Its a Buyer's Market...but is it a good time to sell?

It has been said time and again that it is a buyer's market in real estate. That is certainly true as there are good values all over. On the other side of the equation, perhaps because of what is going on in the bigger picture of the economy and the stock market, perhaps now is a great time to be a seller?

This opinion by industry consultant, Matthew Ferarra is a very interesting take. I follow him and his commentary closely and this makes a lot of sense to me:


Here’s a question you’re unlikely to hear asked in real estate companies these days: Is the stock market drop a GOOD or BAD thing for the housing industry’s current slump? At a time when nobody seems to have the answers - not the Fed, not Congress, not the Detroit auto makers - to turn around the economy, could it be that the market itself has found a way to revive the housing industry and jump start the economy.

And all it takes is a good, old fashioned market crash?


So is the market’s crash this fall really good for selling real estate? Well, If you’re a true contrarian, and don’t just go with the knee-jerk reaction, you know the answer is ……. the Crash is good for real estate sales. Yes, that’s right: it’s GOOD!

Now, the reason:

What does it mean when the stock market loses 400 or 500 points in a day? It means somebody - a lot of somebodies, actually - is selling stock, right? That means they are turning STOCK into CASH.

Now, what are they going to do with that cash? Put it in:

a) the Bank?

b) more Stocks?

c) under their Pillow?

Answer: d) None of the Above!

It the economy is in worrisome times, and people are pulling out of Stocks, especially out of BANKING stocks (which are the big sell offs this week) they certainly aren’t just “depositing” the cash into accounts that could be at risk of disappearing with the bank itself. And they’re not buying more stock, because most stock is falling faster than inflation is devaluing the currency (yes, it’s hard to believe, considering our inflation is so high).

But savvy investors know exactly what they are doing. They are moving capital to safe havens. They are willing to take minimal growth - like fractional-interest Treasury bills - rather than continue to take a pounding in the stock markets. And they most certainly aren’t feeling “confident” in the FDIC, Treasury or Federal Reserve - so putting it in the bank is out, too.

Therefore, the ONLY sensible investment for the capital is …. drum roll, please….. real estate.

Here, I tore this off of the Wall Street Journal’s website:

...Every great fortune in history is based upon real estate. Most were started during recessions, too. In the last century, every boom has started with real estate - even the dot-com boom which relied upon rising real estate appreciations to create excess capital that could be diverted into other industries, notably technology)...

...Boomers are creating the cash to revive the housing industry from their stock sales - to be used as “downpayment” assistance to their children. As vacation homes. As rental property to substitute for their 401ks which won’t be enough to retire on in the future.

So don’t get down as the market keeps falling. It’s actually a sign that the CASH people need to buy homes is being GENERATED through commodity/equity sales of stock. If the BANKS won’t LEND it, then the capital has to come from somewhere. The markets always keep moving; the proof is the 5 million transactions we will STILL have this year. That’s the historical norm for three decades; and it means the market is fine...

To summarize:

1. Falling stock markets mean CASH is flowing OUT of Wall Street and onto Main Street.

2. Poor options in stocks, banking, corporate bonds and currencies mean the cash has to seek other returns.

3. Smart investors know real estate is ALWAYS going to give a long-term return (sorry, flippers).

4. Now it’s the REALTORS’ job to find the people who are cashing out (Boomers) and start talking to them about the SAFE HAVEN of real estate investing today.

Oh, and look! No need for government money!

Funny how the market works!