The opponent’s offense has marched the length of the field and is within striking distance. The question now is one of defense. Can the defense hold the line? Can they bend without breaking or will the line collapse and the market finally capitulate? There’s a saying in the law, “silence is deemed acceptance”. I have been silent on The Real Estate Conversation for 2 weeks now, in part because I haven’t felt like writing the gloom and doom that has infected many in my field.
So what am I talking about? It’s a tough market, a really tough market. Many Realtors I know have gone hunting, or taken up early day drinking habits. The market has been that slow and that difficult to be a Realtor. Buyers appear to have firmly gained the upper hand and while the sellers continue to resist, there is a growing sense amongst Realtors, of capitulation – a new bar that has been set; lower than before. The football analogy of the Red Zone – this is the space on a football field between the 20 yard line and the end zone – is how I’m feeling about this market. I still have sellers who are holding out for their price, however, they are not getting any showings. Of course one could argue the seasonality of this time of year and traditional slowdowns as the holidays approach, but I’m not buying it. Whether it be the changes in the loan limits, which in our area reduced conforming loan ceilings between $104K and $134K, thereby increasing borrowing costs and required down payments, or be it the continued after effects of the Federal Government near shut down, we are seeing slowness, real slowness.
For me personally, I am seeing a couple of trends. First is that I am listing more properties. This is running counter to my area trend where inventory is down 25% from one year ago. Lucky me. However, I am also seeing an increase in distressed sellers – more short sales – and oddly, as one who makes his living selling real estate, I am welcoming them because it means a reasonable seller with a realistic asking price. So herein lays the rub. My equity sellers, those able to sell without requiring lender(s) approval, are holding out for a price that the market is resisting, or worse, choosing to rent their homes out, rather than price them to sell, and move on. But in effect, this has become the Maginot Line – the line of final defense. The position by which a seller is either going to win or capitulate. In football, it’s called the Red Zone; in real estate it’s called fair market value.
Admittedly, it is difficult to read too much into the data this time of year, yet I can’t help but feel the defense is sagging and the bow has finally begun to break. Can the defense hold? Can the seller’s unwillingness to accept a new, lower price bar, overcome the buyer’s insistence for ever lower prices? If I was Knute Rockne, I would rally the troops, “Win one for the Gipper”, I might say. Alas, I am just a working stiff Realtor trying to make a living like the rest of America. The image I use a lot when people ask “how it’s going in real estate?”, is, “It’s going alright, it’s a tough market, but we’re all in the same boat pitching water just as fast as we can to stay afloat”. The take away here? I believe we’re at a crossroads, and the game can go either way. My hope is that a continuing tight inventory will push buyers to pay the price. My fear is that the increase in distressed properties will push the prices ever lower and the spiral downward will continue. Our fates are intertwined; the moment of truth is at hand; the line in the sand has been drawn and the gauntlet laid. Are you with me? If so, repeat after me, De-Fense, De-Fense, De-Fense.