I am NOT a young man. And I have experienced a lot in my life, and one thing that I know for certain is that everything is cyclical!
We had been experiencing a severe drought the last few years. Now it won't stop raining. It's the cyclical nature of weather, the dryer it is, the dryer it gets. And the wetter it is, the wetter it gets!
Economics are cyclical too. The stock market has enjoyed boom years and bust years. People have made millions of dollars and then lost them again as the cyclical nature of the market ran its normal course. It takes only time for the winds of the market to shift in a different direction.
And of course, the real estate market is cyclical too. I purchased a home in the 1980's that came replete with a mortgage at an astounding17.5% interest rate. The market ground to a halt as the restricted pool of buyers that could qualify for a loan at the rate competed for the limited funds that were available to lend. In time, the money supply grew and the market recovered.
So there isn't really any quick-fix for what ails the economy right now. But in time, true market forces will prevail against all of the counterproductive Keynesian efforts to accelerate the process.
The net result is that a lot of buyers are getting some bargains right now. But these low prices combined with low interest rates won't last forever, It's the cyclical nature of things.
And those that seize the opportunity now will be sitting pretty!
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We sure could use some of that rain in Texas.....guess we will have to wait for the infamous "cycle."
I bought my first two houses when the interest rates were in the double digits. Each time I had a great home to raise my family. To many people began to look at real estate as a get quick rich scheme instead of what they should be, a place to enjoy life with loved ones. This cycle will pass and something else will happen to replace it.
Richard,
The economy will recover, despite our government's best attempts to prevent it. Cycles are just a part of nature.
If we could read them correctly, we could be very wealthy, instead of just good looking :)
Rich
Time cures almost all problems, we just need to chase the "market of the moment" to keep our business going!
Edward...
It is coming ... at some point! We were in bad shape and now we have flash flooding, but you need water to survive so it's all good! THX
Cindy...
The way that you said that was great!! You should write a post about that so everyone can read it! Thanks.
Rich...
Being good-looking is a curse that I have learned to deal with as I grow older! lol and thanks.
Great post, Richard. I think we're going to be in this cycle for awhile, but as I tell my clients, "Nothing lasts forever....including bad times."
Hi Richard:
Very true! It's all cyclical...
We all want quick fixes, but need to be patient.
Richard,
I agree on the cyclical nature of economics. The ebb and flow. Shelter will always be a fundamental need, and that need will be addressed in some manner.
Richard, I also bought a home in the early 80's when the interest rates were as high as 18%. Things have a way of working out in the long run. Real estate has always been cyclical in nature. It will eventually turn around again.
Opportunity knocks, but it's only beneficial if we answer the door. Cycles provide those opportunities if we can figure them out. Thanks!
Richard,
I think that we have very short memories and fail to remember those good ole days with the high interest rates. There is a great opportunity for buyers to reap a reward if they act quickly and take advantage of the tax credit.
Thank you sir for the reminder of the cycles of life.
Richard...during the high interest cycle, I got roped into a 25% business loan. I wasn't told that it was that High. I thought it was 'only' 17%.
Richard - I think it is what is done to artificially affect those cycles that we have to worry about, whether in nature or economics.
You beat me on that interest rate. I had one that started at 12% and then went to 15% after 2-1/2 years.
Richard, this is one of those "Du-uh" posts. All too often, we don't have the patience for cycles. And Andrea is blogging in her Jeep? Whoa!
Richard: We need to be able to look at the big picture. Too many buyers want the quick appreciation. Whatever happened to buying a home to LIVE in it and ENJOY it and get a TAX DEDUCTION. If those are things that might interest you, it's time to get out and find a great home.
I thought this was sounding familiar. I just read this on a re-blog =) It's an excellent post. As I said on the re-blog, I'm not sure what I should even comment. You covered it all in this post. Well done.
Richard: You post reminds of the saying: Everything that goes around comes around, and it is so true. The interest rate was 19% when I bought my first house.
Richard,
I was a loan officer when the rates were 17.5%. Highest I wrote was 18%. I don't know how anyone was able to afford it.
The essence of life is based on cycles. I am fascinated by history and how it prepares us for the future.
Richard:
"astounding17.5% interest rate"
I had a client awhile ago who was literally crying because rates had jumped back up to the mid 5's. People do not realize how low these rates are compared to most of the times in our history.
Hi Richard... thanks for taking the time to put so many of the issues we face daily into a manageable perspective. Your posts do a great job of making me step back and look at things from a different angle!
Richard,
Your words ring true. Everything is cyclical and this market will change as it always has done in the past. This time it is lasting a little longer and hanging on for some is a little tougher!
Buyers need to realize that they may never know exactly when the bottom hits. Stop waiting and buy now, stop doing the Vegas thing --always looking for a better deal!
Nothing lasts forever my friend, not the ups or the downs, but give it time and everything will change.
Richard, you are so right. Nothing lasts forever, and those buyers waiting for the market to "hit bottom" may have already missed it! Hope you are well and that your buyers are taking advantage of this great market for them!
We are seeing the cycle begin anew and those that move now can say I told you so.
Richard - it always pays to grasp all things new. You never know when your hand will latch on to pure gold. :)
H-m-m-m, Do you think that Beatle boots and bell bottoms will ever be vogue again? Just kinda sort needed to know whether to keep these in the closet or toss 'em...
Helping you live your American dream...
Great message here Richard. I think it deserves a reBlog
Where's Reagan when you need him? Some disliked him at the time, but after death consider one of the best. Typical!
Hi Richard, Right now is an excellent time to purchase a home in my area. Home prices are haven't been this low since the 90's. Appraisals are coming in $100K over the contract price! AMAZING! There are great deals on the market but this will not last...just another cycle!