Can we time the market on housing price?

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physixfan
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Can we time the market on housing price?

Post by physixfan »

I read some articles these days about investing in real estates, and one of his opinions is very interesting: you can’t time the market on the stock market because of high liquidity; but you can time the market on the real estate market because buying/selling a house is a long expensive process and also some of the people are forced to sell a house when laid off. He says the best timing to buy houses is after a dip occurred and when the house price starts to rise. The upward trend will keep until a cycle (of about 10 years) ends. What’s Bogleheads’ opinion about this argument?
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Cubicle
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Re: Can we time the market on housing price?

Post by Cubicle »

I view real estate like the stock market. Yes it went down. But is it done going down? Is the rise you're seeing right this instance just a fluke?

I've seen luck in real estate. Not repeatable performances.
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runner3081
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Re: Can we time the market on housing price?

Post by runner3081 »

Of course you can... with pure luck! Unless you have a crystal ball? :)
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firebirdparts
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Re: Can we time the market on housing price?

Post by firebirdparts »

You always know when it’s high and when it’s been going lower. The only thing you don’t know is the future.
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flaccidsteele
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Re: Can we time the market on housing price?

Post by flaccidsteele »

physixfan wrote: Tue Dec 31, 2019 11:50 pm I read some articles these days about investing in real estates, and one of his opinions is very interesting: you can’t time the market on the stock market because of high liquidity; but you can time the market on the real estate market because buying/selling a house is a long expensive process and also some of the people are forced to sell a house when laid off. He says the best timing to buy houses is after a dip occurred and when the house price starts to rise. The upward trend will keep until a cycle (of about 10 years) ends. What’s Bogleheads’ opinion about this argument?
Yes. Just like the stock market, you can time the real estate market

The problem is that everybody gets market timing wrong

Market timing is not about predicting anything

When a US market goes down, it always recovers. Always. It’s never different this time

When a US market goes down, you increase buying

Rinse and repeat

I’ve enjoyed buying during US stock and real estate market downturns
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
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Re: Can we time the market on housing price?

Post by flaccidsteele »

Cubicle wrote: Wed Jan 01, 2020 12:03 am I view real estate like the stock market. Yes it went down. But is it done going down? Is the rise you're seeing right this instance just a fluke?

I've seen luck in real estate. Not repeatable performances.
If you haven’t seen repeatable performances in real estate, you’ve been around the wrong people
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat
Scooter57
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Re: Can we time the market on housing price?

Post by Scooter57 »

I timed the real estate market VERY well after observing one real estate meltdown (in TX in the early 1980s) and seeing another one coming in New England in 1989 and taking profits on a home purchase I had made 4 years before when the price had more than doubled.

I saw the 2008 meltdown coming, too, and when I bought a home in 2003 I bought it because I wanted to live there and knew that even if it didn't rise in price over a long period of time, it would still be cheaper than renting. That has turned out to be exactly the case in my local market.

To time real estate you have to know your local market VERY well, because real estate is totally local. You have to follow pricing and closings and have a very good sense for how your local economy works and what factors could affect it over the next decade. You have to be aware of demographics and what people earn, etc. etc. I have followed real estate for decades because it fascinates me, but I have not attempted to profit on that knowlege, only when I saw a windfall, to take it.

There are golden opportunities that come along at times in real estate where you can make a lot of money if you know what you are doing. But few people know what they are doing. People we knew thought I was crazy to sell our home in 1989. It was one of the smartest decisions I ever made.
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unclescrooge
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Re: Can we time the market on housing price?

Post by unclescrooge »

Scooter57 wrote: Wed Jan 01, 2020 1:24 pm I timed the real estate market VERY well after observing one real estate meltdown (in TX in the early 1980s) and seeing another one coming in New England in 1989 and taking profits on a home purchase I had made 4 years before when the price had more than doubled.

I saw the 2008 meltdown coming, too, and when I bought a home in 2003 I bought it because I wanted to live there and knew that even if it didn't rise in price over a long period of time, it would still be cheaper than renting. That has turned out to be exactly the case in my local market.

To time real estate you have to know your local market VERY well, because real estate is totally local. You have to follow pricing and closings and have a very good sense for how your local economy works and what factors could affect it over the next decade. You have to be aware of demographics and what people earn, etc. etc. I have followed real estate for decades because it fascinates me, but I have not attempted to profit on that knowlege, only when I saw a windfall, to take it.

