This week we’re keeping it light! Jess shares an analogy for anyone who has ever said, “I wish I had bought #X of years ago…” Here goes:
Imagine you’re at a train station. You’re standing on the platform when a train pulls up to the station. The train represents the real estate market.
You have a choice. If you get on the train, you can enter onto a luxury car - something towards the front. This car represents your “forever home”, or a luxury home purchase. Something that’s a stretch and a larger investment.
Or, you can elect to enter into an economy car. For you, this may represent an entry-level home, a fixer-upper, something with “potential”, an investment, or a second home.
And of course, you can choose not to board the train and stay on the platform.
That train will eventually take off from the station. When the market is hot, the train will move more quickly - perhaps it’s an 80 mph train. When the market cools, the train slows.
But here’s the rub: in the inner East Bay, the market continues to press on. In other words, that train may slow to 40 mph, but it’s still traveling forward at 40 mph.
And if you choose not to board, it’s only going to be harder to hop on at a later time because that train continues to press on!
I connected with this analogy and I hope it’s helpful for you too. Of course, it’s not a perfect allegory for our complicated market. Here are a couple of caveats to consider:
- You’re hoping to purchase a home and then sell it for a profit within a 5 year timespan. While this is possible with the right house, not every home can deliver on that promise, and not every market can deliver on the appreciation. Market cycles are longer than 5 years so your best bet is to be very clear about your objective and plan when you’re searching for that investment (so your agent can help guide the strategy), or be flexible if the market isn’t responsive at year 5.
- Your goal is to buy the luxury “forever” home but you’re concerned that it will stretch you too much financially. Consider hopping onto an economy car with the hopes of moving from car-to-car…if your starting point is already on the train (as opposed to the platform), you’ll have a much easier time making the leap to the big house.
- Our market does fluctuate: it’s not a straight-line appreciation, but home values in the East Bay are historically more resilient to the up’s and down’s of real estate on a national level and that’s a primary reason why folks invest here over a long term!
If you have any analogies that you’ve found helpful, questions about investing and purchasing a home, or the right time to sell, you know we’re here for you!
