Shift Happens… What Will You Do?
WHAT’S THE SHIFT?
SHIFT. This is the word on every agent’s lips right now. Whether or not, you believe there is a shift a-comin’ there is at least no doubt that we experience shifts in our business as Real Estate Professionals. This season gives me an opportunity to examine the word “shift” and think about how to react in an unsure market environment.
Despite the fact that we are all still a bit stung and sore from the market crash of 2008 (an example of a truly dramatic shift), we have to bear in mind that a shift, by nature, reflects the deeply innate inclination of real estate – the market tends to be a wave moving up and down (buyers’ market today, sellers’ market tomorrow…) – this is the natural order to be expected. Post 2008, any sign of a shifting market and we are running for the hills, but how can tell the extent of the potential shift?
SHIFT AS CATEGORY 4 HURRICANE.
First, let’s examine the range of SHIFTS that can occur – yes, 2008 is the extreme example of SHIFT – registering a full 8 (in my humble opinion) on the real estate Richter scale of disaster. Financial chaos, businesses too big to fail tripping over their own shoe laces and our friends, family and neighbors struggling to keep their wages, work hours and very employment intact. In 2009, I experienced a heartbreaking moment when a client (let’s call them Brianna and Ryan) called to tell me that Brianna, who was just entering her 2nd trimester of pregnancy, had lost her managerial job in a national accounting firm, but that they were still moving ahead with their home purchase because they just weren’t going to fit into their 1 bedroom apartment anymore! 5 days later they called, both in tears because Ryan, who was a regional VP in the same national accounting firm, had also been laid off, and now they were jobless, living in Brooklyn with a baby on the way.
We received a mortgage denial, which took them out of their contract but allowed them to keep their deposit, thank goodness. They picked themselves up and cheerfully began to look for new jobs, but as the weeks ticked into months, the panic set in. When the baby came half a year later, without jobs, they couldn’t find a bigger apartment, so one day I received the inevitable call that they were moving back to be “closer to family.” They packed the U-Haul and back they went to Minnesota, with the contents of their tiny apartment, their new baby boy and their dreams of living in the City (and/or surrounding metropolitan area…) in tow. 2009-2010, I lost almost 40% of my business mid-transaction due to job loss and general financial insecurity – it was a constant refrain.
SHIFT AS LIGHT DRIZZLE.
While 2008 was a rather seismic SHIFT, upon examination, we experience them all the time in this business. On the other end of the spectrum is the “Seasonal Shift” – the market moves up and down merely due to seasonal, holiday & community related events. Here in the northeast, our market tends to feel a winter slowdown (who wants to look at houses in 10 inches of snow?), as well as an end of school cool period when families are busy trying to get through end of year parties, dances, exams, graduation events, to name a few – too busy to sell or buy a house. On an even more granular level, we have lots of “Micro-Shifts” – every holiday long weekend, every August when the whole population of the state is at the beach, even every few weeks before a national election, we can sometimes feel a little pause button as all the buyers and sellers are waiting to see if the we turn the House blue, if our Governor hold his seat or even what the financial policy leanings are of who we elect as the new president (oh boy, there goes our tax advantages…).
All these factors, no matter how small, can bear influence on our local Real Estate market performance. When you have such tight inventory, any flitter can affect the performance of a house. I once watched a house under-perform its first weekend because a tree had fallen in the street and with the road closed, they had abbreviated attendance at their public open house, which resulted in no offers the first week, while other similar houses who were able to be shown consistently received multiple offers. By the end of the 2nd week, the water cooler chat was that the house had lost its momentum (“what was wrong with it that it didn’t get its offers???”) – this attitude snowballed on itself and by the 3rd week, my clients and I waltzed in and saw a big yard, finished basement, full height 3rd floor bedrooms, 3 full baths. What was wrong with the house? Turns out, nothing but some weather. We made an asking price offer while other houses had commanded up to 110% over asking due to competition. I am thankful every time I drive past this house and I give a little nod to the weather gods.
SHIFT SHMIFT. LET’S GET TO WORK.
In retrospect, while this talk of Shift is interesting, it is somewhat moot. Sans crystal ball, even the economists are loathe to pinpoint where the interest rates will land, if this the beginning of a market turn period of flat growth or if housing prices are on the slide. Whatever the direction of the market, people still need a place to live and owners still want to move to Florida. It is up to us to recognize the effects of a shifting market, no matter the size of the shift, be it large scale financial turmoil or localized market fluctuations and react with our best knowledge and skill. What do we, as real estate professionals do now to survive all types of market oscillation? We survive by providing top notch service, being the most educated person in the room and behave with only the highest of ethical best practices in mind. Heck, that isn’t how we survive in an unsure market. THAT is how we thrive.