This Looks Familiar

When you’re in any profession long enough, you see cycles. The current shift in the real estate market is no different.

Perhaps it helps that I started my career in November 2007; the following September 15, 2008, Lehman Brother collapsed and ushered in The Great Recession. As a newly minted REALTOR in high-flying San Francisco, many prognosticators went on record to say the sky was falling. It was. Only, like most financial ups and downs, the impact wasn’t felt the same universally.

In San Francisco—a generally moneyed town—some lost their shirts and their houses. However, most did not.

The lucky ones didn’t over extended themselves with an adjustable rate loan, or they made their home purchase with cash. While many lost jobs, those that had savings to carry them through managed.

This enormous swath of the market stayed where they lived or held on to investments that they didn’t need to sell in a down market. As a result, inventory remained low in wealthier parts of town. Low inventory and modest demand—people are always moving regardless of what the financial markets are doing—kept a lot of prices stable, albeit lower than the go-go days that lead to the crisis.

As the pandemic first closed things down in February 2020, I recall vividly a client whose home we’d just listed. The first week was gangbusters; the second week was crickets. He was in contract to purchase a more expensive property. In the face of such uncertainty, he canceled his purchase, and we agreed to pull his home from the market. He’s remained in that house with scads of equity ever since. It’s a great house; why would he want to leave?

Over the last 18 months of eye-watering escalation in property values across the country, our market has seen an unprecedented amount of cash used to make purchases. It stands to reason. Many are retiring here after selling a home elsewhere. Income is limited to Social Security and investments with little prospects of a big financial “win” in the future. Cash means no house payments to worry about.

Others here for a job—hospitality is big business in our resort village—bought condos and houses they could afford, just like those snowbirds who live here six months of the year.

From my perspective, this is San Francisco 2010 all over again. Will property trade softer than late-2021? Absolutely! We’re no longer seeing eight and nine offers on a listing. That in and of itself in a downward pressure. But we’re also not going to see a lot of foreclosures or panic sales. Nor are we going to see a flood of inventory.

BTW, inventory NEEDS to rise from our current two-ish months of supply. A balanced market is six months. But the fundamentals of lending since The Great Recession will prevent us from returning to 16 months or more of stock.

All of this is to say that if you have a home to sell, it is still a very good time to realize your gains. The frenzy has subsided and now is when you need a serious, professional agent, not your aunt’s, husband’s second cousin who does real estate as a side hustle from her daily dog grooming parlor. (You think I’m joking.)

And if you are looking to buy a home, weigh carefully your options as they become available. A prospective home that has 80% of what you want is an excellent choice, especially when paired with a price you can afford. While this is true in any market, as we cycle into this sleepier time, fewer high-quality properties will come to market. And when they do, they will command top dollar for their rarity.

As always, if I can be of real estate assistance to you, reach out. I’m happy to have a conversation. And that goes for anywhere in the country. Over the course of my career, I’ve developed deep professional relationships with agents in various cities and towns across the United States. If you’re not here in the Coachella Valley, then I’d love to introduce you to an agent that shares my values and commitment to client care.