Real estate markets are shifting beneath our feet right now, as we’ve been prodded from lethargy. Well…lethargy in the PHILOSOPHICAL SENSE (we actually worked our buns off). Sellers didn’t have to put forth much effort to sell, buyers knew they basically needed big money to play, market time was sometimes one day, realtors often had no time to stage or even photograph, lenders were staffed up and ready to go, appraisers were sitting in their trucks with the engine running. There was a great deal of complacency, if we call it like it really was, but we moved a LOT of real estate through the system. Everyone knew the role we were supposed to play and we just got on with it. Let’s just say it was interesting, if not insane. And listen, logistics did not in any way diminish stress. Let’s just get THAT on the table.
The bad part of all of it was that first time buyers were incrementally pushed right out of the market in many cases. It wasn’t a shove, it was a sneaky, stealthy inching and edging. Eventually (too late) this prompted lenders to provide programs to assist these folks; but now, even those programs often can’t work, because house prices have gone through the stratosphere, ridiculously so in some cases. Something must give. And it is giving. The issue with most folks trying to evaluate the market is that there are MANY moving parts, not just one, and not the least of which are interest rates and home prices. Then there’s the ‘supply chain’ issue driving infrastructure prices up, and there’s wage issues for contractors in high demand. Then there are huge numbers of professionals pouring in to find housing to live in for that new job they got moved here for…demand, demand, demand. And there’s greed; let’s just put that out there too.
The market is undulating and struggling to find its footing. Have you ever fallen? You know that feeling when your feet slip from beneath you and you haven’t hit the ground yet? That’s where we are. Right there. It’s scary and unpredictable, to say the least, but that’s what we’re dealing with. And all of us, real estate agents, sellers, buyers, lenders, contractors, everybody, are trying to figure out our new footing, which by the way will surely be temporary. Just when we think we are balanced, standing there with our arms out, sweat beads on our forehead, the ground will shift again. Picture that. But you know when you first stand up on a surf board and you are trying to find the sweet spot? Once you find it, it’s AWESOME; and then you ride the wave. You’ll find that place.
We’ve seen this before. I’ve read that everything occurs in a sine wave configuration, with fairly predictable ups and downs, if the data are tracked. Problem is, most people don’t look at data. Not once. They just repeat the mantra. That’s dangerous. Some people call data swings ‘the pendulum’. I say this: “The pendulum swings. It always does.” Whatever it is, we’ve been here before, sometimes in extreme circumstances. And we’re still here; that’s the important thing. Listen, you know this. If things are just perfectly perfect, warm and cozy, rich and sparkly, get ready because a rug’s going to be pulled out. The only thing that never changes, is change. And you also know, one bolt coming loose causes the whole apparatus to become unsteady eventually. That’s how real estate works. It cascades.
What we have to watch out for, to effectively analyze and to separate apart the nuts and bolts, are the actual market and the panic stirred in by news broadcasters, real estate professionals and talking heads (repeaters). Stay with me on this. Everywhere on the news is gloom and doom…which is normal coming up to a big election, by the way. Fear works like a CHARM. That’s one factor. Good news doesn’t get viewers, so the message has to be ‘crash, crash, crash’. But always remember the moving parts. Remember that the picture is complex. There are many moving parts and experienced professionals understand this and can avoid panicked, anxiety driven responses. So do some digging before you allow fear to dictate your next moves. Adjust your expectations. And for goodness sakes get a real estate agent with enough experience and smarts to help you think this through and understand it.
Now, the real estate market may crash. I don’t know for sure, but I doubt it. But what I do know is that there are things in place to prevent a ‘crash’ unless it is politically beneficial. In other words, I still have hope that the economic process will work. Will it be lovely? No. Corrections are necessary and they are never pretty. I’ve been through a few. I remember when the ‘tech sector’ crashed, remember that? Stock prices plummeted? Yeah, ugly. And the crash of 08 was, in my humble opinion, driven by greed and ignorance. Greed on the part of financial and political institutions and ignorance on the part of the people out there buying houses. I don’t mean STUPID; I mean ignorant. If you’re spending the biggest amount of money you’ve ever spent, you OUGHT to have an idea what’s going on. Really. So educate yourself out of ignorance of the market. And while you’re at it, ask some questions about how agency works.
