Wow!  Because the past 3 years have not been enough and have not been enough change and confusing and daunting—we now have the past 9 months of confusion to clear our minds and hearts! If we have learned anything over the past 9 months, it is that we have learned nothing. Only one thing changed during the past 9 months, but it seemed to have surprised us all. And it should not have surprised anyone. What was the one thing that changed?

 

Buyers collectively realized that the market was moving too fast and decided to stop buying until the market came back into balance. Pretty simple. But the response to the response is and was the thing that scared “the market”. When this very natural thing happened, many people understood it when it happened. Buyers got it. Sellers and builders didn’t want to believe it, but eventually everyone had to come to grips with the fact that buyers had a collective awakening and stopped buying (mostly). And that is what changed. What did not change is what is happening in places like Austin and many other places. People still needed and still need to move. Sellers want to sell. Buyers are ready to move. Employers are hiring and growth is still happening. Yes, some employers got way out over their skis these last 3 years and felt like they could do no wrong and that their growth was going to engulf the planet, but they were overzealous. Every big high-tech success company has had the same feelings that their growth was unlimited, and every major technology company during the past 40 years has had this same awakening that they were not going to be the last and most important technology to come to planet earth. The results from this realization is the same results that we are seeing in real estate—a pull back. The market self-correcting and finding a new balance. It’s pretty simple actually.

 

So, what did not change? Companies are still growing. Companies are still hiring. Yes, companies are also restricting to get back under their skis. But families and individuals are still needing to move and still need a place to live.  Investors still need to invest their money. None of these needs have changed. In fact, the need for more housing has actually gotten bigger, due to the fear that has filled the market and filled the hearts of the very buyers who brought about the change. The fear after the initial pull-back to balance the market, (what some people refer to as a shift in the market), brought on more fear and created momentum of a slow-down. When it happened, they were as surprised as a child who is surprised by its own laughter. Over a period of months, some sellers who absolutely needed to sell their property, sold it at prices that were lower than a few months earlier. No surprise there. In our market, here in Austin, Texas, like many other markets, the price reduction was big compared to how the prices had gotten out of control, but when compared to the prices of a year earlier and two years earlier, homes were still appreciating and the market was and is still very healthy. Because so few sellers really had to sell here, the market found a balance pretty fast and settled down. So, again, buyers did not recognize the settling down of the market and remained in a state of fear that the worst was yet to come. Because fear does not have to be based in the facts or reality of the market, many buyers have remained on the sidelines. Although, some very savvy and experienced business people have seen this before and knew that when everyone else is running away, that is the time to run toward the fear. This is not a new concept, but whether we ae talking about the stock market, real estate or any other shifts in the market, the most experienced investors and buyers look at times like what we have been seeing for the past 3-5 months and they run toward the opportunity, not away from it. They know something that most of us will not realize until it is long, long past. They can see what most can not see—opportunity.

 

Life has become confusing for all of us and we are all looking at the calendar every day, wondering what is going to happen next and where will this leave me and the world. What is next? Traditionally, the timing of real estate sales happened in a very predictable pattern. A business cycle that was easy to understand and predict. A typical market started around March or maybe April of the new year. Buyers started thinking about their move and buyers with families started thinking about how they were going to transition children from the current schools to new schools. Since most schools usually end sometime in May, sellers tried to time new listings to coincide with the cycle of the market. Builders had a similar pattern, but builders would project annual sales based on a formula that included March sales numbers. So, what happened to this cycle and this expectation? Did it just die. Well, yes and no. Mostly, we just forgot that this is how the real estate market worked and this was its’ normal pattern for decades. When the momentum of local markets (ours here in Austin Texas and many other places) just got so crazy, we were seeing sales and listings happening earlier and earlier every year. A few years ago, the market starting moving as early as March. Then it started moving in February. Before we knew it, we were seeing a market that just wanted to run at full speed almost all year long. From Thanksgiving to Christmas we were seeing some drop in sales compared to June and August (the double hump months for traditional seasons), but besides the holidays distraction, many of us felt like we were living in a non-stop and unstoppable market environment. Well, even fast-moving bullet trains have to slow down and even stop at some point to let people get off. Our bullet train and many others did just that. Now here is the news of the train schedule that you may know if you have been a passenger of the train for the past 30 years—the train is only in the station for a short time. The train is not broken and it has not gone out of business. Check the credentials of the click bait that is telling you otherwise. Don’t believe everything you read. In fact, I dare say that anyone who has pronounced a declaration of sickness or doom on the real estate market don’t understand the economics of housing or business. I would also say that investors LOVE the young and inexperienced click bait writers on social media and email articles, because the longer they can discourage new investors from getting into the market, the better and easier it is for the professional investors to buy without competition. These are the kinds of times and opportunities that people like Warren Buffett look for and thrive in taking advantage of the down markets. And by the time the rest of us figure out what has happened, the upward momentum has already begun. We may be back to a very traditional market cycle, but if that is true, the heat of summer is only months or weeks away. The spring buyers are starting to look and these lookers have and will start to become the buyers of 2023.

