I recently returned from a trip to Austin where Keller Williams Realty International hosted one of its annual national conventions called Mega Camp. No we did not “camp” outside in tents and roast marshmallows. Quite the contrary. We stayed inside the convention center all day hearing from the likes of Gary Keller, our company’s founder, who was recently named the most influential man in residential real estate on the Swanepoel Power 200 list. We also listened to incredible agents from all over North America and heard about their local markets and how they are changing.
So how is this relevant to NEJC? Its relevant because I remember sitting in the same convention center 12 years ago when Keller was passionate about a huge correction in the market that was headed our way. He spoke with passion and concern. And I remember sitting in that room thinking, “Prairie Village isn’t L.A. or Las Vegas. We live in this little sheltered part of the country. We should be fine.” Our market felt healthy to me at the time, and like a fool I did not prepare for it. One year later, the real estate market took a nose dive.
Let’s just say that since then, I pay much closer attention to what Gary says.
This year, the observation was made that we are more than likely here as a nation:
The funny thing is, that is what our numbers support here locally as well.
Our market has shifted out of the strong seller’s market and all indications are that we are headed into the downturn. Please know that the downturn nor the section labeled bottom is a recession. What we experienced from 2007-2012 (The Great Recession) is most likely a once in a lifetime occurrence.
The indicators that suggest that we are headed into the downturn are:
An increase in the number of homes for sale
A simultaneous decrease in the number of homes to go under contract each month
An increase in days on market
And an increase in the number of price adjustments
We do know that you cannot time the market. Let me repeat that: You cannot time the market. The market likes to surprise us. And the real estate market is linked to so many other factors like unemployment, mortgage interest rates, GDP, and much more. This is why it is unpredictable. However, the real estate market does not move fast enough that it should be able to surprise us. If we are paying attention (unlike me back in 2006), we should be able to anticipate any major shifts.
Heading into a downturn should be a wake-up call for every home seller out there who’s goal is to achieve top dollar for their home. When downturns occur, home prices inevitably will drop.
Now I know that you home buyers out there might be thinking, “Ah ha! I see. I will just wait to purchase a home until it gets to the bottom. Then I will get a deal!” Be careful with that line of reasoning. While home prices will drop in the downturn and bottom of the market, mortgage interest rates are also on the rise and have been for months:
As a buyer, mortgage interest rates will have the biggest impact on your overall housing affordability. Even as home prices drop, rising interest rates are gobbling up the savings and can cost your MORE money in the long run as the cost of money goes up and so does your mortgage payment.
We are currently working with sellers and buyers are doing some real estate financial planning, if you will, with our team. If you would like to make a strategic plan for your next move, please contact our team today. Even if a move cannot happen for you until 2019 for various reasons, still contact us today so we can make the process even easier for you when the time comes.