[quote=earlyretirement]
I also just bought and know prices will head a bit lower but in investments it’s impossible to always catch the absolute highs and the absolute lows. [/quote]
That is the key concept here.
I can’t really agree with the idea that one should ignore the investment aspects of buying a home. For most people, the home is too big a portion of their net worth to NOT consider the investment implications. (Just think; if homes aren’t investments, why didn’t you just buy at the peak?)
So the problem I’m frequently seeing out there in reading the comments isn’t that people are paying attention to the investment aspects, which as far as I’m concerned is the responsible thing to do. The problem is that people are ignoring the crucial concept stated by earlyretirement, and they are getting angst-ridden over whether they catch the exact bottom.
Buying at the exact bottom or selling at the exact top shouldn’t even be the goal. If you achieved either of these two, it’s because you got lucky. The goal should be buying when something is undervalued (or fairly valued) and selling when it’s overvalued. If you buy something undervalued and it continues to get more undervalued for a while, you still did the right thing. You will almost certainly be rewarded for it eventually. In our uncertain world, all we can do is make a habit of buying at reasonable prices and selling when things get overpriced, and it will work out for us in aggregate and over time.
Now, houses aren’t dirt cheap or anything (they are about fairly valued in aggregate), and of course your mileage varies based on where you are buying and what deal you find. But in general, most people who are buying now have missed out on the crash portion of the decline. That’s huge. There is so much less risk now than there was. It’s not risk-free (nothing is) but the risk is so much lower for having waited this long, I just don’t think the angsting about whether you hit the exact bottom makes any sense. You avoided the biggest ever crash in housing… that is awesome and puts you in rare company. It should be good enough, because nobody knows when the exact bottom will be, so as I said, all you can do is avoid the high risk overvalued situations, which you have.
Also, as many have pointed out, the investment merits of getting a mortgage are huge. Housing may not be particularly cheap purchase price wise, but borrowing money is DIRT CHEAP. That is a situation where if we are not at the very bottom, we have got to be damned close it it. So as I’ve pointed out before, as long as you are a long-term holder and buy somewhere reasonable, you the ultra-cheap mortgage brings down the effective price of your already reasonable home. So now there is even less reason to worry about whether you hit the exact bottom.
Well I got off on a bit of a tangent there… my main point was to agree with earlyretirement that the goal shouldn’t be to hit the exact top or bottom; it should be to buy at a good price for buying and sell at a good price for selling, and not to worry so much about what happens in between.
