It's the day before tax day, and many folks are especially stressed out to meet the April 15th deadline. I was thinking that there is a connection about how people feel during tax season, and how buyers and sellers feel during a challenging real estate market.
It's that sort of market right now. A market that makes you feel like tomorrow is tax day. Buyers are anxious. There are so many choices. Prices seem to be all over the map. Many buyers want to 'wait out the market' until it hits the absolute bottom. But this strategy is flawed, and leaves out the fact that all the time they are waiting, they could have been getting some great tax deductions by owning real estate. They could have been saving money by not renting. Could of, would of, should of. It's that classic second guessing syndrome. It reminds me of watching a gorilla at the zoo and trying to guess which side of his cage he will go to next. You just never know, do you?
It's the same way with the real estate market. It could go any way the wind goes. None of us has access to that proverbial crystal ball. That being said, it seems logical that if you need to buy a house, you buy a house- no matter what the market is doing. This market will help buyers immensely, so score one more for the buyers' side of the fence. Buyers- here are the facts: Seller's are ready to deal. Prices have dropped. Interest rates are low. There are plentiful choices of homes for sale in all price ranges. Even if you don't get your first choice, you can move onto your second, third...tenth- well, you get the idea! Buying a home is like doing your taxes- when you gotta do it, you gotta just do it. Truly, there is no time like the present. For those who want to keep waiting...Well. What can I say, other than that is your prerogative. One of my favorite quotes is the following, "Life is what happens while you're busy making plans." So for all the buyers who are planning to hold out for the bottom, just remember the trade off from not being able to enjoy your new home. Why postpone your happiness, when historically real estate is the safest investment you can make?
Sellers have a different sense of anxiety than buyers right now. And buyers, in case you haven't figured it out yet- you've got it made, especially if you're not needing to sell a home before you buy. I have several clients who are in this situation that I term, "frozen equity." They must sell before they can buy. Given the state of the market, that's not an easy task by any stretch of the imagination. Many houses have been and are sitting on the market for what to many home sellers seems to be an exhausting and unbearable length of time. Some in excess of a year or more. Even great houses that I thought would sell in a heartbeat are still sitting on the market. Sometimes clean houses that are move in ready and have had big price reductions still fail to get buyers' attentions, and have sat without offers for great lengths of time. This can only be attributed to a glut of inventory, and a decline in demand by buyers who are waiting out the market, as mentioned above.
Bottom line is that in this market, buyers want to feel that they are getting "a deal." They want the best house on the block for the least buck! If you, Mr. Home Seller, are not comfortable selling your home in this sort of an environment, especially if you don't want, or don't need to sell- please don't put your home on the market right now. You'll just be setting yourself up for aggravation in an overcrowded marketplace. There is a huge amount of real estate inventory that needs to be cleared out before the market has any chance of becoming a more balanced market. It's no different than a department store after Christmas. Most shoppers are going ganga over the 50% off clearance holiday merchandise. The new shipment of Valentine items is (however beautiful and prominently displayed) collecting dust. It's just a case of simple human nature to try and get the best price possible, whether it's real estate or Christmas decorations.
When a conventional seller's property is competing with foreclosures in a neighborhood, the resulting environment is like a department store after Christmas. The element of deep discounting in a market with many foreclosures and excess inventory confounds the situation, creating a clearance sale mentality and lowering the perceived and actual market value of the community as a whole. Neighbors can try to help neighbors in an attempt to prevent further erosion in home values, however counter intuitive this type of action may seem. That way, we can help to get rid of the old inventory, bring in the new, and keep up the neigbhorhood in the process.
How is the real estate market related to tax season, you ask? Well, like tax season, an artificial frenzy is created when money owed and deadlines come together. The current real estate market is also an artificial frenzy, created by previously artificially high real estate prices, and further perpetuated by the media to sell more newspapers. This artificial frenzy, like any artificial frenzy feeds on itself, and the hole deepens with each bite. If the market were left alone to its own defenses, buyers would buy and sellers would sell. But when you add the component of money and deadlines, fear is created, thus the cycle broadens. The real estate market will eventually even out and stabilize, it's just a matter of when. Like any other challenge in life, it's about a mind set. In order for a change to take place, a necessary perspective shift must occur. It's a psychological line in the sand that needs to be crossed in order to see it. Once buyers realize, "Hey, there really are some good deals out there. I need a house, therefore I'm going to buy a house." And sellers sensibly ask their agent, "Hey, I'm taking that job in Ohio. How low do I have to price my house to sell it in 60 days?" The market will come back. It really hasn't gone anywhere. Let us stop throwing the baby out with the bath water and allow the dynamics of the market do their own magic.
Written by Sarah Ley,
BSBA, ABR, CRS, CNHSA
Tucson, AZ Realtor with
Long Realty Company(520) 404-0544
http://www.sarahley.longrealty.com/
sley@longrealty.com
Monday, April 14, 2008
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