So a few weeks ago I noticed a Realtor friend of mine on Facebook was touting the wild, overbidding experience she had just had selling a house she had listed. One of her friends commented “I can’t stand it…I’ll NEVER be able to buy a place around here”. My friend replied, “Don’t worry, what goes up must come down.” That sounded encouraging and sweet to me, but I think it’s simply not true at all. If there’s one thing I’ve learned repeatedly in the last 25 or so years doing this it’s that the Real Estate market isn’t a Yo-Yo. It absolutely does NOT rise and fall, and rise and fall. I’m sure most of you have seen the graphics on the market’s history around here. It looks a lot like the face of Mt. Everest. It’s about 95% uphill grade, moderated by some slight dips and a few plateaus. That’s over the last 30 or 40 years too. A Yo-Yo it aint.
On September 6 2006 I got this email from a sweet young woman who I’ll call Joanie. She wrote this
“I am beginning to explore the idea of buying my first home and am very new to the process. I browsed your website and found plenty of useful information.
Would you have time to meet with me and discuss further?”
I discovered that she was qualified to $700,000 and we began looking at places. Houses I might add. Houses in nice neighborhoods. The 2006 market was pretty crazy and overbids were common…she was uncomfortable in that environment. She decided to wait…hopefully it would cool off. Guess what…it did. In late 2008. When everybody started to come out of hiding in 2009 so did Joanie. The problem then was…would the market ever REALLY come back? Those 2006 prices were just an illusion anyway and certainly if she continued to wait they would come down even more.
Then in 2011 she came back again but discovered that the nice neighborhood’s she saw in 2006 were not available in her price range anymore. The market was back to competition again and overbids were common. Of course, she was picky too. If the paint color wasn’t right or, God forbid, there was some dry rot disclosed on the pest report…then forget it! She simply wasn’t going to assume somebody else’s problem!
2014 came and she could afford some more…up to $850,000 now. The problem was…she had to look at townhouses since she was WAY priced out of the neighborhood’s she liked before. She was priced out of the mid range neighborhood’s she didn’t like in 2006 but compromised over in 2011. An amazing thing happened though last June…she actually wrote an offer! Her first. We finished 4th out of 5…but it was a start. Right? We continued to look…right up to January of this year. She probably needs to be looking in San Jose or Fremont now…unless she wants a condo around here. The problem is…she’ll need to compete to get that as well. In either place. I personally don’t think she’ll ever buy anything. In my opinion she’s lost at least $300,000 as a result of her timidity. Probably more. Not to mention the tax benefits she DIDN’T get by remaining a renter these last 8 years.
I really think this is a train that you either get on…or remain standing at the station while others get on. The equity that people have earned simply by getting on is impossible to duplicate in any other way. The market will moderate for sure…but it’s not coming back to 2009 levels ever again.