Its been a tough year
Sellers are not yet ready to accept price adjustments to get their properties sold. Buyers are finding fewer mortgage vehicles to finance their purchases. Foreclosures and short sales are now large portions of the market in parts of the country where they were almost nonexistent. A huge portion of the real estate industry finds they need skills to survive that they didn’t need up to now to succeed. And to top it off, the transactions that get written seem to have more and more challenges. And everyone wants to know when the market will hit bottom.
Been there
This is my third major readjustment in the real estate market. I mean industry adjusting major.
My first was in 1979 when interest rates went from 8 to 13% in 8 weeks. We had inventory, we had buyers, but none of them could afford the monthly payments. Interest rates would go as high as 18 or 19% before they peaked. People left the business, and some of us just hunkered down and went to work every day.
In 1988, I bought a second office, just in time for my second industry adjusting event. Not only did I make every possible mistake when buying that office (something I may write about in another post), but the Tax Reform Act of 1986 was kicking in and combined with the Savings & Loan debacle, the market was terrible. Foreclosures increased, investors went away, and people moaned about how they had lost money on homes because they perceived they had lost equity as the market was readjusting.
And of course, we’re in the third adjustment. This adjustment has new components, due to the amount of national media attention,the effects of real estate investment and speculation in the heat of the market, the huge amount of second home purchases, and the number of “experienced real estate agents with over 5 years in the business who never worked in a boom real estate market. Even so, we were doing Okay in many parts of the country until the credit industry crunch, and a confusion of the consumers and the loss of consumer confidence.
Done that
In my first rodeo. we learned about seller financing, wrap around mortgages, installment contracts, and blended interest rates. And at the end of 1982, I realized I had earned more money then ever before, even with the high rates, which had started to come down to the 12% range. In January 1983 I opened our first office because it was time for me to do that- not because of the market. And we worked really hard. As we grew, and the market improved to the great market of the mid to late 1980’s I realized tin retrospect hat 1982 was when the market had changed.
The next time around, the market was tough but work was still a matter of going in every day and working harder and harder with limited results. We honed our skills working with buyers, taught sellers about adjusting prices, went back to basics, tried out new tools , and after doing that day in and day out , all of a sudden we turned around and realized that the market was getting more stable and our numbers were once again increasing each year. until, in the mid 90’s the market was once a “good market”.
This time the challenge is to learn basic skills that weren’t needed before. Treasure the call of a property buyer and learn how to help that consumer reach their objectives by focusing on the market, financial prudence, and real estate as a long term purchase. Learn to meld old techniques with new technology to reach the audience of potential consumers who need your guidance. And learn more about the business as a core human need, and how it affects your buyers.
It really is a good time to buy real estate if you know what you’re doing, or have an agent who can show you how to get it done properly.
Get Your T-Shirt
- Discard many of the wisdoms that you learned when the buyers outnumbered the sellers and the rising tide of appreciation floated everyone’s investment boat.
- Sell Investors properties that they can hold and earn income from. Or properties that have a value added component to the rehab.
- Remind home buyers that when rates are good, it is the time to buy, and rates are good now. Over a period of years, they will probably go higher before they go lower.
- If the rates go down, they can refi, if the rates go up, they secured more house today then they will secure tomorrow.
- Remind home buyers that they are buying a home, not an investment.
- They need to look for strong basics that help the home fit their needs, and will provide value for the next buyer.
- If the home will fit their needs and they can afford to make the monthly payment, they will benefit from home ownership over the long term .
- A house is not a short term investment, it is a place to raise your family and make a home for yourself.
- Since everyone with a monthly housing expense is probably paying a mortgage for someone, it may as well be for themselves.
Nothing in life is constant except change. And the need for housing. Go help someone fill that need for their family. And get your T-shirt.