There are golden opportunities that come along at times in real estate where you can make a lot of money if you know what you are doing. But few people know what they are doing. People we knew thought I was crazy to sell our home in 1989. It was one of the smartest decisions I ever made.
+1
I too have had terrific luck timing real estate. I sold my condo in 2005 and nearly all of my rentals in 2006 for very close to peak pricing.

But I've also seen people sell their homes in the Bay Area in 2015 waiting for a correction to buy back in.
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rocket354
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Re: Can we time the market on housing price?

Post by rocket354 »

The upward trend will keep until a cycle (of about 10 years) ends.
I've seen similar quotes/comments, and the length of the cycle always seems to correspond to whatever time has elapsed since the last downswing. For example, a few years ago I kept reading about 7-year cycles.

It is probably more likely that one can "time" the real estate market than the stock market, but all the same market-timing caveats still apply. How do you know that when the market next goes down, it will go down to less than what it is today? What will you have cost yourself in the interim? As others have mentioned, people in northern California have been "timing the market" to their detriment for years.

Ultimately no one knows for sure, and some get lucky. But many--generally the quieter ones--get unlucky.
Xrayman69
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Re: Can we time the market on housing price?

Post by Xrayman69 »

Scooter57 wrote: Wed Jan 01, 2020 1:24 pm I timed the real estate market VERY well after observing one real estate meltdown (in TX in the early 1980s) and seeing another one coming in New England in 1989 and taking profits on a home purchase I had made 4 years before when the price had more than doubled.

I saw the 2008 meltdown coming, too, and when I bought a home in 2003 I bought it because I wanted to live there and knew that even if it didn't rise in price over a long period of time, it would still be cheaper than renting. That has turned out to be exactly the case in my local market.

To time real estate you have to know your local market VERY well, because real estate is totally local. You have to follow pricing and closings and have a very good sense for how your local economy works and what factors could affect it over the next decade. You have to be aware of demographics and what people earn, etc. etc. I have followed real estate for decades because it fascinates me, but I have not attempted to profit on that knowlege, only when I saw a windfall, to take it.

There are golden opportunities that come along at times in real estate where you can make a lot of money if you know what you are doing. But few people know what they are doing. People we knew thought I was crazy to sell our home in 1989. It was one of the smartest decisions I ever made.
Mostly agree.

OP, what is your goal with “timing” the real estate market? Is the purpose for shelter and having a roof over your head - in this circumstance it will be one of your biggest investments in life and probably a bit more conservative in decision making. Conservative in the sense not too much of your monthly income, terms of loan, safety net in case your income drops. Buying home in my opinion is different then “investing” in real estate for which the goal is to make a profit.

Having a shelter is an absolute requirement and thus minimize risk and stick with the principle of living below your means.

Investing in real estate I do feel there are opportunities to have an “edge”. This requires not only knowledge but resources/capital to be able to take advantage of opportunities -purchasing distressed properties or buildings. Having an infrastructure to restore or manage properties efficiently based upon sound business principles. Having knowledge and having relationships with contractors or construction teams and scale along a large capital base does “permit” (pun intended) those with the ability and resources to have an “advantage” and thus increase likelihood for success.

One indicator I have seen in the past is when I see and hear a lot about how individuals can buy and flip homes with no money down, no experience, and doing it part time. If this occurs inventory goes down and the price goes up and decreases the profit margins. When the margins are not sufficient for too many then the music stops and people can get hurt. Real estate, development, and property management is not an easy business during bad times. As Buffett says be scared when too many are greedy, be greedy (and have the capital) when others are scared. But his being greedy is based upon having essentially infinite capital and probably a superior knowledge/relationship advantage.

Good luck in “timing” the market. It’s not liquid and typically much larger priced unit with limited diversity. Most don’t buy 10-20 homes or units in different communities to diversity nor have the knowledge to understand and appreciate the real estate market.

REITS is an alternative that may have lower risk and require less effort.
LittleMaggieMae
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Re: Can we time the market on housing price?

