OK, so the price of gasoline is up this week. It might have been down two weeks ago but generally most people are considering that the price of this valuable commodity generally is trending upward. I am sure it is only my imagination, but what do you think? Doesn’t the price “seem” to go up every year during the summer months, when most people want to schedule a day trip or a vacation that might require them driving several hundred miles from their homes. Paradoxically, is it a further coincidence that the price always seems to come down (if even only a little bit) right before the general elections in November? It has to be just me who thinks this. Otherwise it would imply that the government just knows how short the American public’s memory is. People are very concerned about gasoline prices and they talk about it all the time. Similarly, the price of Real Estate seems to take a ubiquitous part of any good discussion or conversation, especially around the dinner table. There is one part of the conversation that is not shared when discussing each of these concerns.
If the price of gas goes up, significantly or otherwise, you will never hear anyone, at least I have never heard anyone say,
“Gas is high this week, I am going to wait a few weeks to refill.”
If you need gas, there is no waiting or putting off the decision to purchase it. You just pull up and fill it. Oh, and then you look at the bill and you grumble a little bit each time.
How different the conversation is in Real Estate. You hear prospects all the time say things like,
“Prices are up. It is ridiculous. I will wait till next year when they come down and the market becomes normal again.”
In this second case scenario, this is some seriously flawed thinking. Here’s why. At the gasoline pump, the only issue you have to contend with is that the distributors (or the refineries ) have raised the price. So the guy selling you the product raised the price. You could ride around your neighborhood and maybe you might spot another station offering gasoline for a few cents less. You might even be one of those people who is willing to drive 30 miles to go to the “reservation” and take advantage of the lower prices you will always find there. I sometimes question this logic, especially if it is a 60 mile round trip, which would cancel out the savings you fought for since you burned at least a gallon and a half (or two) for that “trophy price.” But when it comes to purchasing Real Estate, it is very different and there is another issue to consider.
First of all, the market is the market. It has always trended upward. Sure, there have been a few dips over the years but universally it trends up. Rarely will you hear someone say,
“I wish I hadn’t bought that house 20 years ago.”
Waiting for prices to come down requires an infallible crystal ball, and I know I don’t have one. But if you had one you would have to hope that you had a second one. This one would be used to see what interest rates are doing as well. If you were the luckiest gambler in town, even if you shrewdly decided to wait for the prices to go down, you would have to defy all of the magicians in Las Vegas to predict prices and Interest rates going down at the same time. And the entire thought price of returning to normal is without merit since the market is always normal. It is normal for NOW. So you could wait to fill up your tank and watch the neighbors go on that wonderful car trip that they have been telling you about and were so looking forward to all year. And what if you watched them pull out of the driveway, and waited your week or two, and the prices went up instead of down as you had hoped. Likewise, now that you are thinking about buying a house, you could wait for the rates to go down (and the prices as well at the same time), but chances are neither of these will be successful strategies for you.
So when you consider how you spend your money remember these two points: Gasoline: if you need it, you are going to buy it regardless of the price.Real Estate: If you need to move, if your current home doesn’t suit your present needs, you are going to buy that house NOW. If not, bet on the fact that your total costs (the price, and the interest rate) will be higher when you ultimately realize that waiting wasn’t your best option.
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Hey, I wrote the book on Real Estate, literally.”
Author Brendan J. Cunningham is a New York Licensed Associate Real Estate Broker, lead of the Platinum Team at HusVar Real Estate, as well as an accomplished writer, Shakespearean trained professional actor, and podcaster.
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