by Michael Forzatti
If there’s a question that I’ve been asked more than any other in recent times, it’s this: What’s the market going to do next? It spills into a volley of other questions: What should we do with our house as a result? Should we put our property on the market or should we wait? Has it bottomed out or is it still heading there?
It’s fuelled out of concern for missing the boat on what’s happening in the market.
In the absence of definitive replies to questions like this, people start listening to plenty of people for possible answers. Some of those people are ill-qualified to give an answer, while others are wise enough to say nothing at all. Some give answers in the hope that their prediction will come true because it fuels their agenda and creates the sort of market in which they wish they were operating! But it’s driven by fancy not fact.
As one who has been in the thick of real estate for the past 22 years, I can say something with great certainty: the current market conditions are unlike anything I’ve ever experienced. We are amidst the most unique set of market conditions I’ve seen, and it’s difficult to spot consistent trends anywhere. It’s a week by week proposition that can change in a moment.
A significant component of my discussions with home owners and buyers is communicating that we don’t know what’s happening next in the market. We don’t have a crystal ball, and we shouldn’t pretend that we do.
What does this mean and what are the implications?
Well, first, if someone tells you with any clarity what the market is going to do, be highly suspicious! They don’t know, and they’re making it up!
If they’ve caught a whiff of windswept optimism blowing through the market and drawn straight lines from those anecdotes, the ground is shaky. To infer anything regarding the future of the market from a small window of results is always dangerous.
In six to twelve months the market may have picked up, flattened out, or still be heading south; we just don’t know.
What might be fuelling one’s optimism is a single result, but the likely reality is that the owner and the agent became more realistic about price and met today’s market.
What we’re finding right now is that the common practice of considering market evidence from the last six to twelve months is simply not relevant. The market is fluctuating so quickly (in every direction) and is so inconsistent from property type to property type that the evidence of the last six to eight weeks becomes a far more reliable indicator.
As an agent with plenty of experience, it’s still causing me to question myself. What’s true right now? What’s the market doing in the present?
The lack of definitive answers for those with less experience and fewer sales over the past year has caused them to hedge their bets, refraining from any deliberate pricing strategy and suggesting instead that ‘we let the market tell us what’s happening regarding the price of a property’.
There’s still a prevalence of ‘transparent negotiations’, ‘expressions of interest’, and ‘all offers presented’. All of these strategies are bet-hedging-shorthand for ‘we don’t know and haven’t had our heads deep into the market enough to make a strong, informed pricing decision’.
It’s this dynamic that has resulted in properties being stuck on the market for far too long while the overpriced listing is gradually reduced down to market reality (and often below, because it’s become stale).
What are the ramifications of this for sellers? Owners need to be guided by professionals who are active within the current market in their area. Owners also need to be driven by the present realities, while also factoring in their distinct personal situation. One of the most volatile markets in a couple of decades is not the time for false assumptions.
What’s in front of you right now? That’s what needs to drive your decision making. Both your situation and the present market reality. The crystal ball may be a fanciful desire, but in this market, the crystal ball is miniature and sees about four weeks into the future!
It’s a time when strong, successful agents are turning over plenty of business because they have a keen awareness of what the market is doing right now and are confident enough to let owners know the present reality when it comes to talking about price.
Sellers need a ‘current agent’ who is experienced, trusted, and consistently turning over properties right now. They’re the ones who have their heads in the ‘now’. They’re selling eight to ten properties each month, opening handfuls of properties across a weekend, and able to speak reliably about present market conditions. Anything beyond that is probably wishful thinking.