"When do you expect the market to change?" is the question Sarah and I are most often asked by both Sellers and Buyers, and the short answer is: "We don't know." If we judge the marketplace on nothing else but supply & demand, it's NOT going to be tomorrow. Of course, it's never quite that easy; when it comes to buying or selling homes, there are other factors that come into play . . . emotions being at the top of the list.
Depending on the publications you read, the GDP is either going to have an 8% increase in 2021 OR the housing market is going to fall off a cliff . . .
but given that inventory is at its lowest rate since 1982, it doesn't appear as if prices are going to correct anytime in the near term, which isn't to say they won't correct at some point. ALL markets are cyclical (even ours) and it stands to reason that there will be a heavy price to pay for the millions of lost jobs, the untold strain to small businesses, and the huge national debt we've incurred courtesy of the pandemic. (BTW: lost wages don't seem particularly polite.)
Just over a year ago when SIP orders were issued by Governor Newsom, things looked rather bleak. The stock market had tumbled 8000 points, there was nary a car on the road, restaurants, shopping malls, and campuses were all but deserted, and the concept of "social distancing" became the new catchphrase. Meanwhile, the masses huddled indoors, stockpiled toilet paper and antiseptic wipes, searched for masks online while wondering what to do next and how we would weather the storm. (Turns out, not particularly equitably; tech got wealthier still, while the service industry was badly decimated.)
For those of us in the business of Real Estate, we were simply stuck: houses that were painted, couldn't get staged. Staged homes couldn't get photographed. Photographed homes couldn't be shown, and so it went. With strict rules and restrictions in place mandating that properties could only be viewed "virtually," accommodating increasingly anxious Buyers proved to be frustrating, to say the least. Good-bye Sunday Opens and Brokers' Tours.
When the powers that be realized that the only revenue feeding the city coffers would likely come in the form of transfer and property taxes, they deemed Realtors "essential workers," and Buyers quickly returned with rambunctious kids in tow . . . (gone was the concept of a babysitter). Now we could show homes by appointment only - but getting the appointments proved challenging. "Sorry, but the only available opening is 8:00 am or 6:30 pm." (Seriously?!?)
Whether from job transfer, job loss, or simply working from home, against all odds and in the midst of the worst pandemic in 100 years, people chose to move, thus the machinery that helped them do so, needed to be in place. By May, when our painters, stagers, and gardeners could all get back to work, market demand came roaring back, as did the stock market.
And because people were quite literally spending 23 hours a day in their homes - not only working but educating their kids online - the home's functionality became dramatically different AND incredibly IMPORTANT! Consequently, those who were in a position to make significant structural changes to this new reality did so, because quite frankly, they could. Those with means WEREN'T traveling, WEREN'T celebrating with family, WEREN'T sending their kids to school, WEREN'T seeing their friends, WEREN'T going out to restaurants, movies, or gyms, and WEREN'T going into the office. In short, if your home environment was the one thing you could control, you CONTROLLED IT!
With a more empathetic president in office, a new stimulus package having just passed in Congress, Covid vaccinations becoming increasingly available, and interest rates remaining historically low, Buyer demand is on the increase, inventory is scarce, consumer confidence is high, and there may actually be a light at the end of the tunnel. Those are all positive markers. When we track current sales, nearly all of our surrounding communities are selling their housing stock in less than two weeks. In other words, if you are a Seller, this is the perfect storm. (It may never be better.)
On the other hand, even the most well-qualified Buyers have been battered and bruised.
Homeowners who seek to stay in the same community are less inclined to put their houses up for sale, knowing they'll be battling it out on the other end when they go to buy, thereby increasing the lack of available housing stock.
Is there an easy answer to the housing shortage? (I'm afraid there isn't.)
So when do we expect the market to change?
Let me know when you figure it out. In the meantime, Sarah and I are here to help you achieve your goals, whatever they may be.
How can we help you?
Julie Gardner, has been writing The Perspective for 18 years and has published more than 725 humorous but always informative, essays on life and real estate.