Buying low... in 2009?

[auror]

I'm sure you've heard of the phrase "buying low, selling high".

I've recently noticed that a few apartments are selling for around their 2002-2003 price. Makes me feel a bit sorry for their owners because they didn't see any capital gain for 6-7 years, I guess they obviously "bought high".

So if I were to buy that same IP in 2009, would I, too, be "buying high" given the recent price increases over the last 2 years?

I am dithering over whether to buy IP#1 this year or next year. We are leaning towards using a BA to do so (because I'm prone to paralysis-by-analysis --- evidently!). I know that it won't take long for a BA to find a suitable property, but prices seem quite high at the moment, I don't want to have engaged a BA at the time when prices had peaked.

Or should I really be focusing on "time in the market", not "timing the market"? (try telling that to the people who bought in 2002-3 and are now offloading their IPs with no cap growth)...

Cheers

 

[Propertunity]

I'm sure you've heard of the phrase "buying low, selling high".

Mmmm a couple a times

I've recently noticed that a few apartments are selling for around their 2002-2003 price. Makes me feel a bit sorry for their owners because they didn't see any capital gain for 6-7 years, I guess they obviously "bought high".

Yes, they purchased at what was, with the benefit of hindsight, a peak. If you 'feel sorry' for owners then please do not try to negotiate to buy real estate - or they'll walk all over you. I understand the sentiment but there is no room for emotions in investing.

So if I were to buy that same IP in 2009, would I, too, be "buying high" given the recent price increases over the last 2 years?

The peak was 6 years ago. Given that real estate cycles typically go from 7 - 12 years, if history is anything to go by, then we have max. 6 years till the next peak. So no, buying now is buying at a time where you saved 6 years worth of holding costs. The best time to buy was about 10 - 12 months ago. The second best time is now. Tomorrow you'll be paying more.

I am dithering over whether to buy IP#1 this year or next year. We are leaning towards using a BA to do so (because I'm prone to paralysis-by-analysis --- evidently!). I know that it won't take long for a BA to find a suitable property, but prices seem quite high at the moment, I don't want to have engaged a BA at the time when prices had peaked.

Some people need 'saving' from themselves. If you recognize that in yourself, then do whatever you need to, to get the job done. For example, I figured out many many years ago that I could not save. It was just boring and it got spent. But what I was good at was paying my bills on time. So I just got massively into debt for IPs and I have never missed a payment - and the IPs have done well, but I could never have done it by saving.

Or should I really be focusing on "time in the market", not "timing the market"? (try telling that to the people who bought in 2002-3 and are now offloading their IPs with no cap growth)...

People off-loading now are the ones we will be listening to in 3 years time at dinner parties (when all the re shows are back on TV - Hot Auctions and so forth, about how they missed all that growth by selling..dumb, dumb, dumb ....and dumber

The fact that they purchased at the peak (then) would all be forgotten if they hold until the next peak (which is not 2009 btw!). RE is very forgiving that way.

 

[auror]

I knew I could count on you to come back with a quick reply, Prop!

12 months ago was indeed a great time to buy - so glad we bought our PPOR then. It seems that prices have risen massively since then though! Which makes me a bit grumpy, but oh well, you win some, you lose some.

Because RE prices move in 7-12 year cycles I thought there was a chance that we were now in the peak of a 7 year cycle, you see. What makes you think it would be more like a 12 year cycle?

 

[oc1]

Because RE prices move in 7-12 year cycles I thought there was a chance that we were now in the peak of a 7 year cycle, you see. What makes you think it would be more like a 12 year cycle?

More like an 18 year cycle. Tends to be a lull in between.

Study the peaks and troughs of the property market....both here and the US.