About three years ago,* I advised everyone in Miami to sell their house, pocket the money, and wait a couple of years:
[F]ind a moment (and find it soon), to sell your house, put your stuff in storage and rent an apartment for a year (maybe two or three), then buy your house (or one similar) back, for a maybe $200,000 profit.
So, here we are, three years later. Neverminding for now that the housing market took the whole economy with it, let’s see what the smart money’s up to these days. I work up early this morning to cook up a graph for you people, with data from the trusty housingtracker.net:
I chopped the bottom half of the graph to make it more dramatic — the housing is in the tank. This graph actually understates the situation, because it’s showing asking prices, not sales prices. I should also say that during this period, housing inventory in the area went from 12,000 to 50,000.
Now, listen carefully: it’s time to go shopping. Remember the factors that led to the bubble? Idiotic interest-only mortgages, gross overbuilding, and what seemed like terrifying hurricane seasons as far as the eye could see. The picture today? (1) mortgage idiotics universally recognized and being dealt with to the tune of trillions of dollars from the federal government, (2) overbuilding spectacularly finished, and (3) relatively calm winds for the last two seasons. To boot, (4) an incoming president that everyone seems to think Can Fix Things.
Respectively, these factors mean: (1) lots of money for people to borrow to buy homes being injected straight into the economy’s mainline, not the least of which is near-zero interest rates, (2) there are more unocupied homes now then they will be for probably another decade, (3) people will begin moving to Miami in droves again, and (4) the economy is ultimately about mood and expectations, and both are in the process of getting a major boost.
So, what’s the smart money doing? Maybe not buying a house or condo today, but it’s starting to look around. It’s checking out the listings, and getting a feel for the market, and planning on buying something pretty damn soon. I’d say sometime in the next six months. I know the right edge of the graph still looks like a plunge, but the thing is that while the economic recovery will be slow and steady, the housing market will recover probably first with a sudden upward jerk in prices. And if you wait for that first jerk up, you’re going to be one of the droves of people entering the market, and you won’t get the really good deals. The time for those is now.
* Actually, check out this post from June 2005.