Shift Happens Part 3

Tom Brezsny
- Tom Brezsny

Shift Happens Part 3

Continuing the conversation…until recently this was a real estate market that had successfully defied the odds, rewritten the rules, broken all the records and steamrolled over any previously-held notions of normal. It was the longest-running, highest appreciating, craziest-making market of all time, until suddenly, it wasn’t. 

With interest rates 2% higher than in March, ongoing stock market volatility,  the highest inflation rate since the 70s and widespread concern about a recession, we’re in the beginning stages of a much broader, more significant shift in the marketplace. One that was long overdue. 

Right now, there’s a whole generation of people out there, who have never seen a market that wasn’t defined by low supply, waves of multiple-offers and overbids, huge amounts of cash, rapidly disappearing contingencies and a non-stop, frenetic pace. The perfect storm that’s been driving the market to dizzying new heights is the only thing they know. 

They/we are all in for quite an adjustment in the months to come as the number of sales slows, prices flatten, loans get harder, negotiation increases, contingencies return and people discover that not all houses sell with multiple-offers, for above list,  in the first few days.

Sellers, who have ruled the roost for a decade, will have to wrestle with bouts of first world angst as they’re dragged kicking and screaming into escrow and forced to give back some of the easy gains that flowed like manna from heaven over the last few years.

Buyers will have to figure their way out of their own torturous good news/bad news conundrum. The good news?  They’ll be getting exactly what they’ve been praying for  – a more balanced market and more inventory. The bad news? Interest rates will be significantly higher for the foreseeable future.  

We’ll also have a chance to observe an interesting aspect of human nature. Buyers are more comfortable buying in a market that’s going up and away from them than in a market that’s slowing down and coming towards them.  Up markets promise future appreciation and down markets trigger fears about a crash. 

Many agents who first entered the business during the last decade will face serious challenges. The digital lead platforms they’ve come to rely on are going to start drying up. Those who have functioned more like transactional order takers than trusted fiduciaries will have to learn a new, more client-centric brand of real estate that relies on communication and relationships.  As in all previous shifts,  when the market stops going up, a housecleaning in the industry begins. 

NEXT WEEK:  How to sustain reasonable perspective in a changing market.

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