Let me begin by stating the obvious, nothing in life is ever guaranteed. In fact, given the economically volatile and politically uncertain times we’re are living in, something could happen to radically alter the financial landscape in less time than it takes to consume a gallon of very expensive oil. However, despite those concerns, I’ve got to say that it feels like the market has shifted in a positive direction, at least in our local market area.
The first 75 days of this year have produced the best sustained performance in our local market area since the first quarter of 2007 — and that was the last gasp of the late lamented bull market in housing. In fact, thus far this quarter, we’ve booked almost twice the business we did during the same time period in any of the last three years. There’s been a threefold increase in the number of people viewing the properties we’re marketing. We’ve had to contend with multiple offers in roughly one out of every four transactions we’ve negotiated and we’re beginning to see activity pick up among the higher priced properties. All of those factors suggest that something more profound than a simple burst of spring exuberance is underway.
In fact, there really seems to have been a shift in consumer psychology. I’m not sure whether it’s rooted in growing confidence that the worst of the recession may be over, recognition that mortgage rates may never be at this level again or some virtually incalculable combination of factors that we’ve yet to fathom. Regardless, the buyers we’re seeing this year appear more determined to find a new home than to get a great bargain.
About the only thing we can say with certainty about all market corrections is that they’re neither orderly nor readily explained. They tend to start slowly and often give the appearance of incremental improvement in their early stages. However, the trigger that puts them into overdrive frequently catches everyone by surprise. Let’s face it, if change was easy to predict, we’d all be rich. Unfortunately, you need only look back to the dot.com bubble of 1995-2000 and the real estate bubble of 2007-2010 to realize how easy it is for even the smartest people to miss the beginnings and endings of cycles.
I grant that my analysis is primarily the product of instinct. The numbers I have to support it, while good, are admittedly very thin. However, my instincts have been developed over the last 25+ years and have helped me thrive during a period when more than a third of my compatriots have left the business and another third are just gamely hanging on — hoping for a providential change in fortunes.
Actually, I imagine that most people have little capacity left for either emotional or financial risk at this point (and I’d certainly understand that given the last four years) and waiting for more substantive proof from other more authoritative sources is certainly a safer course of action than acting on my observations. However, as comforting as that approach might be, authoritative and respected sources like the Case-Shiller index are, for the most part, generally more adept at explaining what has occurred than they are at predicting or recognizing a market shift as it happens.
That being said, the only folks that I might encourage to act with some urgency are those who’d like to “move up”. There are still marvelous buys available in the higher price ranges, the interest rates continue to be exciting and now that it’s getting easier to sell more modestly priced homes, you’ve got an almost perfect storm of opportunity.
Call me to check out the market!
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