Timing the market and power of leverage

Many clients ask when the best time to buy real estate is. Investing in anything is often about timing: to paraphrase an old adage: the best time to buy real estate is generally 20 years ago; the second best time is when you're ready and you find something that meets your goals. Investment decision levers move up, and they move down, and often they contradict one another. As an example, from a pricing and competition standpoint it would have been a great time to purchase real estate in Manhattan in the fourth quarter of 2008 after Lehman Brothers declared bankruptcy and we ended up in the financial crisis. However, despite this pricing and lack of competition opportunity, very few people were actually buying at that time because the levers of stock portfolios, job security, and general economic sentiment were all moving against would-be buyers.

The non-financial value of real estate is not to be underestimated. So while it's important to study comparables prior to making an offer (=quantitative analysis), it's as important to consider the qualitative factors (e.g., how happy do you see yourself and your family living in this home? Priceless). Investment return in emotional assets like real estate is not only measured in dollars and cents.