 

Let’s talk about style and business or style of business. Real Estate coaching is filled with the idea that a “top performer” is a person who does more transactions (deals) and more dollars than anyone around them. There are lists and awards and coaching programs and seminars and everything that you can imagine in our business that promotes the concept that more is better. Some familiar? Well, my business is not unique in this thought. And I am not here to tell you that more is a bad thing. I have more to share with my family than most. And I am certainly not here to tell you that I have not achieved hundreds of transactions and millions of dollars in real estate revenue, but I do want to say that a long time ago I decided that this idea of building “my team” in such a way to get to the Henry Ford Assembly Line of real estate production is not my idea of serving my clients. It never has been. I have never subscribed to the idea that I am a production machine to pump out the volume at any cost and I still don’t subscribe to this idea today. I don’t want to cast a wide net of dispersion on those who have achieved a lot of transactions or sell millions more in real estate, but here is where I draw the line. More is just more, but more does not equal better, higher quality relationships, better service or more success in my book. I strive for 1:1 relationships and 1:1 communications with my friends and my clients. I don’t want my friends to think that to get to me they have to go through someone or they have to have an emergency to get my attention. I want to be available to my clients when they need me. Sometimes those needs are to ask me “does this seem reasonable to you?”. Or when they need a plumber or new air conditioning contractor. I want to be available to my clients when a car drives through their living room wall in the middle of the night and scares the life out of them! Well, if those sound out of place for a person who feeds his family based on real estate, I would say to you—good. If those sound like the kind of thing you would want to ask a friend and are not sure who to ask, I would say—good. Ask me. And if those sound like random questions and events coming out of left field, I would say to you, these are three of the most recent calls that my friends and clients have asked me about as recent as this week. This makes me happy to know that my clients look to me to help them solve problems. Whether those problems are buying and selling and investing and real estate, or those problems have tangential ties to the home and property that that I helped them purchase. At the closing table for my clients I make a promise to them. A commitment to my new friends. That promise is that “this is the beginning of our relationship, not the end. You can call me any time with any question and I will try my best to help you figure out your next steps”…or help you find someone who can help you do just that—take your next steps.

 

The 2023 Shift. So, is 2023 going to be a shift in our economy, our nation, our real estate markets? Yes, I think that is abundantly clear, but it did not start in 2023. The shift started about 6 months past. Is the change over? Finished? Kaput? Not a chance. Is this the time and opportunity to jump on this shift and get ahead of those who are watching and waiting to see what happens next? You can bet your boots on it, Cowboys and Cowgirls. The best day to buy real estate is always—yesterday. Not tomorrow.

 

One last personal antidote here. I don’t know anyone who has waited to buy a home or invest in a property who came back to me months or years later and said “I’m glad I waited to buy.” I honestly don’t think it has ever happened to me in my 15 years in the business of professional Real Estate. I do however, know lots and lots of people who have admitted to me and to others that they wished they had bought earlier, even when they were not sure. That they had bought “that house” that they really wanted to buy and were just too afraid that they may not be at the bottom yet. Or just not sure about some feature of the home that was not on their list. Waiting until you are sure that everything is perfect and that you are sure the market is at its absolute bottom is a very good place to find future regrets. And waiting for the market to get upward momentum is a sure solution for paying a higher price.