I sure wish I had a crystal ball. There are so many different opinions out there, and I'm talking about trusted individuals that I look up to for their wisdom. Yet they all have different views of the real estate market.
The Real Estate Predictions
I can't remember if it was our own National Association of REALTORS (NAR) or a large real estate publication that told us we would see a recovery in the 3rd quarter of 2008. That sure didn't happen. They pretty quickly changed their prediction to the 4th quarter which didn't ring true to me because in the Chicago area our 4th quarter is always slow due to weather, winter and the holidays. So when I read that I wasn't convinced and my gut feelings were correct. We are still seeing ever declining prices and less buyer activity.
Many have stated that once the election is over there will be a new spirit that will revitalize the economy and cause wary buyers to get off the fence and purchase a property with low prices and interest rates. Again, it's a very nice thought, but in my opinion this will not happen overnight. Changes take time and I do not see buyers running out and looking for homes just because we have a new President.
One "expert" predicts we'll see a recovery in 2009, another says 2010 and yet another tells us not to hold our breath because he doesn't foresee any kind of recovery for around 5 years. I realize real estate is local and many of these real estate forecasters might be talking about their own areas.
I believe we'll see the normal pent-up demand in the upcoming Spring after our winter season is over. However, I don't think it will outpace this year or last year. It will just feel busy because this year has been slow. I don't think we'll see a big recovery next year.
In fact, I'll be happy when we see stabilization. I truly feel predictions as far off as 5 years might be close as far as prices appreciating again. I think once we hit bottom, prices will level out and stay that way for a while. I just wish I knew when we're at bottom. You usually don't know that until prices start creeping up.
Investing In Real Estate Is Long-term
The bottom line is that purchasing a property should be considered a long-term investment. If you think you might be moving in a year or two you should probably rent instead. Wow - I've never said that! But I've felt it, even in the booming Seller's Market we were in. I was shocked at how often people were moving and how transient a society we had become. Maybe buyers need to view home ownership the way my parents and I viewed it, as a place to live and raise your kids and create many happy memories.
There won't be too many flippers in this market. But investors can still thrive; they will just have to hold onto their investment properties for the long term. And sellers just have to understand this market if they need to sell. If you're a few bucks too high your property will simply sit on the market and turn stagnant.