Introduction
To swim a fast 100 meters, it’s better to swim
with the tide than to work on your stroke.
-- Warren Buffett
When it comes to making money in real estate, nothing
beats good timing.
When you buy or sell a home, anything you can do to improve
your timing is like money in the bank. Yes, timing is everything. In
all aspects of life, especially real estate, this is a simple and obvious
truth.
Timing the Real Estate Market offers you a revolutionary approach
to making money in real estate, one that focuses on fast growth of capital
and low risk. Based on 30-years experience as a real estate broker and
investor, and a keen interest in finding ways to stay ahead of market
trends, Robert Campbell has developed a logical, market-proven, and
clearly-defined approach – The Campbell Method –
that shows you how to anticipate residential real estate trends
so that you can make intelligent and informed decisions about when to
buy and sell.
The Campbell Method asks you to look at the market objectively,
not emotionally. It requires that you step away from your own personal
beliefs, opinions and biases about what you would like the
market to do, and focus instead on what the market is telling you to
do. Here is what The Campbell Method will help you identify
to capture the greatest real estate profits:
- Five key Vital Sign indicators that track the trend of the real
estate market.
- Three Market Truths that teach you to respect what the market is
telling you to do.
- Ten Cardinal Rules that tell you what to do and when to do it.
Whether you are a homeowner or an investor, a savvy veteran
or someone who is just starting out in real estate, using The Campbell
Method to buy and sell will give you a tremendous advantage over
those who play the guessing game.
- Your awareness of what is happening in the real estate market will
vastly expand.
- You will see trends more clearly. It will become easier to anticipate
the future direction of the market.
- You will be more relaxed and confident – and less nervous
and uncertain – when
it comes to making important decisions that can cost you money if
you are wrong. Because you will be plugged into the flow of the market,
you will know when to take action and when to sit tight.
- You will make more money in real estate. It will become easier
to break away from buying and selling habits that may have yielded only limited
success in the past.
The Law of Real Estate Markets
Everyone knows there is a natural, irrefutable law to
all markets: prices rise and prices fall. Real estate is no
exception. The pendulum swings back and forth from good markets to bad
markets, building wealth and then tearing it down.
Even though estimates vary widely from one geographic region to another,
on a national basis, the prevailing economic view seems to be that home
prices rise an average of 40-60% during the market uptrends and then
fall an average of 20-30% during the downtrends. In other words, two
steps forward and one step back. In Southern California, where the market
research for this book was conducted, these price swings have been even
more extreme.
With such dramatic price movement in home values, it is
no surprise that the trends can make you rich from real estate ownership;
however, the same trends can also make you poor. While risk and reward
are always present in the marketplace, it is important to learn how
to stack the odds decidedly in your favor.
It’s Not What You Do . . . But When You
Do It
Have you ever tried to grow crops in the wintertime?
You have to spend days or weeks preparing the soil, use special fertilizers
to stimulate growth, and then find ways to protect the seedlings from
the elements. Even after all this hard work, the crops still struggle
to survive . . . and most die.
On the other hand, if you wait until springtime
to grow crops, it is a totally different story. All you have to do it
take handfuls of seeds and toss them on the ground, and without doing
much of anything . . . Presto! They grow like crazy.
Then, during the summertime, the crops become
fully grown and your efforts produce the highest possible yield. This
is when it is time to harvest and collect the full benefits of your
labors. However, if you wait too long to harvest, the crops will start
to wither, and then eventually die. In other words, the greater the
delay, the greater the risk of loss.
This good timing, bad timing principle works exactly the same way in
real estate.
When you buy real estate at the right time – when
prices are at a market cycle low – and sell real estate at the
right time – when prices are at a market cycle high – you
can make optimal returns with minimal risk.
The lesson is simple: whether you are growing crops for
the greatest yield, or buying and selling real estate for the greatest
profits, there is a time to sow and a time to reap.
The Coming Economic Upheavals:
When to Buy
While some forecasters believe the future is bright, and others believe
another depression is right around the corner, no one has a crystal
ball that can see into the future.
Whatever your personal viewpoint about what lies ahead – whether
you are an optimist or a pessimist – one thing is certain:
change is unavoidable. Cycles of boom and bust are as predictable as
the changing seasons and the tides. While the course of mankind is ever
upward, there will always be major setbacks – and major real estate
downturns – along the way.
History does repeat. If you live to be 75 years old and
regardless where you live in the United States, chances are good that
you will experience one serious recession every ten years,
and one economic depression at some point in your lifetime.
While “New Era” promises of lasting prosperity come and
go, there is no reason to expect that this reoccurring pattern will
not continue.
What is ironic, however, is that while the long-term trend of real
estate prices continues to ratchet higher, it is the market downturns
that ultimately offer you the greatest opportunity to profit. In fact,
when you buy at a market cycle bottom (just before the market turns
up again), this will likely be the easiest money you will ever make
in real estate. This is because there are always plenty of screaming
bargains available from highly motivated and even desperate sellers,
who unfortunately find themselves in trouble.
The Campbell Method teaches you how to pinpoint
when the market has hit bottom and is ready to climb higher, so that
you can take advantage of these tremendous real estate bargains.
