Understanding the Market Cycle and Making it Work for You!
The Marketing Cycle graph I've provided is a depiction of what happens to peoples attitudes in the changing cycle. You'll note that the high of the cycle is called 'Euphoria'. We were in this stage in 2005 and 2006. The real estate train was running and everyone wanted to jump on for fear of being left in the station. This drove up prices until the time the public said that they could no longer afford to buy at these prices. This started the market on a decline through 'Denial', 'Fear', 'Panic', all the way to what the model calls 'Depression'. This becomes a "self-fulfilling prophecy". We imagine the market will get worse and sure enough it gets worse. This created times of lowering prices. Many people stayed away from the market for fear of losing value. No one wants to buy a home that could be worth less in time.
Today I believe we have turned the corner and our market is in the area of 'Hope', headed to 'Optimism'. For proof I suggest you need only look at the comparison of the 2nd Quarter of 2010 (April-May-June) and 2nd Quarter of 2009. The: Number of Sales, Average Price and Median Price are all UP for each month. Each month this year improved over the preceding month; while the number of foreclosure went down for each of those months. The percentages were small but positive! This is the second quarter in a row with all positive numbers.
NOW is the most opportunistic time to buy and sell to improve your long range financial future. Prices are still lower, interest rates are incredibly low, and the selection is great. I believe you can buy now and enjoy the benefit of increasing values.
Why now? While you wait you will see the market climb to 'Optimism' and eventually to 'Excitement' and back again to 'Euphoria'. As the market strengthens prices will increase, there will be more demand and we can only speculate what might happen to interest rates. The people who will benefit the most are those that saw the opportunity to make their move early before everyone else does. Remember; the wave not only represents people perception of the market but "PRICES".
Consider making your move NOW! If you've every thought about investing in real estate NOW is the time! NOW is the time to buy lower and get the opportunity to sell higher.
Blog Contribution by: Colorado Springs Real Estate Broker Associate Bruce Simon, RE/MAX Properties, Inc.
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