We’re ten days into 2015 already! Time’s-a-wastin’ so we better get to work. There’s a real estate market out there waiting to be distilled. Here’s a quick recap to make sure we are all on the same page:
First: There’s no more significant factor shaping today’s real estate market than the sheer lack of available inventory. A fact that has brought increasing frustration to buyers. Placed huge crimps in the regular flow of transactions. And overwhelmed many people’s ability to find practical ways to move up or down in their lives. Anything else we might choose to talk about would pale in comparison to the effects of our ongoing supply issue.
Second: Cyclical ups and downs in the marketplace aren’t unusual or unexpected. World, national and regional economies are always swinging back and forth at the same time the real estate market is busy either leading the way or following suit – waxing and waning between Buyers’ and Sellers’ interests, fluctuating waves of supply and demand and the subsequent rise and fall of prices.
Third: The precarious depth our inventory has now fallen to combined with the prolonged duration of its decline is a powerful statement that current conditions aren’t just another iteration of cyclical business as usual. Something fundamental has shifted. Signaling a sea change well-beyond the scope previously imagined.
Fourth: Low levels of inventory are a permanent fixture of the new market normal – a truth that will continue to unfold over the course of the coming year. There’s no simple solution to the inventory problem, waiting around the corner, ready to nudge the supply cycle onto its next phase.
Fifth: There’s no question that many of the big changes real estate is experiencing stem from deeper, residual impacts still reverberating from the Great Recession. The world was turned upside down in 2008. While it would be comforting to assume we could just resume where we left off before the rude interlude of the last seven years, there are some aspects of how things work that have changed forever.
Sixth: Something else happened on the way to the great recession and its patchwork recovery. The perfect storm came along. While the economy was crashing and burning, the country was also coming to the tipping point of a huge demographic shift that’s been in the works for a long time. Aging baby-boomers began reaching retirement age at the same time millennials began launching journeys into adulthood. These significant life transitions are changing the essential fabric of our culture. Redefining notions about quality of life and how people want to live it. We haven’t quite figured out how to make our new choices, find comfortable places and build strong new foundations on all the left-over shaky ground we’ve got – where so many of the old rules no longer apply.
It’s coming… but it’s going to take courage, hard choices and a lot of work. More next week.