Conventional wisdom @ the macro-Economic Cycle says that recession follows a significant contraction of the market.
During a recession, the game players are mostly excited about “Timing the Market” meaning that they want to BUY BUY BUY when the market is at its lowest point and SELL SELL SELL when the market is at its peak.
Isn’t that what all of the financial advisers say?
The “secret” to winning the financial investment game is to “Buy LOW – Sell HIGH!”
The housing market carries some nuances that are not always present in other financial investments . . . Things like emotional needs and attachments. After all, we ARE talking about buying something in which most folks will LIVE and raise families . . . so it’s not always as black and white as buy low – sell high.
What we mean by “Timing the market” WRT conventional wisdom is typically along the lines of identifying those 2 “Sweet Spots” in the market – the lowest point and the highest point, and CAPITALIZING on the market as FAST as possible.
This typically causes low markets to INFLATE quickly because the supply dwindles while Buyer demand increases (as more Buyers jump on the band-wagon).
In high markets, supply INCREASES and the sellers enjoy prosperity until the inevitable period of contraction shows up (Supply out-paces demand).
This is basic economics.
How does this apply to the economic environment we are all swimming around in TODAY? (See yesterday’s blog post Monday Morning Coffee – Will this Recession Double Dip? )
Word on the street is that Nashville and the Middle Tennessee market may very well have hit BOTTOM while many other areas of the country are still facing this threat of “Double Dip Recession.” We’re lucky but the fat lady ain’t singing yet on “recovery”?
“Conventional Wisdom” does not seem to apply. If it did, we would see some real scrambling going on in our marketplace – rabid Buyers . . . BUYING BUYING BUYING. Some of that IS happening as people with CASH are showing up and taking action, but it’s not the pace that would usually be expected . . . and it’s not looking like it’ll create any sudden inflationary bumps.
Why?
- Rates are artificially being held LOW!
- Folks are still scared/worried about job security!
- Many people are still recovering from Bankruptcy/Foreclosure!
So . . . No matter how “Affordable” the Federal Government and/or the local economy can make housing, the average American is being VERY CAUTIOUS about buying real estate.
The result is a SLUGGISH recovery . . . a real lack of the conventionally anticipated ROBUST RECOVERY.
So . . . Hang in there . . . I believe The Middle Tennessee housing market is on the up-swing . . . Have patience . . . This pendulum is swinging SLOWLY!
Join our conversation THIS Friday September 30 @ 10 AM . . . We’re going to “Un-Pack” all of the above and strategize the next 2 years.
Just sayin’
Best,
b
PS: Pareto Realty takes another baby step every day redefining “Conventional Wisdom” WRT what a Residential Real Estate Firm looks like in this new economy . . . Performance oriented – Light on our feet – And serving Real Estate Professionals throughout Middle TN so THEY can serve their clients without having to commute outside their community to “the office”