It’s clear that we’re in the “calm before the storm” phase of the market. Judging from our own level of activity, discussions with other agents about the Lafayette real estate market, and conversations with stagers/industry support vendors… we are going to see a very active first half of the year. Our own portfolio of business is more heavily weighted towards the listing of client properties, however, we are also seeing quite a few clients jumping into the market because they believe now is the time to buy. All of our clients who seek to buy properties in the immediate future are sophisticated business people. Some are seeking to buy and hold for investment purposes, while another client who is the CEO of an international corporation has been renting for an extended period of time and now believes he needs to jump in and buy soon. With record low interest rates, significant price decreases over the last couple of years, and a likely rise in inventories, it’s hard to argue against this being an ideal time to buy. This Sunday’s Super Bowl historically seems to mark the beginning of the upswing in our local real estate market. In about two weeks or so, I expect that we’ll all be having a hard time keeping up with the abundance of new inventory.
Why the large influx? Well, if I had to come up with one word to describe the first half of 2009, it would be “paralysis”. The financial and real estate markets were in a state of shock, and no one was doing much of anything in the world of real estate or finance. The latter half of 2009 saw a much healthier real estate market, but those not needing to sell immediately stayed rightfully on the sidelines. Some were also apparently enduring financial distress while waiting and hoping for a better market ahead. With returning signs of life in the US economy now appearing, the people who held on and awaited the end of 2009 are now jumping in.
On a personal level, it’s hard to see people who absolutely need to sell due to changes in their life circumstances. In the ten or so years that I’ve been in this business, I have only encountered a small handful of clients who were selling for financial reasons, and most were really logical downsizing moves. The situations we are encountering on a more frequent basis during the last 12 months are much more compelling, and much more difficult to buffer without emotionally sharing the client’s pain.
Another challenge that I am beginning to sense will be more prevalent in 2110 will the establishment of reasonable seller expectations in the marketplace. Yes, the market should be better than 2009. Absent an exogenist event, it would be most challenging for it NOT to be better. The problem is that “better” does not mean a return to the prices of yesteryear. For some, it seems like that is the expectation, or that those days are just ahead. The reality is that those days aren’t written into the script for anytime in the foreseeable future. Sure, if we find some enormous untapped oil reserve under Contra Costa County, we might see an abrupt jump in prices! Absent the discovery of Contra Costa crude oil, I expect a relatively flat market this year. At the upper price ranges, we could easily see continued downward pressure into 2011, therefore proper pricing of homes will be of paramount importance. Be realistic, be objective, and then price to the market.