Post by LittleMaggieMae »

I don't think you can (or should) "time the housing market". I happened to be in a great place financially when the housing market crashed (nearly paid off primary home, stable job, high savings/investing rate) and was able to take advantage of the low housing prices at the bottom of the market (bought my first rental property) and then caught the end of the bottom of the housing market a couple years later in another area and bought another rental property. My ability to buy was based more on my financial stability and my long term goals - rather than it was the 'bottom of the market'.

Just bought another "investment property" at what I feel is the "top of the market that's going to flatten out/fall a little before it just kinda goes flat for a long time". BUT, it fits in my budget and time frame (will own it 5 to 10 years probably longer). I got an interest rate on the mortgage I was very satisfied with. The house is in the right neighborhood with good placement in the neighborhood (not on a corner I don't like corner houses, not on a busy street, not backed up to a strip mall or business, etc), it's the right size with good bones, it has all the right parts (room sizes, garage size, yard size, no crappy remodels/not sold by a flipper, it's not 'gray-ish") needs the "right amount" of DIY fixups. It was and will continue to be a nice comfortable home.

Market timing (as in where do I think housing prices are going to go in the area I am buying) was part of the purchase decision but the other things (above) were weighted more.

If you are all about buying low and selling high - then maybe a REIT is the way to go rather than individual properties.
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Re: Can we time the market on housing price?

Post by phxjcc »

Scooter57 wrote: Wed Jan 01, 2020 1:24 pm I timed the real estate market VERY well after observing one real estate meltdown (in TX in the early 1980s) and seeing another one coming in New England in 1989 and taking profits on a home purchase I had made 4 years before when the price had more than doubled.

I saw the 2008 meltdown coming, too, and when I bought a home in 2003 I bought it because I wanted to live there and knew that even if it didn't rise in price over a long period of time, it would still be cheaper than renting. That has turned out to be exactly the case in my local market.

To time real estate you have to know your local market VERY well, because real estate is totally local. You have to follow pricing and closings and have a very good sense for how your local economy works and what factors could affect it over the next decade. You have to be aware of demographics and what people earn, etc. etc. I have followed real estate for decades because it fascinates me, but I have not attempted to profit on that knowlege, only when I saw a windfall, to take it.

There are golden opportunities that come along at times in real estate where you can make a lot of money if you know what you are doing. But few people know what they are doing. People we knew thought I was crazy to sell our home in 1989. It was one of the smartest decisions I ever made.
+2

Every pricing and cost factor about the RE market is local.

Also, The best advice anyone ever gave me is: don't buy "just a house". I.e., it has to have something about it that makes it compelling for a future buyer to want it. View, schools, lot size, zoning, kid safe/traffic, architect/builder, neighborhood, town name/ZIP, SOMETHING so that when the market goes in the crapper, this property will rise above the rest---IOW it maintains its appeal and THAT is your exit strategy, just in case. The more factors that you can combine the greater the appreciation will be during good times and the lesser the deflation in down markets.
Bastiat
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Re: Can we time the market on housing price?

Post by Bastiat »

Do you know something the rest of the market participants don't? If the answer is no, I don't see how you could time the market.

I think what you describe is more akin to finding value in the RE market, which is easier than in the stock market. The reasons for this are it's by definition local and far less liquid.

In other words, you can find better value in the real estate market, but you wont have any more luck timing the market.
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Re: Can we time the market on housing price?

Post by Jags4186 »

physixfan wrote: Tue Dec 31, 2019 11:50 pm I read some articles these days about investing in real estates, and one of his opinions is very interesting: you can’t time the market on the stock market because of high liquidity; but you can time the market on the real estate market because buying/selling a house is a long expensive process and also some of the people are forced to sell a house when laid off. He says the best timing to buy houses is after a dip occurred and when the house price starts to rise. The upward trend will keep until a cycle (of about 10 years) ends. What’s Bogleheads’ opinion about this argument?
Real estate is local. The country overall could be in an upward trend but the local market may be dynamic, stagnant, or declining. A company that employs many people in the town may close or move or announce plans to expand. A new train station could be announced, delayed, or canceled. A chemical leak in the area could ruin the desirability of the town. Funding to build brand new state of the art schools could increase desirability.

