I dunno, Bob. If you bought a house 5 years ago -- in 2007 -- in OC you're almost certainly badly underwater right now, even if you put 20% down. Furthermore, even the biggest bull doesn't think you're going to get back to where you started, 2007 prices, before another 5 years, 2017 or so.
Do we really think a guy who complains about needing to hold his house for 10+ years before he even makes a profit is a victim of "short-term" thinking? Do we say that a person who fears that buying in 2012 may be the same trap -- won't see a profit until 2022 or later -- is also a victim of short-term thinking? I don't think so.
The article is 100% right that no one should try to time the market to the month, and fret if he buys in March and in Decembe his property has fluctuated down 1% (and maybe back up again 2% the following February). That kind of thinking is silly.
But...is that really any explanation of the behaviour of most buyers? I don't really think so. I haven't met very many people in the market for houses who are fretting about 1% or even 5% drops over the near-term. They're worried about 20% and 30% drops, over a span of 5-10 years. They're worried about buying a $650,000 SFR in their 40s today, and having it worth $655,000 twenty years from now, when they would have liked to retire. Is that absurdly unlikely? Tell that to those who bought in 2004,2005,2006,....
I don't think people are quite as dumb as this author suggests. To the extent buyers are worried about price depreciation, they are thinking about large movements over long periods of time. Which, given the last ten years, is perfectly reasonable.
Indeed, if the Federal reserve had not driven interest rates to zero -- if you could still earn 5% on a CD -- I can very easily see people with downpayment-sized cash lying around choosing to leave it in a nice safe bank account cranking out a guaranteed 5% gain year after year then plunging it into a house and hoping for the best.
