I have been struggling to explain our current market for the last couple of months. We have near historically low interest rates, a pent up supply of buyers who were forced to become or remain tenants because of changes to the regulations and the housing crash, a adequate supply of resale and new build homes as well as numerous down payment assistance and other programs designed to overcome the traditional barriers to home ownership. This begs the question of why our market is not absolutely on fire and homes aren’t flying off the shelves. As I was watching the elections, which appeared to dictate that the country wants to go in a new direction, it dawned on me that the one thing missing is consumer confidence in purchasing a home.
This is not the traditional consumer confidence where there simply is no trend in the market or the market is clearly going down, it is a lack of belief in the home ownership model of America. In some of the polling used for the election, an astounding number of people believed that the next generation will not be better off than the current one.
I reject this premise!
I understand that many of the “Millennials” who witnessed their parents either lose their home or struggle mightily to keep their home may be apprehensive about jumping into the purchase of a home as well as many of these same homeowners are also reluctant to purchase again without a clear appreciation model to show them their home will in fact rise in value. When the model clearly shows that these “Millennials” and former homeowners should be on the path to homeownership, it will likely be significantly less advantageous but clearly safer for them to do so at that time. The problem is they likely will have missed another jump in the market. This jump in the market will also place them squarely at the top of that market which will add to their risk of another small downturn.
Although many of these potential buyers are sitting it out right now because of a lack of job stability and/or a mountain of student loan debt, my recommendation would be for them to get their chips in the game as soon as possible. As for former homeowners, the number one source of accumulation of wealth in this country is home ownership. Yes, we all had a very difficult time over the past 8 years but historically, it is likely to be a small glitch on the never ending trend of price appreciation in the housing market. Remember, we are barely at the break even point where the cost to build is slightly higher than the cost to purchase a resale home which is the driving force for a positive or negative trend in the market.
If my business was a political party and I had to develop a “platform” of ideas on how to do business, here would be my platform.
1. Never lie, cheat or steal! Over the years I have lost countless thousands of dollars in earnings because I was unwilling to take these so called “shortcuts”. In almost every transaction, there is an opportunity to omit some factoid that might make things go your way, I sincerely believe that these things should be brought out in the open for the decision makers to evaluate rather than making my own judgment call.
2. Always apply the “Golden Rule”: Treat other people the way you would want to be treated. Working your way through a transaction as my client allows you to not be suspicious at every corner of whether I am working in your best interest or not. Relieving that extra stress tends to make the transaction go smoother and lowers the tension level of everyone involved.
3. Do the right thing even when no one is watching! I believe in doing the right thing because it is the right thing not because I don’t want to get caught doing something wrong. This one was heavily instilled by my grandmother as a youth, although in truth, she was usually watching and she carried a long and lethal cane.
4. Give the best advice you can give regardless of the ramifications. Sometimes, I have to tell a seller in East Apache Junction that they would be better off to list with an agent on that side of town. I am often asked when the best time to sell is around the holidays. If you track last year, the fourth quarter was phenomenal while the first quarter of 2014 was terrible. Correct advice, there is no best time to place your home on the market. I have long believed that the old wives tale of November and December are slow in the housing market had a lot more to do with agents being on vacation than the actual buyer demand.
I know this would be entirely too simple of a political party platform to actually get someone elected but imagine what the country would be like if you combined these