After The Bottom of The Market, Is It Still A Good Time To Buy?

Posted by Sean Matyja on Friday, July 26th, 2013 at 4:10pm.

Buying real estate after passing the bottom of the market can be one of the best times to buy property. Yes, if you missed the bottom of the market, you may have missed out on some of the best deals seen in a long, long time. But, when the market was at the bottom, nobody really knew that for sure. It was a time of major uncertainty. Let's take a quick look at the ups and downs we typically see in real estate market trends and we'll see why buying right after the market bottom can be such a good time to do so.

Across the country, we seem to have just recently passed the bottom of the market.

Below we have an illustrated chart showing the natural cycle and trending of a real estate market. The chart shows the increase of a market to it's peak, shown by point "A". We then see the downward trending of pricing all the way down to point "C", which is the absolute bottom of the market. Across the country, most markets are reporting that unit sales are up, and likewise, most markets are also showing increases in pricing. At this point, most Realtors would agree we are probably at point "D", shown in the chart below.

Why Is This Considered To Be A Safe Time To Buy Property?

We define point "D" as a "Safe" time to buy property. Why? Because after the bottom of the market passes, we typically see a time period where sales activity is good, and sales prices continue to rise with the renewed confidence in the market. We can remember back to a time in our market when pricing was dropping, and we were not sure how much longer the prices would continue to drop. Many of us Realtors knew we were getting close to the market bottom, or maybe already right at the bottom. But how could we truly say for sure? We couldn't - at least until we had the numbers to show we passed it. At that time we saw a few sophisticated, and educated buyers come into the market and they made some great deals. Whether smart or simply lucky, they have one thing in common. They took a calculated risk in a time of major uncertainty. For the buyers who purchased near the bottom, they are now being rewarded with the values of their property moving back up. For many people that were looking in the market back then, it was simply to uncertain, and viewed as too risky to make a purchase at the time.

"Whether smart or simply lucky, they have one thing in common. They took a calculated risk in a time of major uncertainty."

So now let's look to where we currently are in the real estate market cycle. By reviewing many of the posts and statistical reports from across the nation, it appears that for most real estate markets, we seem to have passed the bottom of the market. It's been a long, long wait to hear that good news! For many buyers who were looking at property a couple years ago, or even just one year ago, it was too uncertain and too risky to make a move. Buyers out looking today need to get over the fact that they may have missed out on a couple of incredible deals or steals. Sure they may pay a little more today, than what they could have bought for a year or two ago, but if they are looking to buy now, they can have a level of confidence in the market. If you bought two years ago, would you really have known if the market was going level off, or continue to sink for more years to come?

Today, the market is recovering. Today, the market has bumped up a little in price, but we still have a lot of room to go to get back to where we once were. Today, the activity is so strong in the market that there simply is no reason to expect prices to drop again. Why would pricing drop when activity is moving along so well? Today, looking at our chart above, we can say with good confidence that we are indeed at point "D".

If you have a particular area of interest, ask your local area expert Realtor to collect some data for you from their MLS. Together, you will be able to specifically evaluate where in the market your area of interest is. The best way to do that is with the help of a local Realtor who specializes in the area you are looking in. We are calling this timeframe a "safe" time to buy in a more generalized term, but check with your agent first. See what your Realtor has to say, they will be the expert for their market.

The Park City Real Estate Market

In Park City Utah, we are currently at about a 10% overall increase in pricing according to the statistics reports provided by Park City Board of Realtors® and MLS. But we are still off the peak of the market pricing by about 29%, so we do have a way to go to get back to where we once were. For Park City, I would absolutely say that we are at point "D' in the above chart. We have passed the bottom, and we have had enough time to measure an increase in pricing for almost all areas and all market segments. From the top of the market which was at about late 2007/early 2008 for Park City, it has been about six years to trend down from the market peak to the market bottom. The million dollar question now is "how long do we think it will take to get to the next market peak?" Will it be another six years to go back up? And when we do go back up, will we surpass the numbers we saw at the last peak? Only time will tell!

Sean Matyja - Realtor® / Associate Broker
Mobile: (435) 901-2158 | Email: sean@enjoyparkcity.com 

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