We’ve been saying for years now that the collapse of the real estate industry led us into the great recession of the past six years, and the recovery of the real estate industry will lead us out of it. Now, the real estate and new construction industries have turned around and lo and behold, so is the economy. The “negative nellies” will claim there is still a lot of risk tied to purchasing real estate, so be careful. We say, “throw caution to the wind, step off the fence and get after it, NOW!”
Why are we so bullish on real estate? The answer lies in the trends. It’s always about the trends because history seems to always repeat itself. And what do the trends tell us? Consider the following:
- The stock market lost over 50% of its value and then increased by over 100%. This tells us that what goes down, must go back up.
- The auto industry tells us the same thing. If the market demographics indicate an overcorrection, the pendulum will swing the other way, and usually sooner than later.
And more specifically, how about real estate trends? When the great recession first began, it was selective. Initially it selected super hot markets like Florida, Nevada, and California, and left other areas untouched (or so we thought). It didn’t take long before every area was affected. Why is this important? Because the areas that weren’t initially affected thought they were immune. They found out they weren’t. Now, interestingly enough, the areas that suffered losses first, have made a big recovery, while the areas that lagged behind like New Jersey, continue to wait for signs of a recovery (and wonder if it will ever come). A simple formula to apply:
“If an area was 12 months behind in feeling the effects of the downturn, it will take the same amount of time (12 months) before it begins to feel the recovery.”
Now, consider this: the areas hit first and hardest, such as Florida, are in the midst of a big turnaround. But, hold onto your hat, because things are going to get even better. You see, people all over the country are hearing and reading about all the positive things that have been happening with real estate. The more they read, the more comfortable they will feel moving forward with their own plans (we call this the “Sheeple Strategy.”) Why is this important? Because most of the people who live in northern markets that have lagged behind in the recovery, have yet to take advantage of the opportunity to sell their home and retire to Florida, North Carolina, or Arizona. So what do you think is going to happen when all those people up north that have been waiting to sell their homes, finally do sell them? Do you think they’re going to wait until next season to relocate? Not likely! Having waited, in some cases for many years to move forward with their retirement plans, those sellers will secure a buyer and high tail it down south. And, what do you think is going to happen to real estate values? That’s right. They’re going to go up, maybe way up.
So, if you’re thinking about buying, do you think you should be waiting for the great northern bear to wake up from years of hibernating? That could be dangerous because when bears wake up, they’re hungry. You don’t want to wait until all those hungry buyers begin to satisfy their appetite by entering the real estate market. The solution, get settled safely in your new home before the hungry bears begin to show up!”