It felt like Deja Vu.
Sitting in a living room chatting with a client, I felt like I’d had this conversation before.
“Toby, I’d love to employ you however I think I’ll do better next year.”
I continued talking with her for a little longer before we said our good byes and I left with her comment running through my mind.
She, we’ll call her Susie Seller, was considering selling her home. Talking about the market and my suggestion for listing – she began thinking she’ll do better next year. I put my best foot forward but she is probably going to wait to list until next year — when the market is better.
That’s fine, I’ll have a buyer for her — with a slight problem.
You see, my deja vu was that only a couple of days before I was sitting in Trotters Coffee Company in downtown Delaware with a potential buyer, we’ll call him Billy Buyer. He’s pre-approved and would make a great buyer for anyone. As we talked through the meeting the comment was made.
“Toby, I’d love to employ you however I think I’ll do better next year.”
Now, I’m not a genius – but Billy and Susie can’t both be right. It isn’t possible that home prices will increase and decrease (looking at it froma macroeconomic scale) at the same time.
So how should Susie and Billy move forward?
If I new the answer to that question, I’d be touring on the nation circuit pulling down John Edwards-cash (rumored to be $75,000 per hour) for speaking engagements. But we can use some common sense things to look at the future.
- Economics – The basic fundamental building block of capialism is the “Invisible Hand” that forces prices to decline when supply increases with a movement within equilbrium. Now the problem with “pure” capitalism is that the lows can be very bloody — and take years to recover from, the closest example is the depression. So the United States uses a form of capitalism that is blended with other forms of economics policy which works to keep the lows from being so low, but also keeps the highs from being so high. However when the highs kept reaching higher and higher in the past decade the “controls” were relaxed. This is simply human nature — we want to be protected from the bad – but don’t limit the good. What does the economic picture paint? That will really be dictated by …
- Government – I like being independent of the government. Unfortunately the real estate world is going to be driven by the economic bail-out package. We don’t know where the shoe will fall on this issue. The key is WILL (or CAN) the American public be placated by the Washington faces and regain our confidence.
- Confidence - Regardless of what happens in other areas of the market, consumer confidence is the No.1 issue that is facing the housing market today. If I buy today what will happen to my mortgage, equity, and house? That is the $700 billion question in people’s minds today.
Is Billy or Susie right? Only time will tell, but one will be wishing in a year they’d been in the market this year.
Photo used via permission of Stock.xchng.
Years from now “old timers” will look at home prices, shake their heads and say “do you now what I could have bought that house for back in ’08?”.
Right now home prices are low AND interest rates are low. Home prices may dip a little more or may not but it is for sure that interest rates will be heading up once the bailout is rolled out. To take advantage of both low prices and low interest rates a buyer needs to be in the market now!
We got some love during the most recent (11oth) Carnival of Real Estate hosted by MyNewPlace. This post was one of five honored this week for its look at the current economic crisis.
http://www.mynewplace.com/blog/2008/09/29/the-carnival-of-real-estate-110th-edition/
Jim – Thanks for the well thought out comment. My contention is with this comment: To take advantage of both low prices and low interest rates a buyer needs to be in the market now!.
Would you have said the same one year ago? If so, then would those same buyers have gotten a better interest rate and potentially better price today? Maybe. That’s the problem — for every “bought in ’07 and would have saved in ’08″ there is someone that wouldn’t have been able to get a loan in today’s market.