Why did it take you 2 years to realize the bottom had occured? This is like Alan Greenspan telling people you cannot recognize a bubble until AFTER it has popped. Perhaps back then people were relying on the median, which, as I said before, is a 1 – 2 year lagging indicator. Why are you so upset with my dictum? Timing a crawling asset’s price movement is not even related to making gold out of thin air, but more like making wool from sheep. It’s just a logical thing.
I think you are having such a hard time because we have been fed such poor information about real estate cycles. Nobody educates us about real estate cycles. They are infrequent, usually occuring only once every few decades, in a few cities. Few people have become experts at figuring them out. Furthermore, the MLS is relatively new, and doesn’t allow us to go back in time to look up the data we would really like, to prove our points.
I would love to chart months inventory from 1995 – 1996, and I am sure we would see a steady decrease in that measurement. I would also love to talk to realtors of that time, who would surely tell us that activity picked up in the summer of 1996, as investors came back in the market, and people got excited again about buying homes. During this time, the median would KEEP DROPPING, because the increase of activity in the low end would make the median pick up in the downward direction. As we know, the newspapers report the median. The median didn’t show prices picked up for 2 years, so that makes sense it would be 1998 before the public was aware of the shift.
Again, to prove all this, we would need the actual data. But from what we see today on the way down, my method definitely works on the way down. And that’s why I am so convinved, based on the logic, that it will work on the way up. I will use this method to time the real estate market for myself, and yes, if I had known about this method before May 2006, I would have made a ton of money in real estate. The market softened in 2004, so had I known about this method back in 2000, I would have been buying real estate until the March of 2004, when inventory was at 3,000 and started creeping up (months inventory went up). By June 04 inventory was 6,000, and by Sept 04 it was 12,000. Using months inventory, you would not be buying after March 04, selling instead.
I hope this has been helpful. The greatest disservice done to the public has been the use of the median, which has made everyone believe they cannot time the real estate market, when in reality, it is very easy to time. You just have to stop using the median.
