MOMO PLAY: A slang term used to describe an investment purely as a momentum play, not worrying about the company's fundamentals.
MOMO is a word I am going to use here in Real Estate also. It's a combination of two words - Modern Momentum. It describes what people do when they see activity has picked up. Problem with that is everyone else has already gotten on the boat, and now you're really buying into a deal that's likely marked-up higher than when you could have gotten in just recently.
As an investor (in Stocks and Real Estate), I see this happen all the time. It doesn't matter what kind of market we're having, because there are always good sectors and bad sectors in any given time. An example would be Alternative Energy stocks dizzily escalating up in a down market.
In Real Estate, there may be a down market in certain locations, a depressed market in other locations, and a healthy market in yet another.
In the Greater Roanoke Valley, as Realtor Association statistics of sales have been showing (and from a query that any Realtor can pull up in their MLS software to get particulars), sales are not consistent with down-market reports of harder hit areas around the United States. You cannot compare Roanoke to the Cleveland area. (Upon edit, a message from Stan at Realty One in Cleveland who comments that sales in some areas of Cleveland are doing as well as Roanoke - PLEASE TAKE NOTE, and I apologize for any misrepresentation.)
So when should you buy if you live in or want to live in Roanoke? Now is the time. Spring 2008.
If even a jump of 10-15% in sales volume hits this summer, you could be running into the MOMO problem. And that means prices have hit bottom, momentum will start, home values begin to increase. Does it make sense with gasoline at $3.85 a gallon? Yes. People can drive less, people can shop more cost-effectively at the grocery store, people can do without frilly gadgets, but they have to live somewhere.
Renters can still get into homes cheaper, and there are a few mortgage brokers who will work with various credit strength. Homeowners looking to upgrade can bargain with builders right now. Homeowners looking to downgrade can likely cash fund a smaller home - especially if they're moving to Roanoke from expensive areas of the country.
Supply and demand changes at intervals. The supply is good at this moment to support a buyers' market. The best homes priced to move will be gone first. The rest will adjust as a reaction... when business picks up, prices will adjust up. If you miss it, you will get caught in Modern Momentum when you decide that everyone's out buying a house now, so it must be a good time...
