I am willing to be corrected in my assertion that you *can* time the bottom in a real estate market, because it moves slowly and is fairly illiquid. It takes many months for the trend to turn, not minutes as in the stock market.
Please give me data to correct my assertions below.
This is how I plan to time the market. I will watch the data and get the “beat on the street” from a realtor. Two sources: data and anecdotes.
Realtors will be the first to know when the market has turned, when investors come in to start buying properties, and bubble sitters are no longer sitters, but buyers.
Data: months inventory and HAI are the two metrics I will watch. Inventory will fall as sales pick up. Median is a 1-year to 2-year lagging indicator. Secondary, DOM should decrease; the true DOM, and a realtor can tell you if that his happening. Reductions should be fewer, showings will pick up.
Diego Mamani, what data do you have to show that months inventory was falling, then turning up again? Prices are volatile, and can shift a few percent from month to month, so I wouldn’t use prices. Real estate seems to be a slow moving ship. It doesn’t bounce around like stocks do.
From ASU’s report: “As the housing market slows, the entry level sector basically disappears, while the move- up markets garner a larger share of the remaining activity. Thus, it is not unusual to see median prices to be fairly stable or even increase as the move-up market works to be satisfied.” I believe it will work the same in reverse, when the market picks up again. The entry level sector picks up first, and median prices will resume a larger decline.
In conclusion, I believe I can time the real estate market, and make my purchase within a few percent *after* the bottom. I will wait for the bottom to be behind me, but with RE moving so slow, I can wait for 2-3 months, and will have missed less than 5% of the move up.
