Paul Ybarbo

California Association of Realtors, 5/6/09

Consumer confidence rose more than 12 points in April to 39.2 (1985=100), compared with 26.9 in March, according to a recent Conference Board report. The Board's Present Situation Index increased to 23.7 in April from 21.9 for the previous month, while its Expectations Index jumped more than 19 points to 49.5 in April compared with 30.2 in March.

"Consumer confidence rose in April to its highest reading in 2009, driven primarily by a significant improvement in the short-term outlook," said Lynn Franco, director of The Conference Board Consumer Research Center. "The Present Situation Index posted a moderate gain, a sign that conditions have not deteriorated further, and may even moderately improve, in the second quarter. The sharp increase in the Expectations Index suggests that consumers believe the economy is nearing a bottom, however, this Index still remains well below levels associated with strong economic growth."

Consumers' short-term outlook improved significantly in April. Those anticipating business conditions will worsen over the next six months declined to 25.3 percent from 37.8 percent, according to the report, while those expecting conditions to improve increased to 15.6 percent from 9.6 percent in March.

A friendly reminder to write those oh-so-fun checks that come all too often and at seemingly the most inconvenient of times. I'm grateful for the need to write them and for the capacity to do so!

Should You Buy Now?

Any investment opportunities, whether real estate, commodities, or vintage autos, follow a predictable cycle with several stages.

Optimism is the first period in which many people are excited about buying a home. In a strong market, purchases increase in value quickly, leading to euphoria, which can lead to hasty decisions. A downward cycle then begins from euphoria with prices starting to fall, then buyer denial. After denial comes fear, as prices continue to fall, followed by panic, despondency, and depression. After depression comes hope and then optimism (back to stage one).

The point of maximum risk for any investment is during the euphoria stage. The point of maximum opportunity is at the lowest point, between despondency and depression. That's exactly where we are in many real estate markets today. Clients who are motivated and qualified to purchase can hopefully recognize the market cycles and understand why now is a wonderful time to invest in real estate.

Well, here we are. The holidays are behind us. The election is behind us with a big day coming on the 20th. War is ongoing and springing up in all the usual places, and some unusual ones. Companies are consolidating/merging/closing. The world is on sale: clothes, cars, plates, Q-tips, cruises...and real estate. The economy wants us and needs us to spend and we won't do it with the same fervor as we did spending during years past.

Isn't this what we've been waiting for? Sales galore! 20%, 50%, 75% off and no one is shopping. What gives? People are afraid. Justifiably. Who's going to have a job in 1 month/6 months/next week? Is the pink slip coming tomorrow? Confidence has been shattered and people want to see some sort of leveling off of the stock market, some leadership from the White House, and a return to some basic common sense with consumption.

So what's my point? My point is that we need to turn off CNN for a bit. We need to take a walk, dust off that new bike you paid handsomely for last year, go to the gym, work the stress out of your body & go hit something, go to the movies with your sweetheart and escape for a bit. Guess what? The world is not going to end and in time we will look back and say "prices were low, interest rates were incredibly low, there's minimal-to-no competition, opportunities to negotiate, and I sat on the sidelines waiting for the market to bottom out."

As soon as the media proclaims that the real estate market has corrected and is on the upswing again (and the market will return, as it always has, after every recession because that's what markets do) THEN the masses will regain that confidence and will help propel those rising prices, fueling the market's upward momentum.

Prices rising, interest rates likely rising (they are extremely, ridiculously, artificially low at the moment) will make those properties that much more expensive and you will be paying a premium again for something that could have been "a deal" right now.

As I've said before, real estate should be a long term investment. Buy quality and location and hold. Your window should be 5-8 years. Get the longest term or a fixed interest rate if possible. It's back to basics, and that's excellent for those willing to use this market to their advantage. Augment your portfolio or get into your first place.

Don't wait for the newspaper to inform you that the market is back. By then it's too late.