The following was published in a recent issue of Realtor Magazine:

“The great irony of a buyers market is that even though the opportunity to buy is high, buyer urgency tends to hit an all-time low. The media becomes the excited purveyor of negative news and uninformed advice, and buyers buy it all. Actually, it feels like the only thing they are buying. Their reluctance is ironic since not so long ago buyers were incredibly excited about buying – and it was a sellers’ market. Prices were escalating and it was perhaps one of the most difficult times to buy value and yet people were buying like there was no tomorrow. Buyers were afraid of losing out by not buying, even though the advantage was all to the seller.

Now a shift has occurred. Fear is still in the driver’s seat but the tables have turned – the fear of paying too much seems to stop most in their tracks. When they should have been afraid of paying too much they weren’t, and now that they shouldn’t be afraid of paying too much they are. It is one of the great paradoxical moments of any market and the herd instinct at its purest form. Reluctance in the face of great opportunity becomes an agonizingly defining characteristic of a shift.

There are two types of buyers – Those who believe they can time the market and those who are always in the market and believe timing will find them. History supports the latter – it says that if you are always active in the market, although you may never sell at the peak or buy at the bottom, you can buy right and will always do well over time. Logic says that you can’t predictably time the market to be able to buy at the absolute bottom and sell at the absolute top.

People who buy in a buyers market are the smart ones. They aren’t looking to make a killing because they know that is a matter of luck, not planning. They’re looking to make a sound decision with a predictable result and, therefore, ask the question: “Has the market dropped enough now to make a sensible purchase?” More often than not, when they are asking this question, they are already in the safe zone and the answer is yes.

Real estate is a cyclical business. All of this has happened before, and it will happen again. What goes up must come down. More important, what goes down has always come back up. Home values will most certainly continue their longstanding trend of appreciation over time. At the very least inflation will see to that. If you sell and then buy during a seller’s market, you get more when you sell and pay more when you buy. When you sell and then buy in a buyer’s market, you get less when you sell but pay less when you buy. It is always a lateral move as long as you stay in the same market place.

If you are waiting to see if prices come down even more, you are gambling that interest rates (currently at a five year low) will maintain or drop. What is not widely understood is the impact interest rates can have on the real monthly costs of homeownership. A ten percent drop in home prices is immediately nullified by a mere 1 percentage point increase in interest rates on a 30-year mortgage loan.”