The Real Estate Market...It Breathes!!!
To many, Real Estate is simply, “Hey! I bought a house. We move in next week. I’m having a housewarming party next month hope you can come.”
What many don’t realize is that they are investing in not just a house, but the land itself. This is why, in Real Estate, we say you are buying property not a house (Unless of course you’re purchasing a house on leased land which is another blog entirely). I liken property values to a lung that breathes.
If you take the time to look at the housing market over the past 40 years you will see that property values are in constant flux. One year a property could be appraised for $300,000.00, the next year at $475,000.00, and then the following year it could be $425,000.00. Real Estate is NOT a constant inhale like some may think. The housing crash of 2008 and 2009 was proof of that. This 2023 I am predicting a real estate market correction, not a crash, just an exhale. Why you ask? Well, let me explain…
Here in Spokane, WA., over the last two years, we delt with the California and Washington West Coast Exit. People were fleeing the high-priced market for a more conservative market, causing a massive inhale in price for Eastern Washington and Idaho. With the large migration of cash carrying people to these areas it literally priced locals out of the housing market. But like every lung at some point, it reaches capacity, and it must exhale. We began to see this exhale somewhere around May of this 2022 year. Basically, the real estate market is self-correcting. Buyers made, before the interest rates went up, the conscious decision to stop overpaying for properties and take a step back.
Sellers are seeing this as a bit of a threat to their expected income. I was even told by one of my clients that the market literally stole $100,000.00 from them. “Well,” I said, “That’s a complicated yes and no. The market didn’t technically steal anything. If the money was in your hand and then somehow it took it away then yeah, but a property is only worth what someone is willing to pay. The projection of a property’s worth is not for sure money. Thus, no it didn’t steal money from you. The market belongs to no one, it’s not a physical entity even though it acts like one. It’s simply a thing that happens. It can only take in so much before it has to let it out.” I continued and said, “In time it will take another breath. Annnd yes, you lost possible money on the property because it simply didn’t sustain itself as long as you wanted it too. I wouldn’t call that stealing really, I would simply call that the little green man on the shoulder, whispering in the ear to hold out and wait for the market to keep going up. It’s called greed. Greed is what eliminated the possibility of that extra $100,000.00.” Timing is everything.
I’d love to hear what you have to say in the comments section. Do you think real estate breathes or do you have another point of view?