Should you wait to buy until it's "safe"?

Should you wait to buy until it's "safe"?

With so much uncertainty concerning real estate these days—when will the market bottom? where will prices be when it does?—it's no wonder that so few home buyers are doing what God and nature intended them to do: buy homes.

With so much uncertainty in almost everyone's short-term economic future—will I have a job tomorrow? if I do, will I have to take a pay cut? when will my stock portfolio look as robust as it did in October 2007 or even last September?—it's no wonder that real estate activity, except for a decent recovery at the lowest end of the price range sparked by bank-owned sales, is at its lowest level in the eleven years I've sold real estate. This post-September market is like nothing I've seen except perhaps the weeks following 9/11, when home buyers walked through open houses like zombies and buying was the last thing on their minds. Watch out for those Septembers. Except that instead of lasting a few weeks, as the 9/11 market did, this market is into its seventh month.

Yes, no wonder hardly anyone is buying. Home buyers are understandably waiting until it's "safe" to buy again.

Except that the real estate industry's notorious slogan, "it's always a good time to buy"—the slogan everyone laughs at, including agents who should know better—is true. Yes, even now. Yes, especially now.

I hear you ask, How can now be a good time to buy? Sure, you admit, interest rates are at their lowest since the 1950s. And, sure, you're willing to believe that home sellers are about as desperate these days as home sellers get, here in paradise. And, sure, you figure that competition for homes is about as low as it gets, here in paradise. And, sure, you'll concede that there are plenty of homes to choose from. And, sure, you've heard that Uncle Sam is offering to forgive up to $8000 of your federal income tax if you're a first-time buyer who meets certain criteria.

Yes, you admit, it all adds up. Sure enough, it's a full-fledged buyer's market. But, like almost every home buyer, you're waiting for more certainty before you buy. You want certainty about prices, about interest rates—will they go even lower?—and about your job. You want real estate to be more of a sure thing.

In other words, you want a seller's market.

Uh, no, excuse me, you say, I'm not waiting for anything that's a seller's market. Forget that stuff. Seller's markets are a lousy time to buy. Everybody knows that. Greedy sellers holding out for top dollar. Greedy sellers in the driver's seat, demanding that I write my offer so it's good for them instead of me. Greedy sellers playing one buyer off against another: "that's a pretty good offer, but I'll just see if your competition is willing to do better".

Yes, greedy sellers, aided and abetted in their infamy by competing buyers, pushing prices up and up. Competing buyers, impelled by the certainty of optimism and job security. Competing buyers, each trying to make their offer just a little better—or sometimes a whole lot better—than the others. Competing buyers, in no position to negotiate on price and other terms. Competing buyers, giving up vital contractual rights like inspection and financing contingencies because they bug sellers. Competing buyers, desperately tweaking their offers so sellers smile on them and not the next guy. Competing buyers, many of them offering yesterday's terms in today's market and wondering why they keep coming in second or third or sixth.

Okay, okay, you say, I know that's happened before, and maybe it'll happen again. But I'll sneak back in before the big rush, before everyone else knows it's safe to buy a home again. I'm watching the market like a hawk. I'm not on top of it, I'm all over it. Besides, things are different now. People have learned their lesson. They aren't going to fall for that 2005 feeding frenzy stuff again.

Maybe, but I encourage you to hang around a few open houses next week-end. Pick homes you'd like to own, in neighborhoods and cities in which you'd like to live. Pick both homes that are new to the market and homes that have been around a while. And don't blow through them. Take your time. Look them over. Hang around and talk to the agent. Sit outside in your car. Your goal isn't to see as many homes as you can. Your goal is to see how much interest there is. If the only one who shows up to the open house is you, then no problem: there's no pent-up demand for that house, neighborhood and city. No buyers have been waiting since last September, or since 2007, or since 2006, or since 2005 or even earlier for real estate to "get back to normal" so they can own their own home in the area they love.

Which makes me wonder why you like that home, neighborhood and city so much.

But if my recent experience at open houses is any indication, they won't be lonely. And the more you like that house, neighborhood and city, the more happening its open house is likely to be. I'll let you in on a secret: yes, we're all unique, but 95 percent of buyers want the same kind of house in the same kind of neighborhood in the same kind of city. And 95 percent of the buyers out looking today, plus 100 percent of the buyers who gave up looking last September or back in 2007 or 2006 or 2005 or even earlier, are watching the market, waiting for the sign that says real estate is "safe" again. They're all waiting for the red light to bang! turn green. They're all waiting for the reports and articles that say now hallelujah! is a great time to buy. Now the economy is on the mend. Now the stock market is on the upswing. Now the threat of inflation is pushing up interest rates.

Now real estate is safe again! Top ten cities to buy! Now is a good time to buy! We show you how!

Open the gates and let the games begin!

Okay, okay, maybe it won't happen that way this time. Maybe no one wants to live here anymore. Maybe Silicon Valley real estate will stop acting like Silicon Valley real estate and started acting like Fargo, North Dakota real estate. Maybe local real estate won't explode out of the blocks like it did in January 2002, when enough people had processed 9/11 and the tech bust and decided to get on with their lives. Maybe it'll happen more like late 2003, when enough people had processed "mission accomplished" and thought we'd gotten off easy in Iraq and decided to get on with their lives, and prices edged up incrementally, just enough to fool buyers trying to use last month's comps, until the market exploded in January 2004. Watch out for those Januaries.

Sure, maybe the bust neutered human nature. Maybe we won't let the media whip us into a celebratory buying frenzy. Maybe the market will become completely rational and unemotional. Maybe buyers, chastened by the worst recession in decades, won't rush to hand sellers the advantage. Maybe the inevitable sunny upturn that follows the inevitable cage-rattling downturn won't make buyers forget the next inevitable downturn.

Maybe buyers won't be so willing, invariably without realizing it, to pay a hefty premium for the "certainty" of buying in a "safe" market that's merely a build-up to a "risky" market that in turn is merely the warm-up to a "safe" market that in turn is merely...

Maybe buyers will realize that markets offer no certainty, only varying blends of risk and reward, and that even the illusion of certainty comes at a stiff price. Maybe. Maybe every buyer will stay cool, calm and collected during the recovery. But if even a few buyers don't—if even a few buyers starting pushing and shoving and trying to cut in line—we'll be right back where we started. We'll be right back where we were in 2000 and 2005.

So if it turns into another free-for-all around here, I told you so. But for now, all the things that make this a full-fledged buyer's market are still in place.