It's Best To Buy And Sell In The Same Market

By
Real Estate Agent with The Corcoran Group

 BULL

In real estate it is very difficult to time the market. Markets go in cycles there are tops and bottoms. Bottoms are usually created by pessimism and negativity. Tops are created by “irrational exuberance"  

To quote Jim Cramer on CNBC's Mad Money “Bears make money – Bulls make money but Pigs get slaughtered." The Fed created the boom in housing by lowering interest rates then they ended it by raising interest rates to take “the froth” out of the housing market. Maybe they will change their mind again. 

When everyone is bearish based on sentiment rather than the facts, that is an indication not to listen to everyone and a great strategy would be to BUY! When everyone is bullish and buying in a frenzy that is an indication to SELL! However, the only real reason to Buy or Sell real estate is when you need to or want to not because of the market. 

Why is the mainstream and financial press so bearish on real estate? Sensationalism sells. Could it be perhaps these writers are still renters and never bought their first home because they’ve been waiting for the bubble to burst for years and years? Maybe it’s the reverse Pollyanna syndrome. The media prefers more pessimistic projections and fears about the market because they were so irresponsible during the tech stock rally in the late nineties. Many of them became media stars pushing Enron and Worldcom and The new economy. Maybe they have cash and they know their Wall Street readers will be receiving cash bonuses and they are planning on buying real estate and don't want competition.

Real estate is local. The local economy effects the market. This is evident by reading some of my fellow activerain member’s blogs. By reading Maureen Francis and Sara Lipnitz and Josh Plumber I know that their market in Detroit is very dependent on the auto industry.  The ironic thing about my market Manhattan is that we are dependent on Wall Street. Wall Street bonuses fuel our market. When Wall Street has a good year it’s great for real estate in Manhattan and New York City, even if the financial media is negative and gloomy about real estate and the stock market. 

Last year Goldman Sachs alone gave out $11 billion in bonuses. It came out to an average of $500,000 per employee. It is not divided evenly. The average bonus is about $2 million. Hedge Fund managers get much more. I understand this year they’ve had an even better year and the bonuses are expected to be even higher. Goldman Sachs is just one of many firms on Wall Street expecting to give big bonuses this year. That is a lot of cash walking around Manhattan come January, February and March of next year. Many real estate brokers and Luxury condominiums target those bonuses in advertisements and marketing.

No matter what the market condition it still makes sense to Buy and Sell in the same market. If you Buy and Sell in a sellers market, you sold high and bought high it equals out. If you Buy and Sell in a buyers market, you might get less for your home than your neighbor who sold a year ago but you will get your new home for less than If you bought it last year. It all equals out. Over the long haul real estate is not only a great investment but a wonderful place to live and enjoy.  

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New York New York County Manhattan
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Rainer
434,360
Maureen Francis & Dmitry Koublitsky
SKBK Sotheby's International Realty - Birmingham, MI
SKBK Sothebynulls - Metro Detroit

Mitchell, right now I wish I lived in Manhattan!  Bonuses haven't been on the table in the auto industry for a while.  Pink slips are the norm these days.  But, enough of my moaning...

Its easy to be a follower, and the media is no exception.  Jump on the bandwagon of negativity.  You don't have to think much if  you are a follower.

 

 

Sep 20, 2006 03:10 PM #1
Rainmaker
399,451
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs
Do you ever buy any of Cramer picks. I bought two of them after doing some research and have done OK with them. Local is correct. The news media often misses the points and gives you partial views due to time or the view they want to project.
Sep 20, 2006 04:11 PM #2
Rainmaker
512,350
Mitchell J Hall
The Corcoran Group - Manhattan, NY
Lic Associate RE Broker - Manhattan, NYC

Eric,

Yes I've bought some of Cramer's picks. The best one was buying Google at 160. I loved the company but I thought the stock was so expensive until he explained the valuations. I'm down on some of his picks too. I take him with a grain of salt.

Sep 20, 2006 05:24 PM #3
Rainmaker
163,993
Dave Rosenmarkle
Highland Realty - Arlington, VA
Yes, all real estate islocal and bad news really sells. Back in 1990-1991 when we were headed into a terrible economic recession, after the stock market plunged, the housing market nose dived 40% to 60%, depending on the neighborhood. Saturday is the Washington Post's day for emphasizing real estate and, every Saturday during this time period, in large, bold block letters was one more dire prediction about how much people were losing in equity, about the dramatic increase in foreclosures, about how nobody was able to buy or sell out of fear they may lose their jobs and not be able to pay their mortgage. I wish I had bought about 10 houses back then.....
Sep 20, 2006 06:50 PM #4
Rainer
26,457
Professor X
NONE - Ludington, MI

Mitchell, I am with you brother...I have been touting this on my personal blog for months, because talk about slow economy, you know the old saying...when the economy sneezes, Michigan catches a cold, and we are shivering right about now....the problem is people still need houses, but they are afraid, afraid to lose their jobs, and afraid the market will go lower....You know what I tell them....

Mr. So and So or Mrs. So and So, did you know its all relative....if you are forced to sell your house for x amount less than you paid for it, with all the other people selling don't you think you will more than make up for it when you buy an even nicer house for x amount less than it is worth as well.  Its all relative

Sep 21, 2006 09:46 AM #5
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Rainmaker
512,350

Mitchell J Hall

Lic Associate RE Broker - Manhattan, NYC
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