Mike was extremely concerned when he called me. “How do we tell a different story? People keep thinking the market is crashing and sellers are in trouble, but I just don’t see it that way,” he said. “Tell them the truth,” was my only response. The truth, which everyone seems to have forgotten, is that the market on average for the last three years has been anything but average.
Halfway through 2012, things started to turn around for the real estate market. We finally hit bottom around late March, and the housing stock started to dry up. We started to see homes selling after just a couple weeks, multiple offers became the norm, and we were off to the races. Prices marched up over the next 8 years, and things were generally good. Sellers were getting good prices. Buyers felt they had “won” the bid and were happy with their homes, but these weren’t bidding wars and no one killed themselves for the home.
2020 hit and the market froze. People prepared themselves for the worst downturn of our lifetimes. Inspectors couldn’t enter houses. Appraisals were done from the driver seat. Cities and counties couldn’t even properly process paperwork. This was surely the end, and in anticipation, the American public was offered the cheapest money EVER. What no one understood was that lockdowns would dissolve high density population centers and drive millions upon millions of people scrambling for the suburbs and beyond. Multiple offers no longer meant two or three people competing. It now meant 15-20 people furiously fighting. Prices didn’t follow the last 8 years and slowly marched up; they shot up 30-40% overnight. This was the fever pitch buyers and sellers came to expect, but it wasn’t reality.
Reality is acknowledging that there will always be a give and take. There will be buyers’ markets and sellers’ markets. We’ll have times when the seller has to credit things at closing and times when the home is sold “as is.” Some years homes will appreciate 10% and others they will hold steady or even drop slightly. This may seem annoying or boring or upsetting, but that’s the reality of real estate. It’s a long term game that favors the patient. It’s not a get rich quick scheme that it appeared to be over the last 30 months, and that’s what people need to realize.
Bringing balance back to the market is good for almost everyone, believe it or not. New home buyers need a chance to get their feet in the doors, and those looking to step up need an actual shot at getting something that fits them better. It’s hard to adjust back to normal, but that’s truly what this is; we’re heading back to normal. If you were planning on a high sale price on your home, you may have to adjust your expectations a little or just hold on for a few more years. Prices will rise once again and real estate will remain a fantastic investment, but again, it favors the patient.
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