Back HomeUnderstanding a Market Shift
It’s difficult to make sense of what’s happening in the economic world…we’ve rarely seen anything like it. As banks tighten their ropes and the media reports record lows in the stock and real estate markets, we begin to wonder, “Where’s the bottom?”
The problem with this question is that it’s never clearly answered. Why? Because no one really knows. If you buy at the bottom and sell at the top you’ve simply been one of the lucky ones. Most people play the real estate game in a “safe zone,” analyzing the type of market and how to react to predict a favorable result. The reality is that we never really know the bottom until we’ve begun to climb back toward economic stability.
Real estate is cyclical and meant for long-term investing. Long gone are the days when you can flip a condo right at the closing table and profit 20+ percent. Those were nice days…but they’re gone. A healthy real estate market appreciates steadily with ebbs and flows along the way, not tidal wave action that ends up wiping everyone out.
A shift in the economy has created a shift in our psyche. A recent article in Realtor magazine highlighted some important key points featured in a new book, Shift, for understanding a buyers’ perspective in order to regain stability in this shaky economic climate.
- Talk to your broker about the local economy, he/she will give you a more well-rounded view of what’s happening if you’re thinking of buying or selling. Relying only on the media and the word of your friends and family leads to misinformation. Your local broker will know what’s selling, what’s not, who’s lending on what and what products are available for your specific needs.
- Ask yourself why? Are you buying because of a job change, diversifying your portfolio or simply needing a weekend getaway? There is an endless list of answers to this question so tap into the one that motivates you to buy. When you have clarity and are truthful with yourself, the process can be easier for all parties involved. Wouldn’t you much rather say, “I’m glad I did,” versus, “I wish I had?”
- Like a wrench thrown in the spokes of your real estate tire, your mindset has shifted. While you feel confident in your knowledge of the local market and have all the right motivation to buy, something is keeping you from taking the leap. Authors of Shift say fear is the reason buyers are reluctant – fear of paying too much, fear of depreciating values. The irony is buyers had incredible desire when prices were escalating and the advantages were all to the seller. “When they should have been afraid of paying too much they weren’t, and now that they should be afraid of paying too much they are. It’s one of the great paradoxical moments of any market and the herd instinct at its most pure.”
Prices have dropped, incentives are off the hook and short sales are becoming increasingly more popular. At the first sign of market improvement these great opportunities will start slipping away. We know this is a Buyer’s Market. It’s up to all of us to create a healthy buying and selling atmosphere to regain a stable housing market – one person at a time, one transaction at a time.
