When the Prophet Says Buy – BUY!

Excerpted from Keeping Current Matters and reprinted with permission.

R. Talbott, previously a Goldman Sachs investment banker, is a bestselling author and economic consultant. When it comes to the housing market he is also a prophet. When housing prices started to skyrocket in 2003, he published The Coming Crash in the Housing Market correctly warning us that a real estate bubble was forming. Then in January 2006, he called the absolute peak of home prices in the US by releasing a new book, Sell Now! The End of the Housing Bubble.

Mr. Talbott, the person who accurately predicted the housing bubble and its bust, now has a new prediction – IT IS THE TIME TO BUY A HOME! In a recent article, Homes – Buy Now!, Talbott simply explains:

“I have been waiting for more than five years to offer this advice. It is now time in most cities across the country to buy a new home or refinance your existing home with thirty-year fixed rate mortgage debt.”


He goes on to explain that his conclusion is based on four different metrics, all of which favor buying today:

■ Home Prices Relative to Peak Prices During the Bubble
■ Home Prices Relative to Construction Costs or Replacement Costs
■ Home Prices Relative to Incomes and Rents
■ Home Prices in Real Terms, Not US Dollar Terms

Bottom Line, If the person who called the real estate bubble and its bust says now is the time to buy, we believe it is time to buy.

As I mentioned in another recent blog, our local market is starting to show some signs of recovery. Inventories of houses for sale in some selected parts of Delaware County are dipping back into Seller's Market territory (defined as 1-4 months of inventory).

That is not yet reflected in any county wide trends, but at the end of 2011, there were 3,320 single family houses for sale in Delaware county. That is down from over 4,000 in July so the trend is in the right direction.