Following "conventional thinking" definitely has its merits. Knowing others have gone before you is comforting and therefore they can't ALL be wrong. Right? Not necessarily. In fact once the crowd hops onto a trend in the stock market, that is frequently a sign of a top in that market and thus those who jumped late on the band wagon will be the biggest losers.
Do you remember 2005, 2006 or even 2007? Real estate was everyone's darling and buyers were piling on top of each other, putting in competing bids and selling prices were often over listing prices particularly in the really hot markets.
Those who jumped into real estate in those years have found the rug and the floor pulled out from under them and if they had to sell, significant losses have often been the result. Values fell 30 percent from the very peak and anyone with less than that in equity (over an mortgage they may have taken to purchase) has had their equity wiped out. Not a happy condition. We have all read the stories of the sub-prime lending that was rampant and home buyers who bought with such mortgages lost their equity and the lenders also took a loss. However the buyers typically had virtually no dollar investment to begin with.
So, now the majority of buyers are holding back. What is the Contrarian approach in this market? That should be clear. Taking a Contrarian approach now could prove to be the very best opportunity to purchase a home we may see for years to come.
With steady economic indicators showing improvement in the employment numbers and hints of inflation in some parts of the economy (food yes, fuel no) it is pretty widely accepted that the Fed will begin raising rates this year and of course that means the cost of financing a home will rise.
Real estate prices have already started to rise in some markets and thus this rise in prices could trickle up to the Berkshires in due course. If you are contemplating purchasing I would think seriously about acting sooner than later so I could not only benefit by current soft housing prices but also pick up a long term mortgage at what may prove in 6-8 months to be historically low rates.
Being a Contrarian can definitely be a bit scary but often the most beneficial course of action.
Pittsfield.com welcomes critical, respectful dialogue. Name-calling, personal attacks, libel, slander or foul language is not allowed. All comments are reviewed before posting and will be deleted or edited as necessary.
Paul Harsch, president and founder of Harsch Associates, a Berkshire County based real estate brokerage firm, is a licensed real estate broker in Massachusetts, New York and Vermont, serving a diverse residential, business, commercial and land client base for 40 years. He has achieved personal career sales exceeding $131 million and company sales from 1979 will top $500 million in 2014. Harsch is a member of the Berkshire, Massachusetts, Southwestern Vermont and National associations of realtors, is a licensed Massachusetts real estate instructor and earned the CRB, CRS, GRI and CBI designations. Harsch is a 1969 graduate of Williams College.
To submit comments, questions or requests for future blog topics write him at paul@harschrealestate.com.
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Following "conventional thinking" definitely has its merits. Knowing others have gone before you is comforting and therefore they can't ALL be wrong. Right? Not necessarily. In fact once the crowd hops onto a trend in the stock market, that is frequently a sign of a top in that market and thus those who jumped late on the band wagon will be the biggest losers.