When those planes crashed into the World Trade Center on 9/11 and then into The Pentagon and fields of Pennsylvania, the world experienced a devastating, sudden shock. Anything that happens quickly, unexpectedly and boldly is very difficult to process and navigate.
In the real estate sphere we have had to navigate some rather difficult sudden shocks too. In March 2020 as the world shut down due to COVID, we as a profession were in shock. What were we to do? When would markets come back? How would we manage deals in play? There were hundreds of unanswered questions and touchpoints that required urgent attention. This makes life – and business – very difficult. Without exact precedent, predicting outcomes is tough. Reeling from rapid change requires considerably more effort, time and energy. It is emotionally draining. Doubt about choices and fear of the unknown linger and taunt you. It ain’t easy!
More recently we are dealing with another sudden shock: the unusually rapid mortgage interest rate hikes, faster than at any other time in recent history. All of a sudden buyers and sellers are experiencing heightened levels of anxiety and doubt and we as a profession are scrambling at times to define strategies, re-structure the advice we give to our clients as conditions change almost daily. The stresses of this market are new, although stress abounds in every market. This is just a different kind of stress, a relatively new kind because of the speed. Some listings are taking longer to sell. There are fewer multiple bids. Fewer showing requests. After many months of forming habits and becoming acclimated to certain routines and realities, again we have to shift gears and adapt to new circumstances and new realities…..FAST. All of this would be much easier had we been able to adapt slowly and adjust over time. But alas….here we are! You may lose listings. You may become the second or third broker on others. You will be blamed for lots (that’s not new!). Just always be the calm force of reason, facts, data, insight and intelligence in the face of the storm and your services will remain invaluable.
Unusual times call for unusual measures. Just take one look back to June of 2020, how two short months after our world changed so instantly, our entire profession had adjusted and changed DRAMATICALLY….and was functioning close to full steam. A quick peek at the World Trade Center in Manhattan will leave you CERTAIN we can adjust to anything. So buckle up, move fast, be creative, think, discuss, strategize with colleagues, attend seminars and webinars, read lots, study your markets daily, do the homework – fast – and you will adapt fast too and identify new and old opportunities. They abound in ANY market. Markets will ALWAYS change….that’s the only certainty we have left.
What can YOU AND I do to curb rising inflation? I hate to tell you this, but we could actually do LOTS. In an unreal world. But we live in the real world, so……
One of the key drivers of inflation is the cost of housing. In many parts of the country COVID has fueled new audiences. Housing costs, accounting for almost a third of the Labor Department’s consumer-price index, were the largest single driver of inflation in the Atlanta area and similar places in 2021. We in the real estate profession are helping facilitate rising prices …..often MASSIVE price hikes. Have you EVER said to any of your clients in a multiple bidding scenario to take the asking price instead of the offer 10% over ask because it’s their patriotic duty to keep inflation down? HAH! I wouldn’t even attempt to do so. I know the answer. Have you ever told your sellers or landlords not to raise prices when the market is rising? The reality is we live in a free market system driven by supply and demand. I have yet to meet a lottery winner who wishes to redistribute their wins to everyone who lost. I have yet to meet a seller/owner who wishes to take a lower price to help the US economy tame inflation too…..
The reality about inflation is that when demand far outstrips supply, prices rise. That excess demand is fueled by multiple factors. And thrown into the mix is some good old fashioned greed…..and why not if everyone else is doing it? Why not, if we live in a free market capitalist system? We are reaping the rewards on the rise: chances are we will also feel the pain when the markets shift. They always do. I don’t ever recall myself sympathizing with a retail store when they had to discount their products deeply because of a lack of demand……I do recall the pains of real estate markets when we had to slash prices and accept low offers…..or had no showings and no offers. Markets change and they always will. We all play a role in them, consciously and unconsciously…..
Because of COVID, many parts of the US are reeling from even higher inflation rates because those moving in from more expensive parts – accustomed to far higher housing costs and higher wages – are willing to pay much higher prices than traditional ‘local’ pricing. When housing costs rise for locals, they command higher wages. More people moving into one area fuels demand and diminishes supply. Higher wages add to inflation by triggering rising corporate pricing on the goods and services they sell to pay for this.
So next time I complain about rising prices, I will turn to the mirror and ask myself: am I truly innocent of playing a role in this “BECAUSE YOU CAN” pricing moment? No, we are not responsible for inflation but to better understand it, we are witness to its primary causes each and every day. And we are part of the process that facilitates it. Most people will sell something for a higher price – if they can – regardless of costs.
And yes, prices can and do come down…..triggering DEFLATION and discounting…..and we will be active participants in that too when/if the time comes. Free market pricing is all about supply and demand.