We’re not there yet; however, the storm clouds are showing signs of forming on the horizon. Hold on, this is not a weather report – it’s a sales analogy.
For the past several months many people who have wanted to list and sell their homes have held off putting them on the market because they were waiting for prices to drop on replacement homes (either existing or new construction), and they needed more for their homes than they thought they could get.
All the while interest rates have been quite low, yet only a few people have participated in the transactions that have been occurring.
Imaging the day that is coming – the day of the perfect storm.
All at once people are going to realize that the bottom has been achieved and that an economic improvement is set to occur. This may be a major news pronouncement or something that people just generally understand.
Then everyone is going to list their home at the same time. Dozens of homes in neighborhood after neighborhood are going to be put on the market. Some will be FSBOs and some will use listing agents.
Prices are going to start high and be poised to go even higher. After all there is all this pent-up demand for their homes and there is a recovery mindset.
What they don’t realize is that there is also all this pent-up supply.
If people think there have been issues with excess inventory, wait until everyone tries to sell their current home at the same time. Prices will fail back to reasonable levels, concessions will be made, and some incentives will be offered until a market equilibrium is reached in terms of supply, demand, and pricing.There still will be those who don't understand market forces.
This is the storm that is coming and hopefully will blow through quickly – when everyone who has been waiting to sell their current home floods the market with listings and tries to get top dollar at the same time.
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For more information on my coaching and educational programs and services, visit my website stevehoffacker.com or go to my other blog homesalesinsights.com for additional sales tips, insights, and commentary. You can also listen to my free podcast messages at Steve Hoffacker's Happenings. © Steve Hoffacker, 2009. All Rights Reserved.
I agree with you totally. I believe that it will all happen at the same time. As the foreclosures and short sales quickly get eaten up, I just think everyone is going to have the light switch flick on all at the same time and realize what they have been missing out on.
"Opportunities are like sunrises, if you wait long enough, you will miss out on them."
Mark Twain
I don't claim to know the forecast...what I do know that is if you have your umbrella upside down you are likely to catch the buyers and sellers there now....and later !
I have to agree with Sally & David. My umbrella is ready!!
I think many are holding off on listing and moving up because they view the market as "bad" its not bad, (yes some places its awful) it has turned to a buyers market and sellers will come to grips with that. Then yes, we could have a flood of realization. Hopefully with a flurry of buyers clamoring for these homes at the low interest and the $8,000 tax incentive.
I agree with your assessment, but think there is one more essential ingredient; a press that is no longer forecasting the doom and gloom that it helped to create by applying bubble market statistics to the whole nation. Let's see what we read and hear in the next 3 months. Keep those umbrellas poised.
The perfect storm, low prices, low interest rates. We are between the waves.
I can't wait! Bring it on!
Steve - Your 'perfect storm' analogy is both frightening and exciting. Even more reason for savvy buyers to act now. I appreciate your insights. Thanks
Steve... I'm glad you see the same thing. It IS right around the corner and it WILL happen all at once.. so bring it on.. I'm ready.
Steve...
I gotta tell you, thet here in Newnan GA, we are as busy as bees! The listings are pouring in and the buyers are ready to buy and get their tax credit!
Steve, In general I agree with you. But remember, that real estate is very local. I expect to see some of what you mention, but only in cerain areas. Others will react differently.
David,
Thanks for your agreement, and I love the Mark Twain quote. :)
Steve
Sally and David,
There are players right now, but consumer confidence and fear are holding many people back. :)
Steve
Betina,
Thanks. You may have to use your umbreall to fend off some of the activity. :)
Steve
Gail,
I'm not predicting a calmaity - only a temporary shock to the market that I don't think would-be buyers and sellers are anticipating. :)
Steve
Jeanette,
When Obama proclaims that the housing issue is behind us (similar to his backing off on his dour assessment of the economy yesterday) the press will join in and report that. :)
Steve
Missy,
Agreed. Add in relatively low demand to that as well. :)
Steve
Bridget,
That's the spirit. I think there's going to be a flurry of activity for a short time. :)
Scott,
Thanks for your comments. I agree with your take on this. :)
Steve
Valerie,
Good to see that you have been preparing for this and that you are ready. :)
Steve
Richard,
You might be on the initial squall line of this storm. Great to hear about your activity. :)
Steve
Gabe,
That is true. In areas where there has been relatively steady activity, there shouldn't be that much difference. In areas with a muffled amount of activity, it will happen. :)
Steve
Steve - It is starting to rain here. We have only lost a few sales to contingencies. Although our market is doing fine, our customers have had mixed results. Top reasons - using a listing agent who doesn't have a clue about their neighborhood or submarket and owners who list at above-market prices. Our traffic is up, our listings are up, and it looks like March will be double our sales activity in February. New commercial projects appear unlikely but we are seeing an increase in speculative purchases and land banking for future development as bargains appear on the horizon. These are all great signs... but I still don't like what I see in the lending market. The PMI providers are struggling and their standards are tightening to a point where it is easier to get a loan through lending underwriting than the PMI underwriting.
Ryan,
Thanks for the upday. Sounds like your speing is blossoming just fine. Our land prices continue to be ridiculous - no reality check at all. :)
Steve
Steve - Thanks for another great post. We are starting to see an increase in purchase business. The MI issue Ryan mentioned is a bit of an obstacle, but that is just making us lean more heavily on FHA.
Karl,
Thanks for the support. Glad things are looking up for you. :)
Steve
Steve--you're right. I have had many many sellers tell me they're waiting for it to get a little better. They're all gonna come at once!!!!
Erica,
And how thy're going to come. It may not be pretty for a few days. :)
Steve
I am holding my breath Steve. I don't see it happening anytime soon, but it will happen nonetheless. The question is when. The other question is for what reason. Many people that have taken their homes off the market in the last few months have done so, because they do not have enough equity to get out from behind their mortgages. That is going to take while. Time will heal the wounds, the hipe is that the storm happens soon. The market will rebound when the inventory stabilizes, foreclosures are up and many of the banks have not unloaded yet, so hang to your britches, the bottom is coing soon, but it is a steep slide.
Good post
Bo
Bo,
Thanks. It just seems that so many are waiting for that "perfect time" to put their home on the market and that this time will be relatively the same for everyone. :)
Steve
Steve, I agree with you to a point. I think that there will not only be a flood of homeowners realizing the opportune time is upon them, but also many prospective buyers who have been sitting on the fence and thinking that the rates were going to get a bit lower, or the prices were going to go a bit lower. If both have a realization at the same time, we may be able to weather such a storm.
Tim and Pam,
There are going to be two formidable teams - the mass of people seeking to buy (and still at the lowest price possible) and all those trying sell (and sell high). Should make a great reality show. :)
Steve
The activity of both buyers and sellers seems to be on the rise here in Elkhart but it was also just announced our unemployment went from 15.3 to 18% recently. We are not there yet until more people can find local jobs...
The activity of both buyers and sellers seems to be on the rise here in Elkhart but it was also just announced our unemployment went from 15.3 to 18% recently. We are not there yet until more people can find local jobs...
Emelyn,
Good report on market activity. The unemployment picture is not good, but that will improve in time. :)
Steve
Steve - My umbrella is ready, too. It's already starting to sprinkle here! :)
Looking forward to the RAIN showers. Let the RAIN begin. As they say 2009 is gonna be fine
Debi,
That's great. A little rain is nice. A torent is a different story. :)
Steve
Roland,
The forecast is for rain - just watch of for the flash flooding. :)
Steve
The rain is slowly building here and we're ready to get wet.