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America has a long history of economic cycles.  For centuries, markets have passed through peaks and troughs.  This is true of stocks, bonds, commodities, and real estate.  Over the long term in the United States, the trends have been irresistibly upward. 

There is a certain “herd mentality” that gains momentum in either direction.  When markets are booming, lots of investors are willing to dive into the pool.  When times are tough, the prevailing psychology is to sell.  It seems that only smart (contrarian) investors have enough courage to take the plunge in depressed markets.

We have seen this played out in the stock market in the past decade.  High tech stocks that were “hot” for awhile went into a nose dive.  Many investors bailed out (and were wiped out) at the bottom.  In late 2008 a broad and pervasive stock market plunge wiped out retirement nest eggs for those investors who “cashed out” near the bottom.  Investors who hung on, or saw this as a buying opportunity, have profited. 

The Boeglin Team experienced the Florida boom real estate market of 2004-2006.  A yard sign announcing a home for sale was frequently enough to elicit multiple offers.  Buyers were searching for opportunities to become homeowners in Bonita Springs, Florida.  Speculation was rampant.

We also experienced the real estate slide since 2006, culminating with current price levels on a par with home prices of a decade ago.  In this depressed market, buyers largely disappeared and many homeowners opted for short sales or foreclosures.  The national and world economies tanked, thanks in large part to the real estate crisis.  Doom and gloom still dominate the market place.  Sounds to us like a buying opportunity.

Apparently some people agree with us.  Real estate activity has risen dramatically.  We still work with a number of potential buyers who are having difficulty “pulling the trigger”.  However, more and more buyers now see this difficult time as an unprecedented opportunity.  In the past 12 month, home prices in most Southwest Florida communities have leveled off.  Sales activity is up significantly and the inventory of homes for sale is on the decline. 

Is this a “bottom of the cycle” opportunity?  Only time will tell.  Unfortunately, our crystal ball only works in the rear view mirror.