There is money to be made in real estate. As opposed to stock picking, you can learn how to become a successful real estate investor. But that generally means buying real estate for rental purposes and it comes with the added distinction of being a part-time/full-time job. There is no doubt in my mind that if you had the proper education and discipline you could do well in real estate. The same cannot be said for stock pickers/fund managers. (although depending on how you look at it, the person who became a fund manager is very successful, regardless of whether or not their fund is successful for the investors.)
Vanguard Fan 1367
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Re: Can we time the market on housing price?

Post by Vanguard Fan 1367 »

physixfan wrote: Tue Dec 31, 2019 11:50 pm I read some articles these days about investing in real estates, and one of his opinions is very interesting: you can’t time the market on the stock market because of high liquidity; but you can time the market on the real estate market because buying/selling a house is a long expensive process and also some of the people are forced to sell a house when laid off. He says the best timing to buy houses is after a dip occurred and when the house price starts to rise. The upward trend will keep until a cycle (of about 10 years) ends. What’s Bogleheads’ opinion about this argument?
I happened to want a couple of houses after the real estate crash here in Florida in 2008 or so. I figured that would be a good time to buy them and one of them sold later for enough more than I paid for it to make me happy. The other one I believe has increased in value nicely enough that I am happy with that also.

I agree with Jack Bogle who doesn't know anyone who can time the market and doesn't know anyone who knows anyone who can time the market. At the same time he was around for many market drops and thought that after the 2008 Stock drop was probably a good time to buy.

So I wouldn't necessarily recommend waiting till a big drop in real estate prices but if one happens and you want to buy a house it might be something to consider.
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Scooter57
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Re: Can we time the market on housing price?

Post by Scooter57 »

Vanguard Fan 1367 wrote: Wed Jan 01, 2020 3:42 pm
So I wouldn't necessarily recommend waiting till a big drop in real estate prices but if one happens and you want to buy a house it might be something to consider.
The worst time to buy a house is after a big market drop. My experience has been that after a dramatic drop people with nice homes hesitate to put them on the market because they have lost so much perceived value. If the drop is widespread as happened in 2008 people may fear they can't get a mortgage for a new home, and that might be true, so people who might have sold homes at retirement hold on to them.

So I have seen on the market after a big drop is foreclosures, often ones where the departing owner trashed the place, along with homes that have been put on the market due to forced sales from divorces or deaths. Builders of new homes may prefer to rent rather than sell during a downturn.

After we sold our home in 1989, we were able to rent a beautiful brand new home in a top school district for less than the interest the CD we had bought with our invested home proceeds was generating. The developer was still renting the whole development 5 years later when we finally moved out as prices stagnated for many years in that region due to corporate downsizing in its major industry. Renting a new home at a reasonable price was wonderful. No maintenance costs, no property taxes, and when something didn't work, I just called the owner's office. Not a bad way to live!

Re something posted upthread: It is really hard to know whether what attracts you now will make your home easier to sell in the future. There's not much call for homes with ethernet in every room right now, but that was hot years ago. There's been backlash against McMansions in my region and I see them sitting on the market for a long time even in an active real estate market. Those fancy kitchens go out of style, too, and the fancier they are, the more they will cost you to upgrade.

The easiest homes to sell are those that people with the median family income in your area can afford to finance, and you will do better NOT making those expensive upgrades yourself but offering a lower price so the buyer can make the upgrades themselves to their own tastes in a few years when they have saved up more money.

The more expensive a home, the more you are competing with new homes. When you get into the really expensive home range--unique architected homes on large acreage, at least in our region, homes are extremely hard to sell because people with that kind of money want hire their own architect and build their own white elephant.
Fundhunter
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Re: Can we time the market on housing price?

Post by Fundhunter »

What jumps out at me from the original post is the quoted phrase: "...when the house price starts to rise". Kind of like "when the bear market is turning around and stock prices are going up". Those statements, if true, require a crystal ball, as we never know when prices "are rising", only that they have risen in the recent past. They could go down tomorrow. I own my residence, but think market timing is hogwash, whether in real estate or stock and bond markets.
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JoMoney
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Re: Can we time the market on housing price?

