11. SHOULD I WAIT TO BUY?

Intro  0:02 

Welcome to the get rich, slow podcast. This is the stuff we and our expert guests Wish we knew a decade ago to get the most out of our financial life will provide you with insight into wealth building activities and practices that can expand your net worth exponentially. get insight from top professionals who will reveal how to build wealth the long way, work smarter, not harder, and identify your financial blind spots. With over 25 plus years of experience as licensed real estate professionals and a long track record of winning for their clients. Robin Adrian will teach you what it takes to be an everyday real estate millionaire.

Adrian  0:43 

Welcome back, future millionaires. Adrian Schermer here today with my co host, again, Rob Delavan. And today, we are going to be chewing into a topic that we’re seeing pop up quite a bit, you know, as we enter summer prices do tend to tip up a little bit in the warmer months. And so it’s amplifying this problem that people are having. They’re saying, hey, and this is the question I’m going to pose to you, Rob is more of an expert in this field than me. Which is Hey, is this a Is this a bubble? And be you know, is there some truth to maybe an idea that sometimes people kick around of, well, what if I wait to buy a house? What if I wait and find a dip? And where are dips? And why do they happen? And how do I be one of the clever people that buys low and sells high?

Rob  1:31 

Right? So there are a couple of concepts there. And good morning Also, our gigantic audience across the universe? A couple of concepts there. Number one is the bubble piece. And the way we’ve had this conversation, specifically with the affordability index. Yeah, and Yep, I truly believe that this bubble concept has to do with the relationship between what rents would be versus what monthly payments are. And for our audience for a deep dive into that you guys can search the podcast regarding the affordability index.

Adrian  2:14 

Yes, so my favorite episodes, so tons of tons of info packed into that one.

Rob  2:17 

That was fun. And we’ll probably revisit that sooner than later. Because we get asked that question all the time. It’s a cool day. But then we dive in deeper here to the second question. And the second question is, okay, if all else was the same, and you are purchasing, and you’re just trying to time the market, what do seasons look like? And then frankly, we have an interesting data set to share with you guys today that has to do with the pandemic. And what did that do artistically? So to set up this conversation, I’m going to be sharing my screen with those of you that are listening and watching. For those of you that are listening only to podcasts, we will try to make it easy to follow. But we chose Beaverton, Oregon as our target for this conversation. Frankly, there was it’s relatively it’s a suburb of Portland, it’s relatively well known because Nike is world their world headquarters are there.

Adrian  3:24 

Yep. And Intel also has a tremendous amount of their manufacturing industry there.

Rob  3:30 

And, you know, so anybody who’s followed sports figures within Nike, all the biggest sports figures on the planet in the universe have flown in and out of Hillsboro airport, because it has the private jet capability. And they all visit the Nike World Campus. But the idea here is to there’s right now, the inventory for this small town or suburb of Beaverton is 71 properties as we speak, this is as of May 3, 2021. And these are residential properties. And I might as well bump over here and start sharing our screen. And that would be here we go. So I’ll have you asked some questions about the statistics here. But 71 properties are in the inventory. It’s a strong seller’s market almost at 100%. seller. A, a buyers market is like zero to 30 seller’s market is 30 to 100. And they’re at 98. I won’t dive into all the reasons for that other than just prices are up and inventory is low, and the interest rates are low. So there are a whole lot more buyers than there are sellers right now in the city of Beaverton, Oregon.

Adrian  4:51 

And I think it’s important to note here we’re looking at what is essentially what is this is an almost two-year window. So the data set that we’re looking at for We don’t have the visual here, we’re looking at just, we’re going back to like April, May of 2018. Not a three-year window. I’m sorry.

Rob  5:06 

Yeah. 18 1920 year window. We’re under 21. So. So what we’re looking at here is there are peaks and valleys. And I’m just going to run you through some peaks and valleys here. And then you’re going to ask me scenarios, Adrian. Yeah. So last in June, June 22, and I’m following the 90-day rolling average of median list price, okay, and the 90-day rolling average of median list price, in June of June 29 of 2018, we peaked, and the night in Beaverton, and the 90-day average was about 505. Then you go down to November, the valley here, November night, it was about 467. That was September or November of 2018. So pretty wide berth.

