I’ve kept a close eye on the rise and fall of the housing boom for the past few years. During that time I’ve heard all sorts of opinions and stories from renters, homeowners, coworkers, relatives, realtors, brokers and even random strangers. For the past many years it was mostly the usual “buy now before you get priced out forever” and how “real estate is the best and safest investment you can make” crap. I’ll never understand how anyone can believe that load of bull, but that’s another discussion.
Even after the initial subprime and credit crunch blowout last year, I was still coming across fairly optimistic outlooks from most people. For a while I was starting to wonder if I’m over-reacting. No one I spoke to seem to understand where I was coming from, what I was talking about and looked at me like I’m from the Looney Tunes whenever I mentioned anything about a major housing crash. I asked myself, how can this be?
It can’t be…at least not for long. As the dull winter gave way to the spring real estate kick-off season, people are starting to turn the corner and realize US housing isn’t going to make a summer come-back. Sure the media spread news of foreclosure numbers, slowing economy and volatile stock market reactions, but nothing hits home more than watching your neighbors’ house sit on the market for months on end. Once people start seeing For-Sale signs going up (and not coming down) in their own community, the ever-popular argument of “not in my area” gets thrown out the window. They can lie to themselves and others all they want, but that doesn’t change the fact that prices are falling all across the country.
The psychology of the market can be very powerful. It takes a long time for people to accept what is happening, but once they have accepted and understood the market conditions, it takes a strong hold on them and their money. All of a sudden real estate goes from one end of the spectrum to the other. People who were on the fence are now on the sidelines and people who have their hand caught in the cookie jar are trying to get out as fast as possible.
In my opinion, we’re at the tipping point in terms of a psychological shift in the SGV market. The conversations have changed regardless of whether you’re at the office water cooler or in line at the drugstore. People are finally realizing the magnitude and depth of the mess we’re in. Is that consistent with the encounters in your daily life? I’d appreciate it if you share with us what you’ve heard and how the people around you feel about the housing market in your particular neighborhood and area.