The Best of Both Worlds

Recently, a good friend of mine posted the entry quoted below on his blog, The Elfin Forest. I found the article interesting, and decided to re-post it here, as I figured others may find his assessment of the market of interest as well:

Arguably the single greatest installment of Sci-Fi television in history, The Best of Both Worlds (TBOBW) is the name of the last episode of Star Trek:TNG. If you’ve never seen it, download it or rent it. In fact the writers of Lost have said that this episode was the inspiration for Season 4’s “The Constant”.

How do you have the best of Both Worlds? How can you take advantage of a rising market and at the same time benefit from a falling one? As in the episode TBOBW, time is a factor. It’s a simple adage: sell high buy low, but not so simple in execution.

Some of us sold too soon, not high enough, and left money on the table. Some sold high, bought low, and then didn’t sell a

gain. Some, only bought high, and now are stuck. Some bought low, but took out [money] and didn’t sell in time to cover their rising balance, and now are underwater.

Some have fumbled, some have scored, some have sat on the sidelines, and some are midfield. Unless you are a market genius, most of us will make errors, and have reason to second guess ourselves. Going into the next wealth cycle in Real Estate what have I learned?

1. Buy Low- ( no brainer)


2. Do not use your house like an ATM- only take out cash for 3 reasons:
   
   
   1. Pay off high interest debt (credit cards)
   
   
   2. Remodel- that will actually bring value to property
   
   
   3. If the market is on the upswing, and you are toward the bottom of that upward motion, you can use cash for a down payment on another property ( be careful)
   
   
3. Good times do not last forever. Watch for market indicators, [days on the market], inventory, national trends.


4. The Media tends to lead the market, and has a big psychological influence on buyers, sellers. National politics can affect local markets.


5. Be conservative- sell while the getting is good, not when we are at the top, it may be too late to get out by then, and you could get stuck.


6. Pay attention! Watch the headlines, stay involved- The warning signs were there before the fall. Smart people saw the signs and were proactive-


7. Real life happens, if you can’t move every few years, find a house you love in a down market, and get [a fixed rate mortgage].

As the next wealth cycle comes around again, there is real opportunity for investors, and those looking for a home for life.

The best of both worlds could mean, you made money on the rise of value, sold and now have cash and are waiting for a deal. Or it could simply mean, you now have an opportunity to buy a great home at a reduced price. You have both, a great home, and an affordable mortgage.

Whatever happens, time is a factor, and the time may be soon. ...

My Thoughts

The author of the article above doesn't typically write about the Housing Market and/or Mortgage Crisis. However, it seems that few people can remain oblivious to what's going on. Whether you own a home, are considering buying a home, or planning to sit out on the sidelines while renting, you are affected; as even rents are up significantly since the crash. The important thing now is to try to remain as informed as possible to enable you to take measures to reduce the financial risk and/or impact to yourself and those you care about.

See the full article here