We Told You So(The most recent housing boom which endured a long life span of over five years from 2000 to 2005 was quick, exuberant and unsustainable.)
Industry experts and everyone else who had at least one eye open while buying multiple properties and selling them for two or three times the original purchase price, knew the market strength would eventually begin to wane.
We tried warning you that if you were not careful, you might be stuck holding multiple properties you could not afford to feed each month but did you listen? Well, let’s hope so.
Henry Savage’s article, “Insane Real Estate Market is Long Gone,” published November 17, 2006 in Realty Times, provides the market’s current trends while attempting to refrain from saying, “I told you.”
The article begins with Savage explaining how crazy the United States real estate market was during the height of the boom. And as the years went on, he knew the boom couldn’t last much longer.
Around mid-2005 when it was apparent the boom was slowing down, someone asked Savage to provide Trump with some real estate advice in his most recent book.
“My advice to Mr. Trump was simple: Recognize that real estate, while a good investment over time, may require patience and staying power. Folks expecting to double their money in a year are in for a rude awakening if their investment was ill-timed. If property values dip or the rental market slows, the investor must have the ability to hold the investment long enough to overcome dips in the marketplace.”
The reason Savage mentions this is because he sent the information via e-mail to Trump’s associates via e-mail last year, and just last week received the book in the mail.
His warning made it on page 213.
While Savage was humbled by this achievement, he contacted his good friend Bill Barnes of Barnes Real Estate Company in Alexandria, Virginia to get his take on the current market.
“The number of days on the market for a new listing is approaching 90 days, compared with less than a week a couple of years ago.”
This has been frustrating sellers as they have undoubtedly come to realize their property will no longer sell for above market value, many do not expect a sale to take so long especially after reducing the asking price by tens of thousands of dollars.
“Home prices are indeed declining because houses are being priced at the same levels when the market was at its peak. Since there are far fewer buyers, sellers are coming off those peak prices because many sellers do not, for a variety of reasons, have the ability to hold onto their home indefinitely, waiting to get top price.”
Perhaps the most prevalent thing that can be said about the U.S. real estate market and just about every other market around the world is that there is a “herd mentality, meaning that when the market is hot just about everyone flocks to front doors looking to sign a contract and now that the market is slow, just about everyone is nervous to sign on anything.
The media hasn’t helped either, conjuring up reports that basically tell anyone conducting deals right now is stupid, which of course is not true.
Beware, real estate runs its course through cycles. The seller’s time will strike again.
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