We've all heard tell of certain California and Nevada housing markets in recent years where simply offering 'List Price' on a property didn't cut it on the real estate trading floor. Demand had a strangle hold on Supply and only the earliest of pre-approved birds brought home the juciest worms to the nest. Even the economically horizontal section of the United States where I reside and conduct business enjoyed it's own vertical spike in new construction housing starts with six and seven figure price tags to go with it. The appetite for real estate--condominiums in particular--seemed insatiable and looking back I'm not quite sure if it was greed, gluttony, or some other deadly sin feeding the emotional frenzy. The market was big and it was fast and the word on the street was...the only 'losers' were the snoozers when it came to building a portfolio of brick and mortar. What we didn't realize at the time was we were approaching the top of a housing cycle. No biggie, unless you really overpaid.
Over the past 18 months though, the typical real estate Buyer has steadily evolved from the above mentioned 'Emotional' type to the more cautious 'Analytical' type, or so notes my Broker, Joe Pinto. It is a keen observation, I believe. No longer are young couples packing a 'back-up' checkbook in the glove box of the Hummer before beginning their weekly Open House patrol on Sundays. The day of the great American housing auction has gone the way of detente, it appears.
CNN reports that 'outbidding ambushes' in model units by the ubiquitous Jones clan (down the street) as well as Multiple Offers in general declined sharply in the Third Quarter across the Midwest. I heard Alan Greenspan sneezed during a luncheon in Washington and the market reacted accordingly. Sellers are jumping from first floor windows of their cul-de-sac ranch homes from Peoria to Padukah, says one suburban Broker. In downtown Chicago, Listing Agents just take the elevator to the lobby, head straight for the bar and wait for the Buy-side representation to serve up a lowball on the rocks....Ingredients: Identify a property, measure twice, Offer once, hold the urgency. No bubbles, please.
Shame on anyone in the market for a home if they fail to make a deal at the bottom of this current housing cycle. One National Association of Realtors (NAR) report pointed to an 18 year high in housing inventory across the board nationally. That's a lot of meat in the freezer, as they say.
It is my observation that only the truly needy' are moving forward these days. And by 'needy' I mean just that--in need of a home. Be it a job transfer, domestic change (marriage/divorce), or unexpected triplets, there is a certain sector of the population always in the market for a new place to live.
If a thousand closed escrows a week was the Chicago average in 2004 and that number has been reduced by 30% today, this is still 700 transactions being negotiated, closed and recorded on the tax rolls. And while once wily investors are perhaps now standing in the wings licking their collective, speculative, and respective spreadsheet papercuts, I believe the path is clear and safe for those who purchase real estate for their primary residence.
No One Was There
The Cuban Missile Crisis. The Cold War. The Gas Shortage of the 1970's. The Double Digit Mortgage Rates of the 1980s. Inflation. Solar Flares. The Savings and Loan fiasco of the 1990s. The Killer Bees. The Killer Asian Carp. The Killer Asian Beetles. Recession. The Dot.Com thing of a decade ago. Health Care. The Y2K computer thing in 2000. The Housing Bubble talk of a year ago. Sub Prime Lending. The Credit Crunch. Over a dozen Presidential elections in my lifetime, both Republican and Democrat...all those panic driven headlines for the past 50 years and you know what?
Nothing really happened. Nothing that a little patience couldn't have remedied. Nothing that couldn't be attributed to some type of cycle except maybe that whole Y2K thing which was just plain stupid.
So Relax. Buy a house. I just did. In five years I'll be wishing I bought two at this price (like I always do). Only my self-proclaimed 8th Deadly Sin of Fear is keeping me from doing so. I admit it, I too am human and not immune from the media scuttle of the month. I keep one ear on the radio and one eye on the news channels like everyone else I know. And just between us, I do still wonder about those Killer Bees on occasion.