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Millionaire Now! by Larry NusbaumThis blog is based on the organizational principles found in my new book, "Millionaire Now! - A Financial Toolbox with Seven Steps to Wealth". |
They Don't Ring A Bell At The Top!
Posted on 12/13/2006 04:49 AM | Link | Post Comment
I can not tell you how many times people who pretend to know answer my question of "How does one know when the real estate market has peaked and prices are headed down?" with the following: "Oh, you can see it right now. Prices are starting to go down and it's going to get much worse."
So, does that mean that they sold in 2003 or 2004 when the prices had reached dizzying heights? A few actually did because they were scared or because they wanted to book those gains. And, had they, they would have missed 12-24 months of some of the most spectacular appreciation ever. They will never see that again and there they were on the sidelines! And, despite what they say on bubble blogs, they remain pissed.
Anyone who says that they "cashed out" last year is probably not telling the truth. Heck, no one sold last year because their expectations were for more gains. So, if they tell you that now this is the top and one should get out, how can you possibly do that when so many others are selling right now as well? You had your chance. These are the people who want to sell when the crowd is selling and buy when everyone else is buying. However, all real estate mistakes can be cured by time. Ask anyone who owned houses in Southern California during the recession of 1991-1995 and didn't sell. They are sitting on huge gains and aren't too worried about a bubble.
There are some who say that sellers must reduce their prices to more realistic levels. There is some truth to that! But, could it be that buyers want lower prices so they can get in? Sellers do not have to lower their prices. They can simply allow time to pass and let the market come to their price as it has always done in the past. That's a stark contrast to stocks. Because with stocks, 75% of Market Leaders in each cycle were new companies that incorporated in prior then years, 80% paid no dividends, and earning growth was the driver of market leaders, not dividends.
Many are rooting for the housing market to collapse, for some reason. And, if it does, Landlords will get exactly what they finally deserve: Namely a huge pool of qualified tenants fighting over fewer and fewer vacancies in which rents will sure go up, making their rental units worth more and more!
So, does that mean that they sold in 2003 or 2004 when the prices had reached dizzying heights? A few actually did because they were scared or because they wanted to book those gains. And, had they, they would have missed 12-24 months of some of the most spectacular appreciation ever. They will never see that again and there they were on the sidelines! And, despite what they say on bubble blogs, they remain pissed.
Anyone who says that they "cashed out" last year is probably not telling the truth. Heck, no one sold last year because their expectations were for more gains. So, if they tell you that now this is the top and one should get out, how can you possibly do that when so many others are selling right now as well? You had your chance. These are the people who want to sell when the crowd is selling and buy when everyone else is buying. However, all real estate mistakes can be cured by time. Ask anyone who owned houses in Southern California during the recession of 1991-1995 and didn't sell. They are sitting on huge gains and aren't too worried about a bubble.
There are some who say that sellers must reduce their prices to more realistic levels. There is some truth to that! But, could it be that buyers want lower prices so they can get in? Sellers do not have to lower their prices. They can simply allow time to pass and let the market come to their price as it has always done in the past. That's a stark contrast to stocks. Because with stocks, 75% of Market Leaders in each cycle were new companies that incorporated in prior then years, 80% paid no dividends, and earning growth was the driver of market leaders, not dividends.
Many are rooting for the housing market to collapse, for some reason. And, if it does, Landlords will get exactly what they finally deserve: Namely a huge pool of qualified tenants fighting over fewer and fewer vacancies in which rents will sure go up, making their rental units worth more and more!
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