Adrian  5:59 

We’re talking about a $100,000 spread,

Rob  6:01 

well, 505, all the way down to 467. So what 30 $40,000 spread, yeah, the high 40s, something like that. And then April 26. In 2019 the high end was 529. So consider the peak from the previous year. It was 505 or so. Now it’s 529. And then that was April of 2019. And then it dropped again. And it was down to 479 in November of 2019, and evaluate out. And then we picked again, April 10 of 2025 40. So you can see the drops. And then I’ll stop there just because there’s a pandemic element of this.

Adrian  6:47 

So that’s the normality. Would you say that? That’s

Yes. Previous to that data point you stopped. That’s it. That’s typical. We’re seeing a swing from winter to summer.

Rob  6:57 

Yeah, exactly. And you’re seeing, you know, this, this swing, and it’s rough, you know, I mean, you’re looking at like five to 10%, depending on the year, and it does swing now this is median list price. And we can look at average days on market action index, you know, all sorts of different things here. Sure. But I’m just trying to keep it simple for conversation purposes. This is not the end all be all this is just how we guide ourselves and if you wanted to time the market, so let’s, let’s explain this a little bit more. So in Oregon, okay. We have nice summers and great spring summers. Not a lot of rain in the summertime. And we have rainy wet winters.

Adrian  7:41 

Okay, well, the first indicator is whether, yes, simply makes it easier to shop. Easier to move.

Rob  7:48 

Right? It’s better to move in the summer, versus say Phoenix, Arizona. Right? Sure. latter graph people do not want to move during the summer if they can help it based on weather and that sort of thing. Now, yes. But here’s the thing that, you know, Beaverton, Oregon, and Phoenix, Arizona would also have in common schools. Generally speaking, a good portion, of transactions are driven by family changes, right, you know, marriages, divorces, births, deaths, jobs, relocations, you know, all of the things that we call life change intersections. So what we have here is there The second thing in Oregon is the school year, people want to move towards the end of spring, early summer. Sure, cuz they want it a certain segment of the population wants their kids to be all set up for school in the fall. Yeah, so that’s also explained. So in, in a normal year, Oregon has these two big drivers. Okay. Now, Phoenix is going to also have that, but the weather thing, you know, is maybe going to attract from that, as you said, it’s going to be a flatter graph.

Adrian  9:02 

But you do still have that final family influence. I imagine. Most people do not want to move in the middle of a school year. I mean, you’ve had, what kinds of clients run through your brokerage at this point? And that changes the demographic then to write off the average person buying in the summer, the average person buying in the winter, because I feel like yeah, I could look at this if I were a full-blown layman. And I could say, gosh, it sounds like I should just buy in the middle of the winter houses are cheaper than right.

Rob  9:27 

And that’s the point because of this, just the socio-economic realities, right? If you bought in, you know, April, May, or June of 2019, you are going to pay more than if you bought in October, November, or December of 2019. So this is probably the key takeaway. And again, everybody’s going to differ. You need to make sure that here, you’re looking at your local market with an Extremely accomplished, and capable real estate broker in general, unless, unless you’re that in real estate, in general, yourself, but yes, you can, if you buy in the spring summer and do what everybody does, you’re gonna pay more than if you bought in the wintertime. Now, granted, you’re going to have higher inventory in the spring and summer than you would in the winter. So,

Adrian  10:25 

but also

Rob  10:26 

more competition. Exactly. So which drives what drives up the price? So this concept exists probably easier in a vacuum, rather than in reality, because do you want to, you know, finish out the half of the school year? I mean, you know, just to save 4030 $50,000? Well, maybe you do. But some people and I would say, based on the graph, the majority of people are going to be in a situation where they’re like, they’re going, Hey, you know, I’m gonna, I’m still gonna move because I’m not gonna move my family until spring summer. Yeah, no. So that’s, that’s the piece is. And this comes back to this concept. And I believe we’ve mentioned it before in other episodes, but yeah, we’re going to probably save more and more is, if you do the things the way other people don’t, you know, live and do things like no one else, you’re probably going to have different results than if you’re following the, you know, I, it’s hard to say this nicely, but kind of the flock, right, the flock. And this is what this graph is illustrating here there is a flock mentality were just because of like I said socio-economic realities, more people, there’s going to be more demand to buy in the spring and summer. So, this is just a new way. So think about this, like, if you’re going to buy five houses over the next 20 years, right? Yeah. And every single one of them you bought on the low and sold at the high? Right? You could set up your life intentionally. This is what I think investors think. Yes, right. Absolutely. And every single time you bought and sold, and it was five times, so let’s just say 10 transactions.

