If you have been reading my articles for a while you will know that Stef Lukas is the Realtor who found us over four years ago and helped us out immensely. During the years we have worked with him he has become a great friend, a trusted advisor and just a pleasure to work with and to refer people to. Earlier in the week he sent us a pre-release version of his current newsletter article and we thought it was so great we asked permission to reprint it her on our site. So I hope you enjoy it as much as we did!
Why Buy
I think I could write a successful blog just on what I read in the Calgary Herald, Sun, each day.
Why I even read the Herald is a quandary to me, given that the paper reads more like the Huffington Post these days.
Recently they wrote a little pros/cons section on whether or not it’s the time to buy a house. Reasons to buy? High inventory, low prices, low interest rates, etc. Reasons not to buy? Prices still in decline, renting isn’t a crime, financing is more complicated, etc.
Good reasons, but what about addressing the real reasons that people buy and don’t buy? What if, instead of providing biased opinions from those on each side of the argument, we broke it down and really made it easy to figure out if it’s a good idea to buy or not to buy? What if some people don’t really buy because of interest rates after all, and what’s all this garbage about a market bottom?
What if people buy because they’re confident and don’t buy because they’re scared and the rest of the reasons are just fluff? If people buy because of interest rates, why did anyone buy a home from 1980 to 1983? Interest rates aren’t the key, market indicators aren’t the key, lifestyle accomplishment is the key.
First, let’s get this “market bottom’ theory out of our way. I’ve said it before, and I’ll say it again, market bottoms are only easy to identify once they’ve happened. Look at the stock market. By most accounts, we’ve been to the market bottom of this recession cycle.
Take a look at a stock chart, or individual stock hi/lows, and you’ll see that most stocks hit their 52 week lows on March 5th of this year. Did you buy a hundred thousand dollars worth of stocks on March 5th? If you did, you probably would have turned $100k into $300k pretty easily. What’s that? You didn’t buy on March 5th? But that was the market bottom! Why on earth didn’t you buy? What’s wrong with you? I really can’t believe you were sitting there, at your computer screen, with Etrade account open, and you didn’t pull the trigger on CAR at 33 cents. You could have turned $100k into $3,630,303 in 5 short months. Shame on you.
See why market bottoms aren’t too cool? Because when they happen, there’s usually too much fear in the market to encourage buying. What is true for the stock market is also true of the housing market. Market bottoms sound great in theory, but they’re just too darn hard to identify while they’re happening. Instead of an identifiable bottom, why don’t we just focus on a bottom trough, a trough that we’re certainly in right now.
Movements to either side of this current point are going to be prevalent, which is why we’ll see positive housing numbers one quarter, and negative housing numbers the next. We’re in a sideways market, and I’d suggest we’re in a market bottom that we’ll stay in for another year or so. As long as REO property dominate the sales statistics, we won’t see a true recovery towards a “normal” market.
Jon Stewart fans, mock Jim Cramer all you like, but he had been saying that the time to buy a house is before June 30th, 2009, and he’s probably going to prove to be right on the mad money with that recommendation.
So if we’re in the market, why buy? Do you believe the market bulls or bears? Do you focus on Mary’s 5 positive signs, or are you negative and you prefer to side with the cons? Go right ahead and rent for the rest of your life, and maybe, just maybe your landlord will let you paint a white wall tan. If you ask nicely.
What if you just let the 5 reasons to buy and the 5 reasons to wait cancel each other out, and buy for lifestyle. Housing bull? No thanks. Call me a lifestyle bull. A lifestyle bull in a confidence sapped china shop. Buy because that house you grew up admiring just came on the market. Buy because you’re confident in your job status, and that new development just slashed their prices 35%. Buy because your neighbor cuts his grass at 7 am on Saturday mornings.
Buy because the city heat is just about to make your head explode, and cool lake breezes are better than warm alley breezes any day of the week. Buy because you’ll walk a little taller if you live on that street where the Maples high overhead reach across the street and shake hands with each other Above all, buy because you want a better lifestyle for you, for your friends, and for your family, and the purchase you’re contemplating allows you to more easily obtain that lifestyle.
If you need fundamentals to buy, realize that interest rates are unbelievably low and inventory is monumentally high. Realize that whether or not the market creates an identifiable bottom, you’re not going to know when it does. If you’re hoarding cash hoping for market bottom balloons to be released from the pink unicorns soaring in the sky, I hope you have fun swimming and boating in your money vat like a decidedly uncartoonish Scrooge McDuck. Just buy because of the 320 months of summer we’re all hoping for out of life, way too many of them have already been wasted worrying about 5% market swings, and 5% interest rates.
Stef Lukas
Lukas Group Realty
403-256-0002
Good article. Agreed with it all.
Reference to Jim Cramer calling the housing market right… Anyone can make 10 calls and get 1 right. The guy just likes hearing himself talk.
I predict the stock market will go up tomorrow.
I also predict it will go down.
I predict there will be no change.
I guarantee I will get one right.