambling- the enormous volatility provides for lots of daily highs and lows, with 1000 point swings in the Dow and many opportunites to make money and contrary to conventional wisdom it is not as risky as you may think.
101 in Economics: The only way to make money in any market is to sell high and buy low. And price is determined by supply and demand.
Is now the time to buy real estate? How to time this market? When’s the low and how are supply and demand faring?
I find this interesting: weren’t people buying like madmen and women at the height of all the markets? How come nobody remarked how high the market was then? Weren’t they massively violating the principle of selling high and buying low , by buying at the top of the market without hesitation? Why did that not feel like extremely risky?
It appears people in general are only thinking linear, they can only extrapolate a line going straight up when the markets are getting higher and higher, not recognizing this line could break, and keep buying without stopping; and now can only understand the downside when the line points straight down. People obviously do not extrapolate in curves. But markets work with curves, not straight lines. It amazes me how even very sophisticated and seemingly smart people are who fall in that trap of thinking. The way out of the economic mess is to teach curves!.So aren’t we all violating the principle of buying low and selling high again by not buying under today’s circumstances?
So it’s all psychology maybe? Hyped by the Presidential elections ? Well listen up: these elections are over in about two weeks, T. Boone Pickens is saying: buy stocks and put his actions where his mouth was. Self fulfilling prophecies.
I know what homes looked like in the 400K range on the North Fork some two years ago, and there weren’t that many, virtually nothing . Look at the availability of homes a little over the 300ks right now! And look at what you can now buy for between 400K and 500K on the North Fork! Not a low yet? You must be kidding.
Steve Harney (www.steveharney.com) spoke at the MLSLI tech fair this month: When looking at the value of real estate for the past fourty years or so, at 5 year intervals, values grew some 25-29%, except for the last 5-year period with a whopping almost 90%. So be the world’s most persistent pessimist and say we lost some 30% in the recent turmoil, the only thing that points to is that we’re still ahead, well above the preceding 5 year intervals. Try give me an example of a safer, better investment than real estate so measured.
So now, maybe we are not buying because all these foreclosures are coming? Maybe we’ll even get a check if we wait long enough when we buy a home? Not so. Banks on the North Fork are not accepting lower offers on short sales -ask any of the many frustrated brokers in such transactions. A few auctions I saw had such high reserves that the auction failed to sell. Banks know a good thing when they have it, like real estate on the North Fork, even if their clients defaulted.
The same greed leading to the excesses that made a few lucky cheats so rich, is now preventing buyers from buying at the low; and the low will at some point -and we may be there already- certainly pass them by recognized too late. In order to make money, you have to be ahead of the curve, ahead of the wave of buyers coming. Don’t be too late…
The North Fork is a tiny region, and all real estate is local. There’s lots of pressure on our market, lots of people would love to be here, to escape the overpriced and overpopulated Hamptons, to get a way from the City, many, many reasons. There’s lots of people who want to be on the North Fork, as second homers, weekenders, or to live a dream come true. Whatever excess inventory we may have today in our tiny region, is minute compared to the enormous pent-up demand that exists in potential buyers in a 100 mile radius around Love Lane… This excess will be gone in a blink and you will find yourself feeling like you felt like last year, sorry not to have bought more.
Let me know what you think!