Time In The Market Is More Valuable Than Timing The Market

A Common Misconception

I hear far too often that people are “waiting for interest rates to drop”, “waiting for the bubble to pop”, or “waiting for home prices to decrease.” Essentially what these people are saying is that they are trying to time the market. Here’s what I’ve learned: Timing the market is nearly impossible. In reality, time in the real estate market is more valuable than timing the market.

At 22 years old, I bought a $200,000 condo against the advice of some of my friends and family. See, they thought it was a terrible time to buy. I was too young, I shouldn’t be tied down to something as big as a mortgage, I wasn’t ready…there were lots of fears circulating my inner circle. Regardless, I was financially in a position to buy, and I wanted to buy, so I bought. Today, at 26 years old, I own over $1,ooo,ooo worth of real estate and have seen a combined $300,000 of appreciation in the last 4 years. Had I waited for a “better” time to buy, I would have missed out on all of this appreciation and equity. 

Why You Shouldn’t (and Can’t) Time The Market

The real estate market is dynamic and complex. When it comes to investing in real estate, time is your most valuable asset. The longer you hold onto your property, the more it will appreciate in value. In fact, real estate historically appreciates at an average of 5% per year. The additional benefit of time is that even in volatile markets (as we should expect to see a couple of times in our lifetime) your assets won’t lose value as long as you don’t sell. The younger you buy, the more time you allow your assets to grow and withstand these volatile times.

Timing the market, on the other hand, is a risky strategy that can lead to missed opportunities. Trying to predict market trends and buy or sell at the right time is nearly impossible, even for the most experienced investors. Real estate markets are affected by a wide range of factors, including economic conditions, interest rates, and local market conditions. These variables are constantly changing.

If you concern yourself too much with planning for the market, rather than planning for your life, you might wait too long to invest. You may even miss out on a great property that could have provided excellent returns in the time you were wasting waiting for the “perfect time.”

My Advice

Buy and sell when your personal circumstances require or encourage you to do so. Don’t worry about the high interest rates, because they will come down. Don’t worry about the home prices, because the best time to buy is always last year. Don’t worry about the bubble, because even people who bought homes in 2007 have seen their homes triple in value since the 2008 market crash. Investing in real estate requires a long-term mindset. By buying early and focusing on time in the market, you can take advantage of appreciation potential while minimizing risk.