Not a day goes by that gold is not bought or sold, the only thing that changes is its value. Real estate is very similar. What you bought your home for yesterday has nothing to do with what you will sell it for tomorrow. Only the “market” can determine what you will receive for your home. Consider this example.
One purchases a gold coin for $200 last December, holds it for a year and decides they have to sell it today. If the market for that gold coin has dropped to $175 can the Seller receive $225 for that same gold coin? Absolutely not! What if their agent has glossy brochures, three websites and the strongest national brand in the industry? Still absolutely not!
Just as the gold coin rises and declines in value so does ones home. The only major difference between that gold coin and real estate is a buyers or sellers emotional attachment to it.
Consider the stock market. Those who consistently build wealth from the market do so by purchasing investments at market value and holding them for the long term. The stock market has never had a loss over any 10 year period, ever. Therefore if you treat your property like an investment and buy it at market value while holding it for the long run you are guaranteed to make money, if the home remains the same.
Many people are tempted to hold onto any investment when the market is bad and hope for better times. However, if you need to sell your home to move up to a larger home, why not sell now and if the market truly is declining you will turn around and buy your next property at the same, or better discount.
· People willing to hold properties for a long time could be well served by starting to look at potential purchases now, because over the long term home appreciation usually pays off.
· Despite the recent declines in the market, national home prices are up 80.5% over the first quarter of 2001.
· One reason potential buyers may want to act quickly: Historically, when home prices fall, they don't fall for long.
· "If we go back to 1990, 1991 and 1992 and prices were falling, the reverse came very fast and very suddenly." There is some indication that the time period might be shorter than it was in the 1990s. For one, the job market is actually still fairly strong today and the jobless rate low, contrasting with the rising unemployment rate in the early 1990s.
-- David Blitzer, chairman of the S&P Index Committee, “Good Time to Look for a Second Home?” by Sheree R. Curry, TheStreet.com, November 30, 2007.