The lessons as always: we can never outsmart the market, it will do what it will do. Yes, it may give us clues to what the market is going to do next, but after seven years of following the market, I can confidently say that we cannot put a fixed formula to its rise or fall.
Yes, even in hindsight.
We can talk all day about job growth and local economic factors that "directly" affect the local housing market, or how the Reno housing market is largely affected by neighboring San Francisco & Los Angeles housing markets, but the reality is the best we can do is make an educated guess based on historical figures AND to carefully compare it to unraveling present market data.
That's how I "called" the market bottom. Here's one of my posts back in 2009:
"Investors: If you are in the market for starter homes ($200,000 and below) know that median price may still go down but if cash flow is solid (mortgage is lower than rent) then it might be a good idea to start looking for prized investments."
And another post I wrote in February of 2009, "It is almost impossible not to see the Reno real estate market bottom if we're looking at the market":
"Just to be clear, the Reno real estate market hasn't reached a bottom yet. It's not to say that all markets are in this category. There is one that looks like it's headed for a bottom:South Reno under $250,000."
Here are three reasons why I was getting hopeful with our local real estate market around 2009:
(Note: the above link to RGJ's article that stated the 85% increase starting in 2012, the bottom actually hit around 2011.)
1.) Demand was consistently going up while supply was very low -- about 3 months MSI (months supply of inventory). Here's a screenshot from our Reno housing trends page:
2.) Even though median price was still depressed, sales were skyrocketing....
Median price 2009:
3.) Reno Sparks Increasing Sales 2009:
With those three factors and what we we were seeing working out in the field, we made an educated guess that the market was soon to move to positive territory.
And boy did it fly. Exceeding even my already optimistic expectations.
It is important to remember these lessons as we move to historical highs once again because a lot of so-called experts will be sharing their opinions yet again that are masked with half-truths.
Some will be talking about the flat wages here in Reno, somehow using that as a reason that home prices cannot continue to go up in its current rate with relatively low wages or how home prices will start to level off because mortgage interest rates will soon go up (as I once wrongfully predicted).
But it's hard to rule out the double digit yearly increase for another year or two. Why? Because when the market bottomed in 2010, there really was no concrete reason why it did. Local economy was really struggling (unemployment rate at 11%, residential AND commercial at historical lows, etc.)
It just did.
And now there are good reasons for some more hope -- even though risk is definitely higher than two years ago -- we're getting more higher paying jobs, the U.S economy is doing well, etc., So don't rule it out. But watch carefully.
I still see pretty good deals out there.
|Office Address:||985 Damonte Ranch Pkwy. Ste.110|
Disclaimer: All information in this Blog are deemed reliable but not guaranteed. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions."