Perfect Summer on Whidbey Island

We are having a fantastic summer here on Whidbey Island, though some may say it is to hot. The days have been in the '80s and the evenings in the 60s. Sounds perfect to me. The glorious sunsets and the sight of eagles flying makes it all the better. If you are not familiar with Whidbey Island and all of the attractions that it holds, please view one of the videos on our blog or website and acquaint yourself with this beautiful island. There is much to see and do. Come visit and stay awhile. You will be so glad that you did.

Buy High Sell Low

In 1967 I sat in an Economics 101 class at Bryant College in Providence Rhode Island. After the usual introductions some of first words out of my professor’s mouth were “Buy low and sell high”. He had just taught economics in one phrase. He didn’t even need a full sentence. The very essence of all monetary transactions is summed up in those 5 words.
It seems simple enough; that is, until you bring emotions, real money, and all of the STUFF that’s around us into the equation.
I have been in the real estate business for many years, and while I haven’t seen everything, I have seen the two extreme ends of the market. In 2005 people were literally standing in line to buy houses. The market was so hot the Northwest Multiple Listing Service developed a new form called an escalation clause. This form was used with multiple offers. A multiple offer is when two or more people want the same house. This form allows buyers to bid up the price in a manner similar to EBay; I bid $500 over the last highest bid until the bidding get to $10,000 over list price. The thinking was if I don’t get this house move on to the next one on the list. Wow what a time to get into real estate! Prices were inflating at a rate of 15% per year!
Then POPL, now fast forward to 2009. Housing prices are now down below 2005 levels. But where are the buyers. These are the same houses in the same neighborhoods that people were standing in line to buy only 3 years ago. What happened?
Quite a lot actually! First people realized that 15% growth per year could not continue. No one would pay $150,000 for a 2 bedroom, 1 bath, 800 square foot condo. The second thing that happened was people who couldn’t afford to own a house, but bought one anyway, stopped paying their mortgages. This generated a large reserve of overpriced houses that was thrown on a depressed market; and this was the start of the financial mess we are in today. It doesn’t matter whose fault it is; it is a fact we need to live with.
Back to my original premise that people buy high and sell low. In 2005 people couldn’t wait to buy because everyone else was buying. It didn’t matter that things were getting out of hand. Today those people are selling; but prices are dropping because no one is buying. Why isn’t anyone buying? Prices are low, supplies are high, and interest rates are great. People aren’t buying because no one else is buying. It’s a herd mentality, and the media is feeding the frenzy.
My message to you today is simple. If you need or want to buy a house, buy one. The conditions to buy couldn’t be better. Since World War II housing prices have continued to rise. Yes there have been times when prices dipped, but over all house prices have risen for the past 63 years. The same can be said of the stock market. America is a great place to invest, so buy a house and join the trend to prosperity. David Bach, in his book “The Automatic Homeowner Millionaire” has this quote which I believe wholeheartedly: “Nothing you will ever do in your lifetime is likely to make you as much money as buying a home and living in it.” So buy a home and live in it!