Don't Follow the Herd

In today’s market, it’s challenging to know what to do or whom to listen to. One of the most well-known and oft-quoted experts on real estate in the country is Robert Shiller, Professor of Economics, Yale University and co-founder of the S&P Case-Shiller Price Index. He said:

“My teacher in graduate school at MIT in 1970, Charles Poor Kindleberger, who later wrote Manias, Panics, and Crashes, first convinced me of the social process that drives much of what goes on in speculative markets. One needs to think antisocially to excel in investing, to resist the patterns of thinking that seem mysteriously to arrive simultaneously in the minds of millions of people around the world. People do not trust their own judgment but go along with the crowd, even when they can see the truth. In a world populated with such people, there are investing opportunities for people who will make the effort and do the work to see clearly for themselves.”

We saw what happened the last few years. When some wanted to buy, everybody wanted to buy. Now that many are scared to buy, everybody seemingly is scared to buy. This is crazy – the time to buy is when nobody wants to buy because you’ll get the best price and terms with little competition.

The truth is, our local market will pick back up and price appreciation will re-appear. Few developers are breaking ground on new projects and most are focusing on completing what they’ve already begun. This lack of new development will lead to a shortage of homes and condominiums in just a few years. Some are informally predicting a housing shortage as soon as 2010-11. If and when that happens, prices will undoubtedly rise and buyers will be once again competing with many others and unable to get the terrific concessions they can today.

Don’t follow the herd. Today just might be the best possible time to buy the home you’ve always wanted at a fire-sale price, with a great interest rate, and few competitors. What are you waiting for?