But If We Remember Markets Go Up And Down

Category: Finance, Real Estate.

During an up market everyone is rushing into the real estate market and during a down market everyone is running scared. And generally in 10 years people that bought during a down market frequently are happier with the appreciation on their home than people that bought during an up market.

But if we remember markets go up and down. Not only are prices lower but sellers are more willing to give cost concessions on the price and to fix items that need repair, compared to an up market when many sellers only look at full price offers and don t plan to fix a thing before closing. One of the first clients I had as an agent was a nice young married couple. In addition to price there are some other benefits to looking at houses during a down market. We had been looking for about a month. Around 1 pm it started raining. We had planned on looking on a Saturday afternoon and there was one particular house that they had seen before that they were very interested in, and wanted to see again.

They called and asked if we should still look. We went back to the house they were interested in from last week. I told them I was still game if they didn t mind the rain. The house was centrally located and had recently been remodeled which was what they had been looking for. The carpet was wet. Everything was fine until I went into the bedroom.

Not just a little damp but soaked. I went and found the couple and told them they might want to check out an" update" from our last visit. The house had a leak. While they were a little disappointed they were happy we saw the house while it was raining so that we knew this now instead of finding it out the first rainy night after moving in. In a similar way looking at houses during a down market can be informative. Since then I have never balked at looking at houses in the rain because while it might be harder to see the exterior of the house and the curb appeal the visit might still turn out to be more informative.

While you are any more likely to find a leak there are other issues you can uncover. New home communities downtown lofts and older houses can all be getting multiple offers and selling for above list price. During an up market frequently everything is selling. And when buying in such a market it can be difficult to determine which sections in the market are inherently weak. While all the subsections of the market are doing worse than before you can start to see which parts of the market are really tanking. But when the market slows down this all becomes more clear. Maybe in the central section of the city older houses are faring better than new condos because builders overbuilt condos over the last 10 years.

Also during the boom when houses were frequently selling the first day people failed to notice a certain community had utility issues where their utility bills were 5 times higher than average because of problems with their utility district. Additionally maybe new communities on the west side of the city are faring better than on the east side of the city because of surrounding attractions and the better built roads leading to shorter commuting times. During the downturn you might notice that while there are more houses in general on the market in certain neighborhoods almost every other house is on the market and none of them are selling. Another thing we have found is during the boom home buyers will tend to ignore problems with houses. This might be a clue to something being wrong with the neighborhood. To close to the freeway, small yards, odd layout, poorly done additions, kitchens that have, bad paint colors not been updated since the Paleolithic era can all be ignored in the rush to buy something, anything before homes get out of your price range.

So during the downturn you might find that kitchens that have not been updated are still selling because some buyers like older kitchens and some people like the idea of remodeling to their exact tastes. But during the downturn you can find what matters to most people which will be valuable when its time to resale. On the other hand poorly done additions are pretty much a showstopper.