FRACTURING THE FAIRY TALE!

We toss a lot of words around to describe the real estate market. Words that often come with an encrypted charge and a universe of silent subtext attached to them. Words that carry the weight of metaphor and chains of nuance extending far beyond what the sum of their individual letters are meant to imply.

Which is all to say… I’ve never believed in the fairy tale of a “good” real estate market and a “bad” real estate market. These terms never quite cut it no matter how you slice them. They are way too limited or lopsided in interpretation to do real realty justice. Good for who? Bad for who?

If prices are coming down, is that “bad” for everyone in the marketplace? Or just for some Sellers?  If prices are racing up 2% a month, is that “good” for everyone? What about first time buyers on the lowest rung of affordability watching their point of entry vanish upwards on the horizon?  Its not all so “good” for them.

Is it appropriate for us real estate agents to switch our valences back and forth from side to side, becoming devoted advocates of the buy or the sell depending on whether we perceive it to be a great buyers or sellers market? Just to call it all “good”?

How about  a “move-up” buyer?  One that wants to sell a lower-priced house and purchase a bigger, higher-priced home? There’s an underlying logic that suggests a declining market might be the “best” time for this kind of seller/buyer to make his transition.

The theory is:  The lower the price of the house sold, the more demand there is in that niche of the market.  A lower-priced home should fall less than a higher-priced home in the same declining area. Even though he may sell for less than hoped for, a move-up buyer should make up his “loss” on the other end.  He should pay less for that better, more expensive house. Way less than if the market were going up like crazy.

It is the “relationship” between what move-up buyers sell for and buy for that counts. Not the actual, dollar amounts themselves. Specially, if they can lock-in a portion of their new purchase price at near record low interest rates (like now, with Greece greasing the way).  Nothing like cheap money to help make it all come out nice and tidy in the wash.

So what about this market? This time? How to describe it? Good and bad are particularly inept descriptions for the daily phenomena manifesting itself all around us.

Months ago I mused that there should be two multiple listing systems existing side-by-side. One for corporate-controlled distress properties – REOs and Short Sales. And one for those euphemistic “Organic Listings”  – properties being sold by real human beings going through all the normal life transitions that used to drive regular real estate sales – birth, death, divorce, aging, heath -all the biggies.

But now the fragile dynamic between these two markets occupying the same place at the same time is splitting the market apart even further.  The split has become a full-fledged fracture with prices being driven dramatically up on the low end, at the same time the glass bottom is falling out of the market on the higher end.

If you want to feel like Jeckyll and Hyde for a day – start out in the morning looking for properties with a buyer approved up to $500k. By noon you’ll think you’ve mistakenly wandered into a time warp, transported back to 2004-2005. Everything you look at has 4 or 5 offers and is selling for more than list price.

Get some lunch and boost your blood sugar. Shake it off in time to make your 2pm appointment. That’s the one with the Seller who’s $1.6 listing isn’t selling, hasn’t had any offers and is accumulating days on market faster than cobwebs on the sign out front. Be prepared to spend a couple of hours acting as grief counselor and looking for a sensitive window of opportunity to break the news about just how low their price could really go. A different twist in the wormhole has deposited you smack dab in the middle of 1992!

So what happens when energy in the lower chakras is rising too fast at the same time that movement at the top of  the spine is headed for some serious down time? Welcome to the compression zone. That’s the dense little pocket of  the market lodged between the vertebrae of $550,000 and $750,00. The space being pushed together tighter and tighter from both ends. Its the tiny window of choice that more and more sellers, buyers and listings are finding themselves in – with quite a bit of gnashing of teeth and fraying of nerves accompanying the process.

Sound familiar? Get your helmets on and brace yourselves. Next week we venture into the Compression Zone.

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