What Buyers Have to Wrap Their Heads Around
Continuing the conversation… in the early stages of a shift, the first in more than a decade and one that was arguably long overdue. Since most people have never experienced or can’t remember anything BUT a market driven by multiple-offers and a crazy-fast pace, lots of adjustments are going to have to be made on the fly in the weeks and months to come.
We’ll see some buyers running for the hills with fears about buying in a market that’s suddenly going down. We’ll see some sellers burying their heads in the sand, resisting the notion that there’s been any shift at all. And we’ll see some agents looking like deer in the headlights when they realize that success in a slower market requires a very different set of skills.
Despite it all, homes will continue to sell since real estate revolves around big life transitions: marriage, children, job transfers, divorce, aging, health concerns and death and people don’t stop living (or dying) just because the market slows down. There’s even an argument that real estate activity may increase as the market slows and balance returns.
Here are some things buyers will have to wrap their heads around:
Careful What You Wished For: This is exactly the kind of market buyers have been hoping for, for at least five years. To all those buyers who pledged to stop looking until “next year” when the market slowed down. Guess what? Next year is here.
Higher Rates: 30 yr fixed rates at 3% aren’t coming back anytime soon. Over the last 50 years, interest rates have averaged over 7%. So get used to it and know that if they come down again, you can always refi.
The Sky Isn’t Falling: This is not the Great Recession and there’s no wave of foreclosures coming. People have too much equity and their incomes support their mortgage payments. No one’s going to bail on their house just because prices drop.
That’s Your Amygdala Talking: Why are buyers more comfortable buying in a market moving away from them rather than in a market that’s dropping toward them? Does anyone really think the market will go up forever or down forever?
Time Horizon: Don’t buy a home if you are a house-flipper. Anyone else who thinks they’ll live in their home for at least five years, relax, that’s plenty of time for the market to cycle back up again.
Quality of Life: Why buy a house in the first place? To make money or to create quality of life? Home is an investment in your future and in what matters most – not a lottery ticket.