- Tom BrezsnyShoulda Woulda Coulda Bought…
Continuing the Conversation… talking about what it feels like to be a Buyer and be behind the 8 ball of what can only be described as the most lopsided Sellers market in history…
In retrospect, one of the best times to buy was during the Great Recession circa 2009-2011. It was the worst financial crisis in the US since the Great Depression and while prices were tanking a huge inventory of distressed properties (short sales/bank-owned) also hit the market.
But conventional loans were tough to find in those days (the mortgage industry had just imploded) and buyers were plagued by their biggest fear: If they bought, prices might continue to go down!! No one knew where the bottom was. And no one wanted to be the last person standing when the market’s game of musical chairs ended.
So lots of would-be buyers stayed on the sidelines even when the median price was wallowing in the low $400,000s. Even if they had a solid W-2 job and could qualify for a loan, many couldn’t quite summon up the courage to take the plunge. Of course, last month’s median of $1.36m, is proof that hindsight really is 20-20 when it comes to the market!
By 2013, the worst of the Recession was over and the economy felt like it was finally heading in the right direction. Most of those distress properties had been reabsorbed and the credit crunch was easing. Rates dipped below 3.5% and right after the first of the year the market took off with a velocity we hadn’t seen since 2004.
Without all those short sales/REOs to pad the supply, the number of active listings dropped. And without much inventory, the competition for existing “regular listings” ratcheted up. As demand kept increasing through the Spring, a rush of multiple-offers drove the pace and pushed prices up.
Buyers who were ahead of the curve, jumped into the market, as soon as they saw things heating up. Other buyers held back because they couldn’t quite shake the memory of the recent crash. Everyone knew someone who had lost a home or a job or both. Making a long term commitment to a house/mortgage felt “iffy”.
That of course, was the start of the longest, highest appreciating market in history. The one where prices continued to rise for the next decade while interest rates dropped under 3%. The one where demand steadily increased and supply sank to historic new lows. The market crossed its rubicon when more buyers became more afraid of missing out than of a crash.
Next week: F.O.M.O the other dark fear
