Home Connection: When is the best time to invest in real estate?

Guest Commentary
March 9, 2008

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When confronted with the question of the best time to buy real estate, old-timers in the real estate business might have been tempted to respond with "right now" or "yesterday." The long-held three rules of real estate -- Location. Location. Location -- now have a companion. It goes like this: Timing. Timing. Timing. When to buy is a big issue in today's market.

Naturally, buyers are concerned about making a purchasing decision in a market cycle where prices are trending down. Here are questions that might give potential buyers some perspective:

» Are you concerned about prices in the long run or the short run?

» How long do you plan to own the property?

» How will you know when the market has "bottomed out"?

» Will you be comfortable buying in a rising market?

» Will you be comfortable buying in a market with fewer homes on the market?

» With fewer homes to choose from, will you have to compete harder?

» Will sellers be more difficult to deal with?

» Are you OK with the uncertainty of interest rates in the future?

» Which market cycle -- trending down or trending up -- is better for buyers?

» How important is it for you to buy the best quality real estate?

From past real estate cycles, we have learned that:

» Long-term investment in real estate is a primary contributor to individual net worth.

» Short-term real estate investments should be carefully researched in any market.

» We will know when the market has bottomed out by looking back and recognizing that the market has started to move up.

» Rising markets are characterized by declining inventory (fewer houses) and increasing demand (more buyers).

» Mortgage interest rates worldwide are 1.5 percent to 2 percent higher than in the United States.

No question, every buyer has unique circumstances that contribute to the right time to make investments like real estate. Is it possible that we find ourselves with a unique "window of opportunity" here in northern Colorado? Is the smart money buying or selling right now?

We know one thing for certain: We are fortunate to wake up each day in one of the most desirable areas of our great country.

Don Tennessen is the broker/manager of The Group, Inc. and serves on the board of directors of the Greeley Area Realtor Association.