I was driving over to Palo Alto this week. Headed up 280, weaving between all the Tesla’s, when I noticed a Prius behind me in the rearview. It zipped past going 80mph sporting an inconspicuous little bumper sticker that read: “ Please God, just one more bubble.”
I had to laugh because it gave perfect expression to so much of the big dreaming that’s going on in Silicon Valley these days. That unconscious sea of inner voices out there, each whispering: “ If I’m in the right place at the right time and all the cosmic tumblers line up, maybe I can hit the jackpot, get mine and get out before the next bubble bursts.”
No surprise that we’ve heard a lot of those voices resonating loudly and clearly in the real estate market this past year. Musing with the multiple offers. Bouncing off the bid ups. Rising in pitch along with list prices.
After surviving the long, tough years of the housing bust it’s good to know that the market’s back on track and there’s still plenty of irrational exuberance left to go around.
Which, in a roundabout way, brings us to where we left off last week. I had just uttered the phrase: “How, when and why the market has stalled.” While everyone else recoiled in horror that I could even suggest such a thing.
The fact that so many people freaked-out, shows just how far the real estate market has really come. It’s only been a few short years since home values were wallowing in the lows of the late, great recession. When we all felt displaced and oddly resigned.
I’m making the argument that the market’s recent “stall” is actually a very healthy sign. We are right where we should be along the road to recovery.
And just to be clear – prices haven’t nose-dived, plunged or even tanked. They are just flat for the moment. Steady and holding their own.
In February 2013, the median price for single family homes in SC County was $449,000. Then something crazy happened. In a two-month flash, the median rose $200,000! By April 2013, it was $641,000. Déjà Vu all over again. It felt like we had all been transported back to 2005!
Researching the history of sales in Santa Cruz County, I can’t find any other interval of time shorter than two years, where the median price made such a staggering leap.
And since April of 2013? What has the median price done? Despite a few minor fluctuations, it has pretty much stayed the same.
I know that seems contrary to most of what we’ve heard and read about the market over the last year. But in some ways perceptions are just catching up to what already happened.
A few months ago, March came roaring in like a lion. It looked like we might be poised for another quantum leap. But the urge couldn’t quite sustain itself long enough to become a surge.
I think the market just decided to take a well-earned rest. Catch its breath after it took off and gave us enough escape velocity to get back into the black.
There’s a far more subtle organic process at work now. A bigger picture slowly emerging out of millions of individual decisions that different buyers and sellers are making in their lives.
We’ll watch it come into better focus in the next year or two but the message is this: The real estate market went as far as it could go by leveraging lots of quantitative easing and very little inventory. Now it’s time to build some real inventory, jobs and equilibrium for the long haul. And that’s good for everyone.