Can you time the real estate market?

[James Carlson]

I've been having this conversation with my Colorado buyers/investors recently. To the question of "should I buy right now," this 2023 study feels timely.

Clif Notes version: Of 720 timing strategies for the stock market, 690 failed miserably. And of the 30 that "worked," researchers found none succeeded on merit, but rather on luck. Flip a coin enough times, you're bound to hit heads ten times in a row. It doesn't mean you're know what they're doing.

This is for the stock market, but I think it applies to the real estate market as well. What do you all think? Anyone really think they can time the market?

My answer is a resounding "no." I think any perceived benefit of waiting a year, two, four, etc. to get a better deal are heavily outweighed by the cost waiting.

• -- These forums have for years predicted the sky will fall soon. There was going to be "Another Crash in 2017." And a "Housing Crash in 2018-2019." And again in 2020. And in 2021 and in 2022 and on and on. Now, other peoples' incorrect predictions from the past do not mean it will never happen again, only that no one knows when it will happen.
• -- Someone will say, "Well, I timed the market correctly in 2007." Yes, and I have an uncle who smoked two packs a day and lived to 87. Doesn't mean cigarettes are the next superfood. Markets are long-term investments. Learning the wrong lesson from one correct “timing” likely means you’ll think you can do it again and miss a big upswing in the market.
• -- We personally follow, and advocate to our clients that they follow, a dollar-cost averaging strategy. It’s more of a stock-market idea, but the basics are the same. Buy in often and routinely. It’s been shown to have to smooth out your costs and lead to best returns in the long-term.

As the New York Times article linked to at the top says, aiming for average is a great strategy.

What do you all think?

[Greg Scott]

In real estate, I never worry about timing the market.  

If I'm buying at 80 cents on the dollar, I don't need to time the market.  If I'm buying because the property will kick off a certain level of cash flow, I don't need to time the market.  If I'm buying in the right locations with job and income growth, they often outperform "the market" regardless of where we are in the economic cycle.

I have friends who have been waiting for the next real estate crash since 2012 before they start investing.  Meanwhile, I've made buckets of money.