Is It Time to Buy?

Is it time to buy?
This a common question for both homebuyers and investors. While we are no more able than anyone else to accurately forecast future market prices, we can provide some guidance with your decision to buy a property, or not to buy.

The approach to this question is somewhat different for homebuyers than it is for investors – it’s also easier. Homebuyers should buy when the time is right for them, and when they find a house they want to own and live in. The only exception might be for a buyer who only expected to hold the property for a short time, and if there was clear concern the market might not be appreciating in the short term.

This question about timing comes up more often with investors, and I guess that’s because one common investment strategy is to buy low and sell high. This advice sounds so logical most people don’t question it. The problem in executing such a strategy becomes evident when an investor is planning a commitment. Is the market now high or low?

It’s easy to look back in time and identify when markets were high or low, but looking forward is an inexact science, at best. We subscribe to the philosophy that investing is a long-term practice, and market timing should not be a factor in decision-making. This is for 2 reasons:

* It’s not possible to consistently predict future values with accuracy, and, more importantly
* It’s not necessary to predict short-term price movements to be a successful investor.

What’s more, a market timing strategy suggests there will be times when you want to be out of the market, which presents the challenge of where to put your money during those periods. Add the eroding effect of taxes that have to be paid when you realize a gain, and a long-term, buy and hold strategy starts to look better and better.

In the long run real values have always gone up. The market trend has been a series of successively higher highs. For those who say the market is at an all time high, and therefore suggest waiting, just look at all the times in the past when the market was at an all-time high, and later exceeded those highs with new highs. Numerous studies have shown that it’s more important to invest early and let time work for you, than trying to time investments to occur at the most opportune time.

We dislike saying it because it sounds so self-serving, but we believe it’s always time to invest.

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