Real Estate Markets Are Like the Weather

As Mark Twain said about New England weather, "If you don't like it, just wait a few minutes."  The real estate market--unfortunately for us in the field--isn't quite so quick to change, but it does sometimes seem to go almost week by week.  We are learning that it's harder to tell what causes a shift than it used to be.  Hot weather, and the Fourth of July, used to mean a serious lull in activity.  This year, many agents were showing homes right into the holiday itself.  Others found that office calls were slow, and transactions sluggish. 

Hot weather doesn't slow the market down as much as it used to, before we had winters that were epic.  Now we need to use that time, because we lose so many days to snow and ice.  As I've written before, the school calendar affects sales much less than it used to, before so many jobs moved out of state.  So how do we know what's going to happen? 

We don't.  We can't tell you with certainty when to list, or when we should hold open houses.  We know certain things, like that Mother's Day is dead, while Father's Day isn't, but we aren't as sure of timing now.  There seem to be the equivalent of microbursts in weather, where one town will be slow, while others are booming. And that's not just the Shoreline in the summer, where people on vacation look at property.  It seems to be true throughout the region; one town's good year is another town's dip. 

Advice?  Follow your own internal clock, but don't wait for rates to rise, or prices to start spiking! 

Don't Just Invest, Enjoy Your Investment

Many of you have probably been reading all the dire news about the real estate market lately. It was the worst July in 15 years, and the outlook for the rest of the year isn't great. I think we can safely say that those of us in the business already knew that, just by the lack of calls, sales, and closings. The articles in the papers aren't helping, either. They keep telling people that houses are no longer safe investments, guaranteed to go up each year and to outpace inflation.

But, really, what's so bad about that? Your home should be a place that you enjoy living in, and where you are happy to be without regard to appreciation. Over time, no investment goes up steadily; even ones which are extremely risk-averse do poorly when inflation is high. I recently had a friend tell me about his fancy new wine cellar. He is building it to display his 297 bottles of wine, most of which were bought as investments, after careful research. My friend knows exactly what they are now worth--just over double what he paid for them. As we laughed about his knowledge of the wine collection's appreciation, he downplayed the investment value. After all, he told us, even if their value goes to zero, they will still be available to drink and enjoy!

And what about a similar view for real estate? It's always been true that homes should be bought for more than their investment value, and buyers have always been aware that they shouldn't buy if they might have to sell right away. Although it's not quite the same as the fact that a new car loses its greatest amount of value just as it's driven off the lot, the costs of reselling property mean that there has to be some increase in price just in order to break even on a resale. What it seems that we've all been forgetting lately is the consumption value of living in your investment, and enjoying it in the short run. So try to think of real estate as a consumer good, which you can enjoy and use; while you are at it, maybe you should lay away some bottles of wine as a hedge for your bet!