Part 1: The Market is a Changin’
I was talking with a colleague the other day. She reminded me just how difficult it is for anyone (professional or otherwise) to develop and maintain an accurate perspective about what’s really happening in the real estate market and where values are at.
The market is way too big of a beast. And it moves way too fast. It is constantly getting invented and reinvented each day by too many different people making too many different life-altering decisions. Throw all of it into one big pot, turn up the heat and bring it to a boil. Voila, there’s the market you are currently swimming in.
The larger machinations of the marketplace (in the deep end) rarely yield easy answers to inquiring minds looking for a quick fix. Or simple solutions designed to assuage the concerns that inevitably arise when it comes time to sell your home. Understanding clearly where you and your home are at in relation to the market, at any given time, is always going to be a challenge.
My colleague and I were reminiscing about 1989. And how most people thought that it was the earthquake that caused the bottom of the real estate market to fall out back then. Just like it made the tops of some of those buildings on Pacific Avenue fall down. It seemed obvious – the market tanked because people didn’t want to buy a house in earthquake country anymore. Prices dropped and stayed down until 1993 when enough time had passed and memories had faded enough to coax new buyers out of the ruble.
But it wasn’t really those 15 seconds that turned the market on its head. Deeper shifts in the landscape had begun to appear long before October 17th. As my colleague observed: “The market started changing in April of 1989. By summer it was as dead as a doornail and very little was selling. Suddenly, I found I could pretty much shoot a cannon through one of my Sunday open houses and not worry about hitting any buyers.”
Hindsight says that the boom market of the late 80s didn’t end with a bang or a rumble in October. It was an extended whimper that began its long slide seven or eight months prior to that. The earthquake didn’t help. But it wasn’t the cause celeb of all the upheaval.
Think about the excesses of the Savings and Loans Institutions back then and the fixation that developed for newly-minted Adjustable Rate Mortgages while the market was going crazy-up and it’s easier to see the roots of real estate’s big shake-up in the rearview mirror.
Loma Prieta happened here – not in the rest of the Country. It couldn’t explain the nationwide recession we had or the Read My Lips/It’s the Economy Stupid Memes that came out of the Bush/Clinton Election in 92.
And that brings us back to the Real Estate Market today. It’s already been a long interesting summer and the dog days of August aren’t quite over yet. Where is the market at? It’s a little confusing at the moment. On one hand, we’ve seen the highest Median Prices we’ve ever seen in Santa Cruz County – over $800k. On the other hand, there have been significantly fewer sales happening. So is all this better or worse for those Sellers who are thinking about putting their places on the market now?
To be continued next week….