MARKET SLUMPS AND BOOMS
THE LAW OF SUPPLY AND DEMAND
DON'T "TIME THE MARKET"
WHY YOU SHOULD NOT WAIT

Market Slumps and Booms

Obviously when the market is booming we feel more confident about our future. Because of this we spend money. We eat out more, buy new cars, and new homes. Then, for different reasons, the economy slows down. People get laid off and we are slower to decide what we spend our money on, we may actually try to save more than we did before. This actually ends up slowing down the economy even more. If it slows enough, we find ourselves in a market slump or recession. In times like these, less of us are buying homes. Unfortunately, some homeowners end up in a situation where they have sell because either their families grow to large for the home, they get relocated or laid off and find that they can no longer afford the payment.

The Law of Supply and Demand

We all know that when the supply of houses is larger than the supply of buyers, appreciation of homes can slow down and prices can even fall. If you are able to purchase a home during a slow period, like we are in now, you can be reasonably confident that the economy will begin to show strength again.

Don't "Time the Market"

This may cause you to attempt to time your purchase to the economic cycle, the problem with this thought process is that no one can predict the future and typically interest rates are higher during a slowed market. Often times income doesn't keeping up with it and for that reason, fewer people can qualify for a mortgage than when the market is booming.

Why You Should Not Wait

First time buyers should consider this thought. . . current homeowners usually need to sell it in order to buy their next one. If they want to purchase one during a depressed market, then they typically have to sell one during the same slow market and in kind, if they want to sell their home to take advantage of a booming market when asking prices are higher, then they also have to buy their next home during that same hot market. You see how it tends to equal out. We have "history" to help us. History tell us that since the early 1980's, we have had two pretty lengthy expansions with only a small recession in between each boom. Based on history, if you wanted to time the market you would have to wait 9 years to buy a home. In that length of time you would potentially miss out on a great deal of appreciation by waiting, and likely end up paying a much higher price.

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