What you described as a bottom can also occur in a dead cat bounce. People will think it can drop any lower, and now is the time to buy again. Some will start buying and cause the dead cat bounce. This bounce can possibly make you think it finally turn around. In stock market, dead cat bounce can last 1-2 months before it start turning down again. Since RE is much slower, my guess is it can bounce for many months in RE before it turn down again. That’s why it’s impossible to predict the bottom or top. That’s also the reason why many people sold in 2003. They start hearing about the bubble and believe it and sold. So, bottom line is, we all hope and try to time the bottom, but I’ve been humbled by the market too many times to think I can truly time the market. I would be happy to by when it’s makes financial sense to me, i.e. compare to rent, even if it drop some more.
Also, although good realtor will know more about the movement of the market than the average person, they still can’t have a feel of the whole market. They might know about 200-300 houses personally and know the sentiment of the buyers and sellers of those houses, that’s still only about 10% of the market. There’s a possibility that 10% of the market move in the wrong direction of the market and cause the dead cat bounce scenario.
