Timing The Market is Like Timing The Weather

I just returned from a trip to Switzerland with my wife and oldest daughter. The weather was incredible, despite the fact January is typically the coldest and wettest month for the Swiss.  Our good fortune was quite remarkable and I can’t help but compare our timing with the weather to how many folks feel about timing the real estate market.

More and more clients seem to be asking for my prediction on what the upcoming year holds for real estate. The truth is I can’t time the market any more than I can time the weather!

Instead of basing decisions on good fortune from things beyond our control, I’m an advocate for planning and acting based on things we can control. This is true in most walks of life, including real estate. Below are the 3 things I encourage every client to consider before making an important real estate decision.

Plan Ahead

Most people don’t wake up and decide they’re going off to the airport to go on vacation because the weather looks good in a faraway city. Rather, a long trip requires planning. How are you going to get there?  What will you do when you get there?

Planning for this trip began in October. We figured out which cities we would visit, how we were going to get to each one, and where we would stay.  Furthermore, we have a “team” of people that we need to consult with prior to traveling (colleagues, grandparents, teachers, etc.), and each one’s input is important in figuring out if and how the trip will come together.

The same is true in real estate. You should not wake up one morning and decide to buy or sell a home on a whim or, even worse, because of what some market “expert” is predicting.  It takes planning, and a team of people to help you sort it out.  Many people take this time of year to do real estate planning so they are ready to act in the spring when market activity picks up.

Focus on Factors You Can Control

Mary and I knew January was a sketchy month to travel to Switzerland. February or March would have been better as the temperatures are generally warmer and there likely is a bigger snow pack to enjoy for skiing.  In the end, January was the month where we could pull it off due to our schedule.  In the end, it worked out great because we had Spring-time conditions in the dead of winter!

With real estate, I see many people attempt to decide to buy, sell or refinance based on the right timing in the market. I believe this is a recipe for disappointment.  The market is unpredictable and there is no way to guarantee the market is going to behave in your favor.  Rather, an important real estate decision should be based on questions you can answer: does your family need a larger home?  Are you stable in your career?  Can you afford a home?  Is your health making it difficult to maintain your home?  Do current rates make your monthly payment affordable?

Making a move based on these factors means you are doing what’s best for your timing, not the market’s.

Don’t Let The Outcome Be Determined By Factors You CANNOT Control

As much as we enjoyed our fortunate weather, our enjoyment was not going to be impacted by Mother Nature. We packed for cold weather, and had alternative itineraries for gloomy days should they have arisen.  Also, this was a rare opportunity for Mary and I to travel with just our oldest daughter (we have two younger children as well).  This factor alone meant we were going to have a memorable and unique trip to spend quality time with her, regardless of the weather.

When it comes to buying and selling real estate, it is a dangerous proposition to say that your decision will only be a smart one if the market ends up working in your favor. For example, if you are considering selling your home this spring because you are confident home prices are going to fall later this year, then how will you feel if prices keep going up?  Conversely, if you are thinking of buying this year because you’re convinced you’ll be priced out of the market if you keep waiting, then how deflated will you become if prices and/or interest rates fall instead?

The bottom line is this: you and I can’t time the real estate market any better than we can predict the weather. I encourage all of my clients to put less emphasis on what’s going on in the market, and a greater emphasis on what’s going on in YOUR life.  In other words, is buying or selling a right time for YOU?

As I said previously, now is a wise time to begin discussing and making plans for a real estate decision later this year. These types of life-changing events don’t formulate over-night. My team and I are here to help you sort out the important and complex decisions ahead.  As always, we value your trust in us to navigate you in your real estate affairs.