There are few guarantees in life. One thing you can count on, however, is change. Constant change. I equate real estate with life. It’s always up and down, forever moving, seldom boring. I have now been working in California real estate for 20 years, two decades, a very long time.
We are currently going through another changing market — the type of market that gives many of us in the industry extra grey hair, if we allow it. The buyers expect screaming deals inside this rather soft platform. The sellers expect what they had a few short months ago — lines of people out the door, multi-offers and constant increases in list prices every time they turn around. I want to stand on the top of the tallest roof and yell loudly to all — “Everything has changed — you are not going to get any of that anymore!” Instead, I must be unusually diplomatic and put on my counselor hat. “Oh, but it’s different to six months ago, you see…”
In this industry, many people we encounter have bought or sold a house or two over the years — there are so many experts out there who have never been anywhere near the department of real estate website, or paid a Multiple Listing Service fee, but they seem to know more than the professionals who do this every day. Those people require the extra loud voice from the top of the church steeple. I have been known on occasion to ask, cryptically, “Oh, you have your real estate license?” Being British, some don’t know how to take my tone. I digress.
I recall, back in the dark days pre-crash, when the house prices were escalating every time you turned around and even the appraisers didn’t know what the heck kind of prices to put on the homes. You barely needed a pulse, let alone any income or assets to qualify for a loan and it was a pretty scary time for many of us who knew it couldn’t last. The train had left the station and she was out of control. I had listed a home on Indian Warrior Way in Soledad and that home was $550K. I remember thinking that this house should never be that price and I would never see it at that price again.
Well, I’m here to tell you we have seen that and some. I’m not saying we are headed for another crash or anything, I’m just indicating that real estate is unpredictable and always subject to change. Even the professionals among us shake our heads and say, “Boy, didn’t see that coming…”
“When are the prices going to drop to a more affordable level?” he barked, furious that we were still not seeing the short sales and foreclosures he had anticipated, when he sold his house last year to prep for his next guarded move. “Sell high, buy low,” he tells me. “That’s how you do it!” I tried to explain to him that there were many factors that come into play in order for those ideal buying conditions to repeat themselves. But he knew best.
“When are the inventory levels going to increase?” That’s another one. People look at me strangely when I explain my belief that we are still coming out of the Covid market, when nothing was moving. Nobody was listing and little was selling. Our inventory levels continue to be remarkably low three years after Covid and that keeps prices strong, never mind any increase in rates. How will next year be? Ahh, that’s a good question. I think that there will be a slight uptick in inventory when people see that the price points are still strong, but with that will likely incur a slight decrease in price. I say “slight” because there is new product in our small towns that are in competition with the resale and providing incentives for folks to go new, never mind the wait times and the extra costs that can accompany.
Will we have short sales and foreclosures? Another good question. Inevitably, when you come down off the top of the market pricing, there are folks who are not going to get along with that concept and dump a house. There are others who have life changes and no equity in the house to be able to sell it; but I think there will be minimal examples of this, because the banks and real estate communities learned a lot the last time around and no one will be in a hurry to go back to those dark places. Now, we may see a few short sales again (when the owner owes more than the home is worth and the bank works with them to sell short the house) and we are all much better at working those than we were before, but those do not destroy the real estate economy and entire neighborhoods like foreclosures do.
Isn’t real estate interesting? I talk to people who think they might like to get their license and work part time at it. I say to them it’s not a part time kind of job. You must be fully vested, engaged and available in real estate, or you are doing no one any favors. The same as I do not endorse real estate agents who also do mortgage lending. Real estate is a big enough job all by itself and anyone, in my opinion, who works both, does neither very well.
On the anniversary of my 20th year in the industry in this country and, on completion of my 45 hours of painful further education to be able to renew my license, I say to you that, like life, real estate is always changing and evolving. Just when you think you have everything figured out, along comes a tidal wave to knock you over and show you how little you know — just as we were all bowled over during the real estate crash and its recurring aftermath of distressed properties and people. And then we were bowled over again by Covid and the aftermath of all of its gifts.
People I know are buying hand sanitizer in bulk and masking up again. Let’s hope we are not all in for another cruel session of that particular beast. Having experienced Covid for the very first time a month ago and been put to bed for a week, I am anticipating my next vaccine sometime this month. We can be as prepared as we can be, but life, Covid and real estate always has surprises in store for us. Best leave the Covid stuff to the real experts out there and focus on what we do know a little about. In my case, that might be real estate.