As reported in a recent Blog, Carmel sales are showing much improved numbers. According to many market experts nationally and in California, the real estate markets appear to be forming a bottom. We see this locally on the Monterey Peninsula, especially in the lower price ranges. Are we at or near the bottom on the Monterey Peninsula?. It depends…
Our real estate markets are composed of individual sales. Although the evidence at this point is anecdotal, I am seeing many sales that look like a bottom for the individual properties. When we add these sales together, we have a market place, and 3 to 6 months from now we may be able to look back and confirm that yes, that was the turning point.
When real estate and stock markets begin to improve there are many mixed signals. Good news is followed by bad news. Trends start looking better then more bad news shows up. The cup is half full or half empty and buyers can find all sorts of reasons to support their preconceived notions about the market, good and bad. So how do buyers operate in this kind of mixed enviornment? Who are these buyers and how can they make decisions with so much conflicting information?
From my experience with buyers over 30 years, I have found in general there tend to be four types of buyer profiles in the market:
- Right house, right now – These buyers have a long-term perspective and do not worry about the ups and downs of the marketplace. If they find the right house, they enter the market and negotiate the best possible deal. These buyers tend to place a higher premium on time versus money, but paradoxically, these are also the best long-term investors because they enjoy the benefits of long term ownership.
- Cautious – These buyers tend to be moved by headlines versus their own time lines. Money is more important than time, with the best possible deal being the goal. These buyers tend to follow the herd and get hurt in two ways. When the herd says the market is going in the tank, they hesitate to break away so they miss opportunity. When the herd says the market is hot, they get caught up in the frenzy and pay too much.
- Market timer – These buyers actually wait for the market to reach a bottom. They are convinced that their crystal ball is on target. Unfortunately, markets do not ring a bell at the bottom and these buyers rarely do purchase and at some point are priced out of the market.
- Experienced – These buyers are contrarian thinkers and do exceptionally well by stepping away from the herd. They enjoy the business cycle and take advantage of opportunities that flow from having more choices, more buyer clout, and a quieter marketplace.
So what can we conclude from all the conflicting information? I think many of my buyers have it right when they say, “we may not be at the bottom, but it is close enough for us to enter the market and make a deal. As they say, “time will tell.”