When to Sell
Mistakenly, most people believe real estate is always
a safe investment. Although you can make spectacular profits with
low risk during rising markets, nothing goes up forever. Sooner
or later rising markets turn into falling markets. When this happens,
when real estate values go into major decline (even if its not as bad
as the 1929 crash), some or all of your profits can be quickly wiped
out in what seems like the blink of an eye.
To protect your real estate profits, you have to know when to sell.
In fact, knowing when to sell is even more important than
knowing when to buy. Why? Because the loss of real profits always takes
priority over missing out on potential profits. After all,
there will always be new real estate trends to catch. But if you lose
your money because of bad timing, you may not be in position to grab
the brass ring when the next market cycle hits bottom again.
If you invest in real estate wisely – knowing that when to sell
is key – your alertness can protect you from problems that may
seriously hurt or break others. It is easy to see how “selling
high” also puts you in the ideal cash position to “buy low”
after prices fall.
Whether the future holds good times or bad times for the
real estate market, The Campbell Method prepares you for both.
Timing the Market for Maximum Profits
While housing markets vary greatly by region, historically,
real estate trends tend to last about three to five years on the upside
and three to five years on the downside. To really profit during the
good markets and, more importantly, protect your profits from the bad
markets, you must be able to anticipate these trend reversals.
To do this, you have to look deeper into market events than
what is reported on headline news or what is held true by mass thinking.
These approaches put you behind the curve, not ahead of it.
So, how can you anticipate when these trend changes
are coming? How can you tell when the market will boom . . . and when
it will crash?
The Campbell Method for timing the real estate
market shows you how to track the trend of the market by using five
key real estate indicators called “Vital Signs.” These market
bell weathers are “leading indicators” to what is on the
horizon for real estate prices and will give you a three to six month
“window into the future.” This early warning detection
system gives you the strategic advantage of being able to buy and
sell before mass crowd psychology starts to move real estate
prices higher or lower in a significant way.
What the Vital Sign Indicators Tell You
The Vital Sign indicators directly measure supply and
demand pressures that are building in the real estate market. By letting
the market disclose what it is going to do next, you can rely on these
indicators to tell you:
- When home prices are approaching a market peak.
- When home prices are approaching a market bottom.
- When home prices are in market uptrends or downtrends.
Clearly, the better you can anticipate real estate trends, the more
likely you are to profit. Wayne Gretzky, the greatest hockey player
to ever play the game, put it this way:
“Go where the puck is headed, not where it is.”
Knowing how to use the information that these Vital Sign indicators
provide can produce staggering results. Imagine the profits you could
achieve if you were able to anticipate the “high” and “low”
points of the real estate cycle three to six months ahead of the general
public? It would be like winning the lottery!
Why ride the market cycle up and then ride it back down? The key is
to buy at the bottom and sell at the top. If you like roller coaster
rides, go to the amusement park.
Big Mistakes in Real Estate and How to Avoid Them
Buying near market cycle bottoms can make you rich and
buying near market cycle peaks can make you poor. The reason
for this is simple: if you buy a home at a highly inflated price, you
stand to lose much more than you make. Remember, since there is no protective
moat built around real estate values, what may appear to be the American
Dream can quickly turn into a nightmare if you are not careful. Home
prices – especially in California and other high priced housing
markets – can drop up to 30% or more during market declines.
When you buy at a market peak, a $250,000 home will drop
in value to $175,000 during a 30% market decline. This means the same
home would have to appreciate by a whopping 43% just to break even.
Even though home prices have steadily risen since the 1950’s,
waiting years and years to “get even” is hardly a good way
to make money in real estate or get ahead in life.
The risk of “buying high” at market peaks becomes even
more perilous when you consider how downturns in the economy closely
parallel downturns in the real estate market. For better or worse, 15-20%
of the economy is directly linked to the health of the real estate business.
It is called the “wealth effect.” Therefore, if you “buy
high,” it is likely you will be over-burdened with a big mortgage
(debt) on a home that is sinking in value. Then, as the economy unravels
– this is especially true if you lose your job, your savings,
or your home – the negative effects on you and your family can
be devastating.
Maximum Profits with Minimum Risk
The Campbell Method for timing the real estate
market shows you a safe and rewarding way to buy and
sell real estate. Using market insights generated by the Vital Sign
calculations, you will know to buy before the market starts to move
up . . . and to sell before the market starts to move down.
Simply put, as the Vital Sign indicators go . . . so goes the real
estate market.
Realize this: real estate trends never end. Sooner or
later -- good or bad – these trends only change direction. If
you stay alert and prepare yourself for these approaching trend changes,
you can place yourself in the extreme minority of people who
will prosper from whatever direction the real estate market (and the
economy) moves.
The Campbell Method is not a gimmick or a get-rich-overnight
scheme. It is a fresh new approach to buying and selling real estate
that shows you how to maximize profits and minimize risk by intelligently
moving money into and out of the market, not by whim, but by careful,
well thought out analysis of trends. When you master the market timing
skills presented in this book, your success in real estate will be secure.
There is an old saying in the markets: “Nobody rings
a bell when the market peaks or hits bottom.” But contrary to
common belief, when you apply The Campbell Method for Timing
the Real Estate Market, that bell can ring for you.
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