Got Foreclosure! - Blog

What a strange headline!

Stocks go up because of bargain hunters? When the stock market is down enough, people jump in to snap up barginas, and that makes the price go up, because the market IMMEDIATELY responds to the changed balance of supply and demand.

That’s pretty neat.

Check out what happens in real estate

When housing prices are lowered enough to attract buyers, that buying activity creates a bunch of low comps (comparable sold properties). These comps in turn will reflect on the next market statistics a s a PRICE DROP!

Once again - opposite worlds in real estate because of the way the market gauges value.

Ho do you know a good deal?

Good question! The buyers who are jumping into bargain stocks and drive up the price think they get a good deal (and many of them probably are if they’re holding on for long term investing…) However, in real estate bargain hunters tend to fail to recognize a discounted sale as a good deal. Instead they think the discounted sales reflect the new “fair market value” so therefore they need to buy even lower.

Well, guess what happens! Next month some savvy investor buyers come into the market and buy at yet another 20 to 30% lower, creating another set of low sold comps. And here we go again…