Jim Cramer moved up the date on his prediction of the bottom of the real estate market from the end of June and called the bottom on June 16 of this year. I made a prediction in September of last year that the bottom of the real estate market will be November 25, 2009. It may seem that we are far apart on our prediction day, but we're not. First, we both called the bottom in the same year. Second, our predictions are only five months apart, and this big ship called real estate takes a long time to turn. Five months in real estate time is equal to about only five days in stock market time.
When I made my prediction for the real estate bottom, I was looking at it primarily from the standpoint of the individual homebuyer and residential real estate investor. I was also looking at it from a psychological standpoint; trying to determine when the best time of the year would be to find the best bargains. I chose November because there are very few buyers out there compared to the summer months, the weather is not conducive to open houses, and sellers at that time of the year are more desperate and willing to take lower prices.
Now I'm going to move up my prediction by a few days, to Sunday, November 1, the day after Halloween. Hopefully, when you go around looking at open houses that day, you can find a few bargains with a couple of rotten egg stains on the front door and maybe the mailbox blown up. Make lowball offers and the seller and realtor will be very happy.
Obviously I am being a little facetious but I think that if you make a real estate purchase around the early November time frame, you can't go wrong. You won't make a quick profit but if there is any additional drop in real estate prices after that time, it will be minimal.
Interest rates are still low, banks are now releasing foreclosed homes on a systematic basis without flooding the market (banks have this down to a science, surprisingly), housing starts are increasing, and the hardest hit areas seem to be bottoming out. This summer should show a little bump in activity, sales, and possibly prices, then a drop after kids are back in school.
I don't think it is time to start buying the homebuilder stocks yet, but it you are looking for a single family residence to buy, start looking in October.