Understanding Changing Markets

A big challenge facing home buyers and home sellers today is understanding changing markets. My father once told me he invested in Otis Elevator because he went on the theory that what goes done must do up. My father never did all that well in the stock market.

I cannot speak to all market places such as stocks, or bonds, or commodities because that is not my specialty, however I have been a real estate agent and broker since 1983. And I have seen several changes in the real estate market place over that time period. And as a student of history I also am familiar with historical changes in real estate markets since 1908 when real estate agents started to form an association which is now known as the National Association of REALTORS.

The biggest challenge in understanding changing markets is to recognize signals in the economy and market that trigger such changes. In recent history we say real estate start to appreciate over a 6 year period. Although is was dramatic culminating to an all time high in 2005, it was gradual over the 6 year period. Those who sold in 2000 and 2001 could not have known that they could have gained larger sales if they waited to 2003 or 2004. It simply does not work that way. It takes the gradual sales to lead to the all time high. Those who bought in 2005 could not have known that they were buying at the peak of the real estate market and that after 2005 economic conditions began to change along with other factors and real estate values have declined from the all time high.

So it is also true with Otis Elevator that what goes up must come down. When purchasing real estate there is a check list everyone should ask themselves. First and foremost is why I want to purchase a property. Never ever should anyone purchase a property to "flip" the property for a gain. That is not to say that some have been lucky with such a risk. However today I am seeing more of the unlucky ones who took such a gamble. Real Estate in general is a long term investment, that will show a reasonable gain over time.

The reasons to purchase a home are:

Primary Home. Now when purchasing a primary home be sure of your job security, and that the location is good for going and coming home from work. Also be sure the home meets your needs. And always get a reliable home inspection, to be sure that what you are purchasing is not a pig in a poke.
Second Home. Now the American Dream. First the American Dream was to own a home. Now the American dream is to own a primary home and a vacation home. When purchasing a vacation home first and foremost make sure you can afford it. We can help you to qualify for purchasing a primary or second home at Jerry Mueller Real Estate. Also have a back up plan to rent the home when you are not using it as much as you thought you would. At Jerry Mueller Real Estate we have a wonderful rental center and we will be able you help you understand about all the various rental programs we have.
Investment Property. Investment property is for the purpose of getting a return on an investment, and having a viable tax shelter. And that some day in the future selling the home at a reasonable gain. Be sure that when you purchase an investment property the numbers work for you on the property you are purchasing. At Jerry Mueller Real Estate we will be able to calculate your cash flow analysis. The purpose of purchasing an investment property is to rent it at a reasonable rate of return.
Lots and Land. There is no tax advantage when purchasing lots or land, other than doing a 1031 exchange when selling. So it is always best to purchase lots and land for cash. When purchasing lots and land to build on, extreme caution must be taken. There are lots of factors that can increase building costs by not getting all the information about the property you are purchasing. At Jerry Mueller Real Estate we will be able to explain all the details about purchasing lots and land.

If you are a seller it is always a good idea to sell in a sellers market. And not to sell at the top of the market, however if you as a seller are able to dictate the price and terms of the sale and are satisfied with those terms then it is definitely a great time to sell. If you as a seller cannot dictate the price and terms then only sell if you have to. It is best to rent the property during this marketplace and wait until you can be satisfied with the results. If you are a buyer just the opposite. It is best to buy when as a buyer you can dictate the price and terms of a purchase. And if the property is in the location you want and the price and terms make sense with your financial condition and needs then you will be able to make your best deal. If you cannot buy in a buyers market then it is a good time to take a look at the market place in it's entirety. How long has the sellers market been in place, are prices not making sense and is the risk to high. These are all red flags that were becoming obvious in 2005 going into 2006. The sellers that wanted to sell during that period who had the most success, dropped their prices quicker then other sellers. That was a huge successful strategy that helped sellers get a reasonable gain and get out before prices fell more even below what they dropped to get their property sold. The other side for buyers is to ask how long has the market been declining. Especially for investment properties and second homes.

Probably the worst place to get your information is from the TV news. By the time they report anything it is already trailing the play. At Jerry Mueller Real Estate we will be able to give you all the information you need to buy and sell real estate. We will be able to offer you our signature very best personal and professional real estate services.

Jerry Mueller