Post by JoMoney »

Real estate is a specialized field, and the market can be very unique in specific areas.
Like in other fields, there are some 'experts' that have better information and experience. While I'm hesitant to say they can "time the market" knowing where the short-term prices are headed, they may have a better take on prices, what the costs and potential income streams for a rental may be, know where to look for or negotiate 'bargains', know what big pit-falls/money traps to avoid.

But broadly speaking, No - the market participants can't beat themselves and the aggregate performance will be the market "average". To the extent some do 'beat the market', skilled professionals with better positions and information (or maybe just lucky) will garner any above average returns at the expense of those with less information (or maybe unlucky). Unfortunately, we can't 'average' a home purchase over time, making regular purchases or rebalancing at various price levels.
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Re: Can we time the market on housing price?

Post by kimura king »

If you are selling a house and buying a house in the same market then it will make no difference how well you time it. Also, for me at least, it is enough of a challenge to find a house I like for a price I like. Making it any more complex than that means I would have spend too much time looking. I guess if you live in an apartment, can break the lease whenever, and you have a down payment ready, you could wait for house prices to dip if you want. Personally, I'd just buy when you are ready.
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Re: Can we time the market on housing price?

Post by watchnerd »

physixfan wrote: Tue Dec 31, 2019 11:50 pm I read some articles these days about investing in real estates, and one of his opinions is very interesting: you can’t time the market on the stock market because of high liquidity; but you can time the market on the real estate market because buying/selling a house is a long expensive process and also some of the people are forced to sell a house when laid off. He says the best timing to buy houses is after a dip occurred and when the house price starts to rise. The upward trend will keep until a cycle (of about 10 years) ends. What’s Bogleheads’ opinion about this argument?
It worked for us.

Bought a house in Bay Area in 2010, sold it in 2017 for $1.1 million profit. Moved to WA, bought a house for the same price as what I bought in 2010 with cash, put the remaining profits in the stock market. It worked nicely.
70% Global Market Weight Equities | 15% Long Treasuries 15% short TIPS & cash || RSU + ESPP
Independent George
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Re: Can we time the market on housing price?

Post by Independent George »

Anecdotally, I think there are a lot more inefficiencies in the housing market that can be exploited by smart individuals than there are in stocks. It's much more than just market timing, however - it depends on having very good understanding of the local market which includes, but is not limited to, knowing when the market is hot. There is a lot of money to be made in real estate, but not as a passive investment.
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Re: Can we time the market on housing price?

Post by Scooter57 »

I saw an interesting story on Bloomberg that illustrates just how local real estate is. It said that housing in Connecticut is still 17% below the 2006 peak. So out of curiosity, I went to see what the home I sold in 1989 would list at today.

it hasn't sold for quite a while but Zillow prices it about $240,000. I had it listed for $210,000 in 1988 and as the market started to soften I dropped the price and sold it for $185,000 right before prices crashed. Within weeks of my sale and it's resale value had dropped to less than $130,000. If it were to sell for $240,000 today, the owner would net $225,000 after the real estate broker's commission. So that house has appreciated at most a whopping $40,600 over 31 years.

This tells you how misleading averages are when talking about home prices. At the time we put this house on the market, we were thinking of relocating to Seattle where $200,000 would have bought us a very nice suburban home. By the time we sold the house, Seattle real estate had risen so far we couldn't afford to move there. The 1988 $200,000 home in the Seattle neighborhoods we were looking at are now near $1,000,000.
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Re: Can we time the market on housing price?

Post by Vanguard Fan 1367 »

Scooter57 wrote: Tue Jan 07, 2020 10:52 am I saw an interesting story on Bloomberg that illustrates just how local real estate is. It said that housing in Connecticut is still 17% below the 2006 peak. So out of curiosity, I went to see what the home I sold in 1989 would list at today.

it hasn't sold for quite a while but Zillow prices it about $240,000. I had it listed for $210,000 in 1988 and as the market started to soften I dropped the price and sold it for $185,000 right before prices crashed. Within weeks of my sale and it's resale value had dropped to less than $130,000. If it were to sell for $240,000 today, the owner would net $225,000 after the real estate broker's commission. So that house has appreciated at most a whopping $40,600 over 31 years.

