Can You Time The Market?

Photo by: dictybloke

I won't be surprised if this post gets nipped in the bud.

Whoever said that we can time the market is either a genius or dreaming. 

I am none of the above.   

But I am going to say it anyway:  I don't believe that we cannot time the real estate market.

Human nature rarely changes. History repeats itself.

I may not know when the exact market bottom will be, but history gives us great clues.
We know for example that once the real estate market reaches a bottom, it takes a while before it goes to normal appreciation (6-8%) this happens after a few years of breaking even to 2-5% appreciation. 

This is where I am coming from when I cringe when I hear people say, "Oh, I'll just wait for the market to come back up again before I sell my house" I just hope that they know that it may take a while for market cycles to reverse.

So how do we do it?First, know that the best we can do for now is have an educated guess.  We can never predict the exact time.  But you'll be surprised that that guess does not have to feel like your traversing a dark tunnel.

Take for example this graph of Reno's homes for sale,
How did I  'guess' that this was going to go up come summer months?
As you can see here. Notice that in the first graph that whenever we were in the summer months (the previous two years) inventory shot up.  It's not hard for me to reach the conclusion that the same thing will probably happen this coming summer(and that's whats happening right now).

And the best way to know that the market has bottomed is to wait until it bottoms out.  Make sure that it has, then move forward.  Sure, you didn't hit the exact bottom but by that time people are still unsure of the market that you will still be ahead of 80% of the majority.  Just don't wait too long before you act.

And lastly, I think we can predict the market when we continue to question and learn from the posts in this blog.  I really believe that.  That's my goal.