The Yo Yo Market

I’ve heard several people tell me that they would just as soon avoid taking part in this current real estate market’s insanity. Their plan is to just wait things out. Hang on the sidelines and enter the market maybe later this summer when things have calmed down. When there’s more inventory. When prices have settled down again. Why get into this craziness at all…they say. Within this philosophy is the notion that the real estate market is sort of a yo yo that goes out and comes back. It goes up in a frenzy like this and then returns to stasis.

I’m thinking not. The problem is, what I’m thinking really sort of hurts. What I’m thinking is that it’ll take such an enormous amount of new inventory to mute the demand that exists right now that satisfying the number of buyers in the market right now will pose somewhat of a challenge. Whether or not a whole bunch of new listings come up now is irrelevant…there really is no such thing as the yo yo effect. Home prices DO NOT bounce up and down in a short period of time. They do not go up 5% in one month (or 25% if you’re looking in San Carlos) and fall an equal amount in the next 2 or 3 months. If you wait you may indeed have less competition but you’ll pay more too.

Look at it this way, the 4 bedroom, 2 bath ranch house on Schooner gets $1,150,000 right now when it was listed for $950,000. Will a similar floorplan listed on Spinnaker in July come on the market at $950,000? I think not…it’ll come on at $1,150,000. Lets say it doesn’t sell…will that seller just shrug his shoulders and say “oh well, let’s drop the price to $950,000”. Ummm….No, he won’t. He might take $1,100,000. Maybe.

All I’m saying is, we’re all in this together. It took 3 years for prices to fall 12-15% in Foster City. If you’re thinking that’ll happen if you just wait to buy until August of this year you’re wrong. Sorry.

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