Here it comes. Alert number 1001: Real estate is local. That means what happens in your subdivision could be very different than what happens in one 10 miles away, and definitely what happens in your state will not be the same as one across the country. So you need to see the actual data. DATA folks, data. And you need to know which train car your market is in. Were you the first to fall in 08? Or were you the last? THERE’S A REASON FOR THAT. Find out what that reason is and you have one big data point. And then think about how you should respond. Remember when I said sellers didn’t have to do much of anything to sell their house? Well that was the anomaly and this is now. Time to clean the carpet or declutter, time to expect to have to make your home attractive to buyers. Move-in-ready, folks. Move-in-ready. You heard it here first.
So for now, we see houses sitting on the market longer, maybe as much as weeks longer, and we also see agents rushing in making ridiculously low offers. We are not in a crash, and our demand here is still overwhelming: This is NOT a panic market. In other words, sales prices are often at list price rather than above, and some sellers are selling below list price, too, but not fire sale price. Not THAT low. It’s not time for that.
Builders can’t build fast enough, neither for renters nor for buyers. AND some are still trying to charge elevated prices like they did when interest rates were around 3%. Those days are over. But it takes builders time to turn that ship around. They will though. They surely will. Although I worked for one once who said, and this is a is a quote, “We are just going to ignore the economy and keep on selling houses.” Ask me how that worked out. Listen, humans are adaptable. We’ll get through this and yes, we will buy and sell homes.
Once the providers of supply adjust…and they are adjusting…supply will flow again, and demand will flood in. It will happen. Right now we’re in deer-in-the-headlights mode. People are standing with great big eyes, feet planted, looking around for the boogey man. Wait. Picture that; it’ll make you laugh. But it’s all about the money, ladies and gentlemen. I’m already seeing builders lowering prices, changing the stupid high ‘deposits’ and providing ‘broker events’ to lure us in, where we were public enemy number one for a LONG time (not with DR Horton though; they still paid real estate commissions as usual). Builders slashed our income because in their minds, buyers didn’t need representation. They did, but many buyers didn’t realize that. Anyway, we’re not so bad now; we’re being asked to come around, see what we offer, have a sandwich, we love ya, bring your clients. I’m chuckling. I know where THIS is going. But that’s a HUGE sign that builders have lost a LOT of traffic. See? Data point. Another data point: Real estate agents have good memories. Now I’m being facetious. BUT, you can’t expect to keep ignoring the economy and expect business not to change. Interest rates have gone up! Time to adjust.
What I tell my sellers is that buyers are still out there, but the buyer DEMOGRAPHIC has changed. In my market, the ones who are now shopping can afford the rate hike, but they also know the market is in flux and they’re taking advantage (once they break out of the deer-in-the-headlights stance). Why wouldn’t they? They’ve been beaten up pretty bad for several years. The market is ‘normalizing’. Listen, a 30 year rate under 3 was a HUGE anomaly. THAT was what was strange. We are now moving back to top dead center. For my first time buyers, my heart breaks. But we adjust, we are industrious, we figure things out. And in the not too distant future, the market will favor buyers about as much as it favors sellers….except in the areas where demand outstrips supply. Sellers will keep the upper hand there until demand falls.
Bottom line is this: Real estate is not dead, it hasn’t crashed, this is not the time to panic. It’s going to be okay. But it will go back to more ‘normal’ interest rates. I call that around 6% even though my first interest rate was 14% with a perfect credit score and good income. AND I SURVIVED THAT! (I know) So hang in there.
I have a foundational theme, which is that most problems go away if expectations are correct. So I encourage you to look at the data right around you (local, remember?), and adjust your expectations. It might take a little longer, cost a bit more, but you can still get there. I’ve been here before…in a changing market, that is…and I made it through. You will too. A second foundation theme is that stress kills.
I know. Some folks can NOT handle stress. It’s sad to see them end up very ill or worse, after worrying and hollering their way through a transaction. Not worth it folks, not worth it. No amount of screaming and caterwauling is going to change interest rates or change lender requirements. Deep breath, expectation adjustment…and call an experienced, level headed real estate agent. Then, we we freak out, you freak out, and not one second before.😉 Keep it between the ditches, fly straight and level, keep it between the channel markers, wear your life jacket, remember your parachute….whatever floats your boat. How’s THAT for cliche writing? In other words, lean more towards logical action rather than caterwauling. Just saying. hahaha.
If you want to talk, call me. I’m Brenda Briggs at Coldwell Banker Advantage. Find me online. Meanwhile, have a great day!