Welcome fellow travelers, to this fascinating garden of
forking paths that we euphemistically embrace as the real
thing …
Occasionally, the real path appears to run as straight as an
arrow all the way to the horizon and beyond - even when
it is a mirage. Other times the real path feels as easy as
clicking the heels of our right and left hemispheres
together and following the little bread crumbs of memory
home. Sometimes it seems like we can navigate the real
path simply by listening to the voice of the trusty Sherpa
guide pre-programmed into our personal GPS systems.
Then again, there are times when all our finely-honed,
homing instincts seem to abandon us to the fates.
Suddenly, we are all over the map, tumbling head-first
down the rabbit's worm hole into a warren of warning
signs and inauspicious auguries. We can't remember where
we've been or how we wandered onto the path to nowhere
in the first place. We search madly for a comfortable briar
patch to throw ourselves into. We can't decide if all the
glass houses we have fashioned are now half empty or half
full of equity!
In trying times like these, I invoke the inscrutable wisdom
of the great Buckaroo Bonzai (google him), who so
blithely observed “Wherever you go….there you are. “
Or, as I like to say…. nowhere is the same as now here give or take a little syntax.
We've come to one of those rare and interesting moments
of clarity in the continuum of change called the real estate
market. It is a moment that was eloquently captured in six
simple words published front and center in last Tuesday's
Sentinel: HOME SALES JUMP AS PRICES FALL.
Ladies and gentlemen, welcome to the tipping point of the
marketplace. It has only taken us three years (on top of the
previous ten) to get here.
After all the speculation about speculation and blogging
for bubbles that took place in 2004, by mid 2005 most
Agents could sense the dangerously depleted oxygen
levels in the market stratosphere. The affordability factor
was declining precipitously even as prices rose impossibly
higher! How could more people purchase when only 11%
of the population could afford a median-priced home on
paper?
The answer, of course, was thinner paper. One hundred
percent, easy qual, no qual, fake qual loans fueled the final
booster stages through 2005 and 2006 for many who were
the last to jump on board the rocket ship. As the
trajectory turned in 2007 and the mortgage market began
to fall back towards earth, subprime instruments blew
their gaskets and burned up upon re-entry. Instead of
having the right stuff, people suddenly discovered they
were lost in space.
But all throughout 2007, even when most of us knew
better or should have known better, some vestiges of an
active real estate fantasy life continued. Despite the
increasing inventory of homes on the market, the longer
number of days on market, the decidedly fewer sales
taking place and the big jump in the unsold inventory
index, those that didn't want to let go kept pointing to
the median price - still $750,000 at the end of 2007!
When the market barely made it out of the chutes this
year, the hangers-on made the case that so few transactions
skewed the median price and we shouldn't take it too
seriously. Of course the real questionable elephant in the
room was: How long could the inventory, days on
market and unsold inventory keep going up and the
sales go down before prices eventually had to come
down too? and What good is the median price as an
indicator of anything “real”?
The simplest of all real estate adages has always been “At
the right price everything sells.” The headline in the
Sentinel could have read PRICES FALL HOME
SALES JUMP . Next month it could read HOME
SALES FALL PRICES RISE . Get the connection?
Throw everything else out for now and concentrate on the
solution. Sellers, what do you want - more sales or higher
prices? The buyers have already told us what they want.
The whole market can't continue to chase its own tail
down. Sometimes it has to meet itself coming in order to
get going.
Or as Buckaroo Bonzai also reminds us: “Nothing is
ever what it seems but everything is exactly what it is.”