Mirror, Mirror On The Wall, When Is The Fairest Time To Invest?

Updated: Jan 23, 2020

At the end of every year the property experts dish out their forecasts for the next year. I've done this on one (or two occasions). You know what the irony of these forecasts is?

They're pointless.

A mirror is best used to look at your own reflection.

In looking for forecasts and predictions, we're trying to time the market. To this date I've not met anyone who could accurately time the market. Not even the great Oracle of Omaha is able to consistently time the market.

Here's what the Oracle or Warren Buffet says about forecasts:

Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.

He even insinuates that it would be foolish to try and time the market.

"You’d be making a terrible mistake if you stay out of a game you think is going to be very good over time because you think you can pick a better time to enter"

It really does not get very difficult as far as timing goes in the property market because its value only goes up over time. Land is a scarce resource with growing demand. One can't simply produce more land to meet demand.

Economics suggests that when a resource is scarce and demand is consistently increasing, its value goes up.

So how is it that people lose their pants investing in property? They could have failed to understand 3 very important concepts:

Or they could have just purchased crappy properties from crappy developers.

To overcome the above you have to improve on your knowledge. Attend property seminars, read, and learn. You will become savvy at picking out good properties. But don't waste your time trying to predict the next boom or bust. The property market has cycles, like the economy. However, the long term trend is up.

Whatever direction the market is headed toward in 2019, it is a good year for you if your fundamentals are strong.

If property prices are going to decline or consolidate in 2019, it would be a great year for smart money. The best time to be picking up properties is in a buyer's market, when the average investor is staying on the sidelines waiting for the next uptick.

On the other hand if the property market has a reversal in 2019 and heads up, it would still be a great year for smart money. Credit will become easier and appreciation faster.

See, as far as timing goes, it doesn't matter.

What matters are the fundamentals. What are these fundamentals you ask?

  1. Demographics - what is the largest age group, what is the typical family size, what is the income level?

  2. Socio-economics - how is the job market, can people afford to pay rent or buy, are there schools nearby, what is the infrastructure like, is public transportation easy, is the local economy doing well, is tourism on the rise?

These considerations will help you decide what type of product to buy. This information is useful and can be studied objectively.

Are we still in a downward trajectory or recovery phase? That is the realm of people with crystal balls. I don't think anyone has an answer.

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