Adrian  12:18 

And it was juicy. 50,000 each. Yeah. And could you save 500,000? And I think the answer is perchance it could be no because this is one of my favorite things about this piece of data. And so data can sort of lie to you. we uncover this all the time, right? We just talked about what are the indicators here. Why are the median prices low? Is it because it’s Are you actually because the problem with this is it doesn’t tell you what all those houses are? And this is why I love how you’re scrolling up to one of my favorite chunks of the data. And it’s that third one down the price per square foot, the right price per square foot doesn’t encounter nearly as much chaos as the median line. And the reason for that is because like we just mentioned, families are moving in the summer. So of course, the median price is going to be higher because the type of the average person, the average buyer is now someone who needs a four-bedroom house and not a two-bedroom house. Right? And the couples without kids or with preschool children who have no you know, influence Right, right. Um, that that factor of what is gonna happen with school is Little Timmy gonna get ripped out from his friends and dropped in the middle of a new teacher? Sure, is pulled out of the equation. And then we look at price per square foot and it trends much more smoothly. So right. Can you get a better deal in the winter? You know, is it the actual $50,000 spread indicated?

Rob  13:42 

Maybe not, you know, depends. And it’s deal by deal. Yeah. But if you’re willing to not follow the crowd? Absolutely. It is an opportunity there. Now. I think we should probably save for another episode. This is some fascinating data right here. It’s April 17, April 10, 2020, and then a dip. And then actually, the high of that year was September 18. To 2020. Let’s go down that rabbit trail and another episode. Yeah, but this that six

Adrian  14:14 

month mark after March, you know, I think the march was the peak of awareness, right? And that’s when people started working from home. And when exactly, the restaurants started shutting down, that’s when we saw the world shift a bit.

Rob  14:26 

Right? So what ends up happening is we can look at that data specifically. But what ends up happening here is if you then took that say 500,000 theoretical dollars by doing 10 transactions of always selling at the, at you know, spring summer, and always buying in the winter, and then did that over that 20 years. Well, if you do a quick time value of money, that quickly becomes a million or more just by timing the market you know This is where and every market is different times change, you know, some winters, not so much, as far as drops, and then inventory all of those things. So this is very much a buyer looking at a property piece of residential real estate more as a commodity than as that perfect dream house because frankly, that doesn’t exist. Sure. Because that’s your perfect Dream House today, right now is going to be very different than your perfect dream house, maybe even a year from now. Absolutely. Yeah. So. So that’s, that’s another concept to look at, to look at when it comes to this sort of thing. But in the abstract, is it possible? Yes. Is it super likely? Maybe, maybe not. But it’s, it’s one of those, those hacks that if you can live, and be intentional about not following the herd,

Adrian  16:00 

it’s the sum of the parts, right, we’ve been talking about all these things that they sound like, you know, just a little bit of extra margin here and there. But, you know, there’s a lot of people who get very wealthy and very thin margins like that. So perhaps more often on average than then people do these sorts of overnight tricks, right? But, you know, there there is no, that’s why it’s called the get rich, slow feet podcast, people were taking a full circle. You know, it’s, it’s the reality that it’s a bunch of little deliberate changes to strategy. And you’re right, kind of seeing people walk in one direction and going, Okay, so there’s a void over there now that all those people just walked out of that room. Now, that room’s got a different crowd, maybe that’s a good place for me to be. If you want to be an investor who bounces from winter to winter purchasing properties, you’re probably going to pay a little bit less than someone who opts to purchase in the summer, right? And there’ll be the con of lower inventory for you to suck through and filter out. But you also won’t be elbow to elbow with every family that wants to grab property, trying to fight over each piece with someone who can maybe write a better letter than you because they’re not an investor.

Rob  17:08 

Exactly. So I love that summary. Adrian, thank you for that. I think this is just another fun hack that hopefully it’s valuable to you as our audience and will dive deeper into some of the other pieces of this particular report that we shared. So also I need to mention, thank you to fidelity national title for that report that I get every week. And we always like to give credit to the folks that are giving us our data points.

Adrian  17:40 

Absolutely. Okay. All right. See you out there next week. Future millionaires.

Unknown Speaker

17:45 

Alright, but

Intro  17:46 

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