Buy Now, Sell Later

These last few weeks have offered a ton of contradictory real estate news. Sales are up, sales are down. It all depends on which story you are reading or which TV station you are watching. I say time out, the reports of how the market is doing are a function of so many things, and the reporting is sloppy at best. If you want to know how well or poorly the market has recently done, don't look at how things were on one day or one week or as the government seems to prefer, even one month. Remember the real estate cycle: a buyer decides to buy, a buyer shops for a house (new or used), a buyer applies for a mortgage, a buyer decides on a house to buy and makes an offer, the offer is negotiated, a contract is signed, then if the house is existing, it only takes 4 more weeks before the house is sold, if it's new and to be built, add 40 weeks. This process may take 3-4 months, assuming the buyer does not have to sell a house to make the whole thing happen. So how can you have any confidence in a report that sales were off last month? Last month was July, a dead month in the north, and certainly dead in Florida. So as they say in the Realtor ads, “every market is different”—and that's the one piece of truth you can take to the bank. So let's take a “longer view” of the market. Economic growth continues to gain momentum in the second half of the year, as expected, despite the slow start at the beginning of 2013. The housing recovery continues, and manufacturing and business investment are rebounding, helping to boost growth. Furthermore, consumer spending and the employment sector appear to be growing sustainably, which may help to offset downside risks from the expected tapering of the Federal Reserve’s securities purchases. “Our macroeconomic and housing forecast shows very little change from July, and the steady pickup during the past few months validates our expectations for the second half of the year,” said Fannie Mae Chief Economist Doug Duncan. “The biggest risk to this forecast is the expected reduction in the Federal Reserve’s asset purchases, which would likely put additional upward pressure on interest rates and lead to some volatility in capital markets. The housing recovery appears to have weathered the fiscal uncertainty, although immediate growth is expected to be modest rather than robust while the market awaits an easing of credit conditions in the presence of rising interest rates. The rise in mortgage rates has led to a drop-off in refinance activity but does not appear to have had much impact on home purchase activity to this point. Even though home prices are expected to continue to climb, the pace is predicted to slow from the dramatic levels seen during the past 12 months. But again, all markets are different, and the market that is important to you and me is the one in which we operate. So as long as there are buyers snooping around, and homes for sale, there will be some sales. I expect that August will represent generally slow sales, and that market sales will increase in September and level off for October through December before revving up for January. If I were planning to buy, I would buy now. If I were planning to sell, I would offer my home for sale in February, after the inventory of cheaper homes has been sold off during January. February is the month the Canadians, Germans, English and American buyers realize that—just like in musical chairs, when the music stops they need to be seated--so if they are looking for a home, then they need to find a place before they are all sold. Dane Hahn is a real estate professional serving Sarasota and Charlotte County, you can reach him at 941-681-0312 or by email at dane.hahn@gmail.com. See him on the web at www.danesellsflorida.com