Overheard while walking into a home on broker’s tour, this low moan from the listing agent: “Yeah, it cost me seventy bucks this morning just to fill my car half full”.
“Years of doom and gloom”, he declares. “Years and years of it”, murmurs his faithful sidekick.
And a great big howdy right back at ya, partner!
There’s wailing and gnashing of teeth these days, much of it in the real estate community, some of it even warranted. If sales don’t pick up soon, many of us will have to get a real job. But much of it is also the plea for help of the man who digs his own trap and then falls into it.
What kind of world is it, I ask, where someone has to pay at the pump for driving a German luxury sedan capable of autobahn speeds? What kind of world is it, somebody please tell me, where an agent who prices a listing like it’s 2007 has to wake up and find it’s 2008? And do you or I want to live in a world—I don’t think we do—where the sky is always falling on the very people who take the most delight is telling us the sky is falling?
Why is it, I wonder, that every downturn brings out the closet prophets of doom, the weighty pronouncements that “this is the big one, the mother of all catastrophes, years and years of it, the likes of which we’ve never seen”? Maybe because weighty pronouncements sound more impressive than “I’m absolutely clueless about what’s going to happen to me tomorrow and I’m scared”? Yet “I’m clueless” is the more accurate and honest, and therefore preferred, answer.
No, I’m not in charge of morale-building for the real estate industry, nor am I famous for my what-me-worry? attitude, nor am I Hobo Bill, happy to give up the trappings of worldly wealth to ride the rails, but there isn’t a week that goes by that I’m not grateful for the wisdom a veteran agent laid on me back in 2001 during my first market slump, when he saw me ready to cave at the knees: “People don’t want to be around doom and gloom”.
And to be fair, it’s not just agents who fall into this trap. Back during the tech bust it was the techies who seemed to take the most pleasure in telling the latest dot-com horror story. But there’s something about a downturn in the marketplace—whether it’s real estate or stocks—that unleashes the prophet of Armageddon lurking in all but the most level-headed of us.
Take, for example, the co-worker of a client of mine who took one look at my client’s youthful optimism and, with the unerring instinct of the bully and knucklehead, knew it had to be nipped in the bud. Buying a house, are you, young feller? Think it’s a good time to buy, do you, just because interest rates are low and prices are down 40 percent where you want to live? Well, let me tell you something, sonny. I’m a-gettin’ out while the gettin’ is good. I’m buyin’ me a big fancy house on forty acres in the middle of nowhere in the middle of Utah, for the paltry sum of $200,000, and me and the coyotes are gonna thumb our noses at all you suckers stuck here in this highly-desirable Bay Area I can’t afford because it’s gonna be the Great Depression all over again and you’re all a-goin’ down ya hear? And have a nice day.
Never mind that our expert on depressions probably doesn’t know anything about the Great Depression except that it was really bad and George Washington was president.
Trying times also bring out the shoot-yourself-in-the-foot investor in all of us. One of the top agents in my office, an agent who sells in the multi-million dollar range, told us at a recent office meeting about a client who told him he’d decided not to buy because “I don’t need to make money on my home, but I don’t want to lose money on it”. Remember, this is a buyer who can afford one of the top-end communities—Atherton, Woodside, Portola Valley—in an area where even the low end is expensive. And I can tell you he didn’t reach that station in life with that kind of investment philosophy. And if he did—if it’s all Daddy’s money—Daddy sure didn’t get there with that kind of muddled thinking.
Because what he’s saying is, “I won’t invest in anything that might lose value”. Think about it. Where does that allow our marketplace philosopher-prince to put his money? In CDs? Under his mattress? In his piggybank?
But what he’s really saying is, “I’m afraid to buy, and I’ve found what I think is a plausible excuse”. Because the era of the market downturn is the era of the plausible excuse. In times like these I wish I could set up a sidewalk stand, Peanuts-style, dispensing “Plausible excuses 5¢”.
One of the most profound truths I’ve ever heard was uttered, improbably enough, at a new-agent training class. The trainer was an old-time agent, ancient and bald and paunchy and incredibly corny and all us hot-shot newbies snickered and rolled our eyes. Then someone announced that this was his last class and he gazed at us with tear-filled eyes as if memorizing each know-it-all face, and a few of us were incredibly lucky despite ourselves because somehow we took away this bit of his profundity: “Whenever you say you don’t have time to do something, you’re really saying you don’t want to do it”. I’m not big on pat formulaic approaches to life, but the enormity (and economy) of this insight, by itself and in relation to so many other handy rationalizations, continues to live with me.
Don’t have time to look at homes? It’s because you don’t want to. Don’t think a buyer’s market is a good time to buy? You’re right—it’s never a good time, nor is it ever a bad time, because there’s never a perfect time, there’s never that one fool-proof market-beating time—but let’s be honest: you don’t want to buy. That’s okay. Maybe in a year or two, when prices are on their way up again and everyone is saying real estate is a sure bet again and we’re back in a seller’s market again and there’s five buyers for every mediocre house again and fifteen or twenty for the good ones. Sure. That’s the perfect time to buy. The fool-proof time to buy.
Wait, I forgot: this time, the market isn’t coming back. Ever. Or at least for a very long time. The law of market cycles has been permanently suspended by the power of wishful thinking and we’re stuck in a trough forever. Because this is the big one, the mother of all catastrophes, years and years of it, the likes of which we’ve never seen.
The times ask for profundities, and get everything but.
copyright © John Fyten 2008