I want to start by telling a story. It a humbling story, but it serves good purpose. Back in 2007 and 2008 when the housing market was in its initial state of decline and home prices were falling quarter after quarter there was considerable disagreement among real estate professionals about just how bad this dip in prices was going to be. I was an optimist. I believed, without any real evidence, that the downturn would be short lived, home prices would quickly rebound, and in 2009 I thought we were about to turn around and home prices would rise. I was advising my buyer clients this was buying opportunity and I was advising my sellers, just hold on a few more months. I was betting the market would return to the long term historical trend of increasing value and homes would once again be the rock solid investment they had been my entire life.
I was wrong, as we all know. It got worse, much worse, and the decline in values lasted much longer than I had hoped or thought possible. People who bought in 2009 with the anticipation of rising values in the near term went under, and people who held on for another year might not be out from being underwater even today! Hard lessons and difficult decisions. The real estate market is docile today compared to 2010 and 2011. But the lessons of those “bad” years are not to be forgotten. Prices fluctuate, supply increases and decreases and then increases again in regular heart beat tuned to the seasons, and buyer demand goes up and down based on perceptions that are often times driven by media hype. Hubris is a powerful enemy to fact based decision making. The market never lies, but sometimes it is difficult to see when the facts contradict entrenched beliefs. Homes always sell for exactly what a buyer and seller agree is the right price. Sometimes principles that are the most self-evident are the most difficult to apply with integrity. So, for this first blog entry, let me do a little “be honest” (a term favored by one of my business coaches when he wanted to make a point that required rational introspection rather than usual self-aggrandizing hype of a sales person). I don’t have a crystal ball. Nobody does. Nobody knows what will happen two or three years down the line. Nobody can tell you today if the home you buy or sell now will be worth more or less 24 months from now. It would be unprofessional and pretentious, and an outright lie if I claimed to know the future. That’s not what I do, and that’s not the point of this blog.
So, I empathize with my clients. What I hear every day from my clients who are in the process of buying or selling is they are trying to decide to act or wait. They want to know if they wait will they be rewarded with greater leverage in the transaction then if they take decisive action today? Of course, long term, a decade or more, prices will rise the same as general rate of inflation for all goods and services, but in the intermediary time frame, two years, or less, the price or value of a home is uncertain, and buyers and sellers are grappling with this uncertainty and are seeking my professional advice on what might amount to tens of thousands of dollars of additional costs or lost equity if they act imprudently. What I can assure my clients is that while the price of a home is uncertain it is not arbitrary and it is not irrational. I have dedicated this blog to understanding the logic, math, and statistics of our local housing market. Nothing so refined as an exact formula is possible. But what is possible, what is actually doable, and really makes a great deal of sense, is knowing what is happening in the real estate market in terms of short term trends, especially if you want to know what is likely to happen in the next 12 months. What I am very good at is knowing where we are today, and where we are going in short term, and that turns out to be very useful to just about everyone who wants to buye or sell right now, and that’s why I create this blog.