National Assoc of Realtors says "Sell Now"
Finally someone within the real estate industry is acknowledging that the housing market is peaking. NAR came out Tuesday and made some statements many did not expect. First it said home sales would trend down from these record levels, that the housing market was “close to a peak.” Wow. That is some admission from inside the industry.
More than that, NAR suggested that now was a good time to go ahead and sell if you were thinking of doing it, taking advantage of the high prices. NAR then advised to wait a year, however, before buying your next home to get a better price when the market softens. That is pretty stark in its view of where the market is. Based on this, NAR is not saying it is close to a peak, it is saying the peak is here.
Should anyone follow this advice? We agree the market is peaking; we feel it has already peaked or at least the tracks are laid and it is starting down them. Not a major crash for the entire market as some seem to think; any crashes will be limited in area to those levels that got way overheated and typically see pretty severe swings in the market, e.g., parts of California, Arizona, Florida, New York, South Carolina, etc. Those markets heat up and cool down in faster cycles than the rest of the country. We recall stories from Silicon Valley back in 2001 where sellers were praying the deal would close because so many buyers were walking contracts as the tech boom further crashed and the nation struggled through recession. Those same folks are saying today ‘if only we would have waited a year or so we would have made another million.’ No kidding; we personally know more than a few that were in that position. The point: the majority of the markets that are considered overheated now are ones that overheat and cool off much more frequently than the rest of the country.
That leave you wondering. If you sell now and sit for a year, prices damn well better fall significantly if you are going to come out ahead. Why? Because rents are not dropping, and if you sign a year lease now you are not going to cut a great deal. You are going to lock in at a high monthly rate and burn up a lot of your profits paying rent. Thus prices better plunge in order for you to make out on that deal. In short, this strategy might work in those areas that are overheated and will fall harder versus the rest of the country where prices may soften, but they are not going to crash. That makes this a risky gambit for most would be sellers.
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