This tells you how misleading averages are when talking about home prices. At the time we put this house on the market, we were thinking of relocating to Seattle where $200,000 would have bought us a very nice suburban home. By the time we sold the house, Seattle real estate had risen so far we couldn't afford to move there. The 1988 $200,000 home in the Seattle neighborhoods we were looking at are now near $1,000,000.
My experience with "just how local real estate is" has been urban versus rural. I live in a rural part of Florida and real estate gains have been pretty humble. I am wondering if your low appreciating Connecticut is in a rural or small town area versus a desirable large urban area location.
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Re: Can we time the market on housing price?

Post by rbaldini »

I think the argument is cogent, though I don't know if it's correct. The stock market is unpredictable because people can quickly buy and sell at low cost, and thereby rapidly erase any easily predictable changes. That is, if everyone "knows" (or strongly believes) that stock A is going up this weekend, people will buy and sell now, driving up the price *right now*, and therefore erasing the expectation it will go up this weekend.

Houses aren't quite like that. Even if everyone "knows" that the houses in an area are going to increase in price this summer, it's not so easy to actually take advantage of that fact. It's a lot of work to buy and sell real estate, with high costs of doing business. The "known" effects can't be taken advantage of, so they don't get erased. The knowledge isn't particularly profitable, so in the end it's no better.

I've toyed with machine learning models that predict stock prices and housing prices. Stocks are very unpredictable, like a random walk, but the housing market data did appear to have predictable trends that weren't just a matter of chance.

The important point, though, is that neither market provides "easy money". House prices might be *somewhat* predictable, but there's not much you can do about it.
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Re: Can we time the market on housing price?

Post by Independent George »

I think it's much more than just knowing the trends on housing prices - it's knowing the ins & outs of the local economy. You can see the difference with different real estate agents - some folks just really, really know their business, and can move their inventory quickly because they know what the demand is. The same is almost certainly true with developers and investors who have to understand the intricacies of the zoning, permitting, and construction business as well as the market demand. Meanwhile, the flippers and speculators got wiped out during the crash. Unlike picking stocks, success in real estate seems to depend more on skill than luck.
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Re: Can we time the market on housing price?

Post by Lee_WSP »

You have to live somewhere. How can you possibly time that? Unless you've got some alternative living arrangement.

Either you are renting and if you try to buy the dip, you may or may not be renting for a lot longer than you want to, and the dip may or may not be lower or higher than the price today.

Or, you own a home and the "trade-in" value of the current house also dips with the market.

If buying a rental property, I would agree that it may be wise to buy during a buyer's market.
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Re: Can we time the market on housing price?

Post by Scooter57 »

Vanguard Fan 1367 wrote: Tue Jan 07, 2020 11:16 am
My experience with "just how local real estate is" has been urban versus rural. I live in a rural part of Florida and real estate gains have been pretty humble. I am wondering if your low appreciating Connecticut is in a rural or small town area versus a desirable large urban area location.
That house was in a convenient Hartford suburb close to what had been the major employers back in the 1980s, the insurers and some defense contractors. But the insurers have cut way back on employees and outsourced their once-huge IT departments. The defense contractors have merged with other companies and consolidated operations elsewhere. The jobs that maintained housing prices have gone and hence those prices have stagnated.

In our nearest rural college town only an hour north of Hartford, prices have risen this past year to, at times, ridiculous amounts because the university is expanding and hiring, while a lot of retirees who attended the colleges in this area and loved living here want to retire here. My home is another half hour north and prices here are pretty flat because our school district isn't considered "good" in realtor-speak, which translates to "white and rich" as it so often does.
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Re: Can we time the market on housing price?

Post by DB2 »

Speaking of timing, what about timing interest rates? I recently locked down a 3.5% fixed for a 20-year mortgage re-fi ($250K mortgage) a couple of weeks ago, but I see 3.37% is already appearing. And then I got thinking about the possibility of the fed cutting again this year...I'm thinking of just waiting it out through the year. Does anyone recall how low a 20-year fixed refi went for back when rates hit an all time low several years ago?
WhiteMaxima
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Re: Can we time the market on housing price?

Post by WhiteMaxima »

The only time you catch is the season effect. Usually start in Fall till Winter when the market slows down. usually it is a single digit discount. But as market slows, a lot seller pull their house off the market.
ohai
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Re: Can we time the market on housing price?

Post by ohai »

House prices are very sticky - "market timing" is a function of years normally. At that scale, your life stage matters more than house cost.

