The main feature in last Sunday’s SF Chronicle Real Estate Magazine was a year-end poll that asked three high-profile Bay Area Realtors to respond to the same question: What was the biggest surprise in the real estate market in 2014? All three weighed in and gave the same exact answer: The biggest surprise, bar none, was the lack of inventory of homes for sale.
The same conspicuously low inventory that has profoundly shaped every other factor in the market for the last two years. The one that will continue to remain real estate’s biggest elephant in the room heading into 2015. The one for which there is no apparent magic wand, ready to transform our severely ratcheted-down supply back into a steady, reasonable flow of good choices and opportunities again. Suffice to say that we’re heading back into crunch time soon. Once more unto the breach Dear Friends.
None of the three were able to offer any enlightened perspective about “why” there is such low inventory. Just that there is. And that’s exactly what we’ve been scratching our real estate mind’s about these last few weeks. Trying to get a few answers. Or at least a clue.
So here’s my latest, best thought: I remember a wise person, once telling me that if I wanted to understand the big picture of real estate, I had to forget about all the nagging little ups and downs of the economy. Things were always going to ebb and flow back and forth. That was the norm. Getting hung up on smaller cycles was a form of misdirection, sure to obscure the true slight of hand at work, changing the game on a much more fundamental level.
If I wanted to understand what was really going on, I should dig deeper. Not by drilling down ad nauseum into reams of statistical analysis but rather by stepping back and adjusting my gaze toward a broader, meta-view of the landscape.
When I couldn’t figure out why something was happening, I should take note of any large demographic trends taking place and start following them. Big changes in population – like shifts in age, migration patterns, birth rates – often happen below the conscious awareness of everyday life. Demographic changes are what happen when the world is busy making other plans.
Is there any evidence that suggests our prevailing pattern of low to no inventory is a symptom of a much larger struggle that two different generations are having, trying to find their place in a world turned upside down by the Great Recession? One that came of age and one that began reaching retirement age both during the last ten years?
Next Week: Aging Baby-Boomers and Millennials looking for their places