A New York Times article on what makes Black Friday shoppers so aroused has me thinking that our real estate Black Friday began during the dot-com era and never stopped.
Of course, Valley real estate doesn’t have the “raging hordes” the Times alludes to. Although if you’ve ever been to an open house crammed with twenty or thirty people, you might think that Valley real estate was marked down 70%.
And we don’t have the sort of “consumer misbehavior” that includes trashing displays–although someone once mildly criticized the staging at one of my listings for not representing “the way people really live”–and yelling at employees–although I once was taken to task by an earnest young woman for causing prices to rise during the dot-com era.
Yes, it was all my fault. Is it too late to ask forgiveness?
But there’s no disputing that Silicon Valley real estate brings out the competitiveness in people. In fact, if you don’t have a competitive bone in your body, it’s highly unlikely that you’ll ever succeed in buying a home here. On the other hand, if you’re a Valley tech worker or tech camp follower who makes enough money to buy a home here, it’s highly unlikely that you don’t have a competitive bone in your body.
Social scientists and psychologists are trying to figure out what causes Black Friday’s aggressive behavior, near riots and occasional full-blown riots.
One speculates that “feelings of unfairness” drive many shoppers to behave the way they do. Nothing incites Black Friday shopper incivility more than not having enough doorbusters on hand, or failing to honor an early bird discount.
Is the Valley real estate market unfair? Certainly there isn’t enough of the good stuff to go around. But I think our local real estate market is a model of fairness–if you have enough money to buy a home. After all, how would you like it if homes sold to the first person through the door? And don’t we all agree, at least in theory, that competition is the cornerstone of an equitable marketplace?
But it’s true that, like Black Friday, Valley real estate has its doorbuster list prices, designed to get as many bodies through the door as possible, and that the supply of doorbusters is limited–very few homes sell at their doorbuster price.
And Valley real estate refuses to honor the early bird discount. Try making an offer before the offer date, and the answer will either be “wait your turn” or “be prepared to pay (even more) dearly”. It’s not enough to be the firstest. You’ve also got to have the mostest.
“Perceptions of scarcity” also drive Black Friday frenzy, according to the Times. “When consumers feel a product is scarce, they value it more. And Black Friday is designed to offer limited amounts of products for a limited amount of time, thus heightening the sense of urgency.”
I’ll disagree with the idea that scarcity, by itself, is enough to excite buyers. Anyone who’s collected anything knows that just because you possess one of only two or three of the world’s entire supply doesn’t mean that people will beat a path to your door. That’s typical rookie collector thinking, divorced from reality or, in this case, typical academic thinking divorced from reality.
But the rest of the statement seems credible. Inventory of that highly desirable commodity, Silicon Valley housing, is scarce. The house of your dreams is available only for a brief time, usually a week or so. Buyers need to feel urgency. They don’t have time to mull things over. They need to know what they want and be ready to grab it.
Scarcity “sparks ‘consumer competitive arousal'”, the belief that “a consumer situation is a competition in which there are potential ‘winners’ and ‘losers'”, analogous to an auction.
Fair or not, it describes the Silicon Valley market these days, and for the vast majority of the nineteen years I’ve been selling Valley real estate. It has its winners and losers, and let’s drop the quotation marks. Because for home buyers, there’s no trophy for coming in second.
copyright © John Fyten 2017