Market timing in houses has probably more to do with your opportunity cost, i.e. other uses of money. Would you have taken $200k from your stock portfolio in December 2018 to pay a downpayment, or would you have left it in stocks and paid in January 2019?
aristotelian
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Re: Can we time the market on housing price?

Post by aristotelian »

The only time this really matters is when going from renting to owning or owning to renting. Otherwise, you are moving from one home to another. Any timing premium you get from selling in a seller's market is going to be offset by having to buy at the same time.
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physixfan
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Re: Can we time the market on housing price?

Post by physixfan »

physixfan wrote: Tue Dec 31, 2019 11:50 pm I read some articles these days about investing in real estates, and one of his opinions is very interesting: you can’t time the market on the stock market because of high liquidity; but you can time the market on the real estate market because buying/selling a house is a long expensive process and also some of the people are forced to sell a house when laid off. He says the best timing to buy houses is after a dip occurred and when the house price starts to rise. The upward trend will keep until a cycle (of about 10 years) ends. What’s Bogleheads’ opinion about this argument?
So now we have this coronavirus recession coming. I my opinion, house price is going to go down in a few months, because the unemployment rate is going to rise to a significant level. Is it a good market timing strategy to wait for a few months and buy houses when the unemployment rate is sky-high?
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sergeant
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Re: Can we time the market on housing price?

Post by sergeant »

physixfan wrote: Sat Mar 14, 2020 10:29 pm
physixfan wrote: Tue Dec 31, 2019 11:50 pm I read some articles these days about investing in real estates, and one of his opinions is very interesting: you can’t time the market on the stock market because of high liquidity; but you can time the market on the real estate market because buying/selling a house is a long expensive process and also some of the people are forced to sell a house when laid off. He says the best timing to buy houses is after a dip occurred and when the house price starts to rise. The upward trend will keep until a cycle (of about 10 years) ends. What’s Bogleheads’ opinion about this argument?
So now we have this coronavirus recession coming. I my opinion, house price is going to go down in a few months, because the unemployment rate is going to rise to a significant level. Is it a good market timing strategy to wait for a few months and buy houses when the unemployment rate is sky-high?
A recession may be coming. Housing prices may go down. The unemployment rate may reach significant levels. If all these things do happen and interest rates stay the same or fall and you are in no danger of becoming unemployed it probably makes sense to wait. I have no idea if any of those presumptions will happen.
AA- 20+ Years of Expenses Fixed Income/The remainder in Equities.
MoneyMarathon
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Re: Can we time the market on housing price?

Post by MoneyMarathon »

physixfan wrote: Tue Dec 31, 2019 11:50 pm What’s Bogleheads’ opinion about this argument?
In the recent past, the bear markets in Bay Area housing prices haven't been anything to get too excited about.

Image

Past performance, etc., etc., but so far it's been mostly an unfulfilled hope to delay a purchase for the primary reason of wanting a lower price. Not guessing the future, just stating facts about how this has worked out.

You could argue that the market has more selection when there are lots of sellers, so you could improve on some aspects of home buying by getting things that the market doesn't value as much as you do. Might also be a less stressful & disappointing bidding process.

Then again, since lower employment tends to come after a recession starts, might be worth giving it a year or two if you're in one, for people to get laid off / cry uncle / get out of their houses.
anoop
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Re: Can we time the market on housing price?

Post by anoop »

Follow calculatedriskblog.com. If it is indeed possible to do it, then he is doing it. He got the bottom right during the 2008/2009 meltdown to the month for both inventory and prices.
https://www.calculatedriskblog.com/2012 ... -here.html
There's a seasonality aspect to house prices, so you have to watch out for that.
glorat
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Re: Can we time the market on housing price?

Post by glorat »

Bastiat wrote: Wed Jan 01, 2020 3:10 pm Do you know something the rest of the market participants don't? If the answer is no, I don't see how you could time the market.

I think what you describe is more akin to finding value in the RE market, which is easier than in the stock market. The reasons for this are it's by definition local and far less liquid.

In other words, you can find better value in the real estate market, but you wont have any more luck timing the market.
This! It's more about value than timing. I know people who have consistently made money in the real estate market by having much better local information than the other buyers/sellers
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