If, over the course of the past six months, you've had the opportunity to speak to someone who was in the process of looking for a home to purchase, my guess is that you’ve heard a lot of rumbling and grousing about how difficult the process has been. In extreme cases, perhaps even a tear was shed or a profanity exclaimed… It’s true. The market has been tough for prospective buyers, to say the least. It turns out that second quarter statistics in Monroe County show that the number of properties on the market for sale is down a whopping 37.5% from the same period of time last year. Of course, this has greatly impacted the total sales volume and number of properties that have transferred title. That figure has fallen a full 12%.
What's remarkable about these numbers is that they exacerbate a problem that we began to experience last year. As anticipated, the local real estate market began to falter in the summer of 2016. Why? Well, every four years, Americans refrain from making large financial decisions in the months preceding a Presidential election. So, it would make sense that home-buying, one of the largest financial transactions that one makes during the course of a lifetime, would take a hit. And let’s face it – the uncertainty associated with Clinton versus Trump didn’t make things any easier. In fact, last year’s campaign encouraged more people to move to the sidelines and wait to see how things played out than we’ve experienced in elections past.
After the election concluded, our country was suddenly focused on the Macy’s Day Parade, Sugar Plum Fairies, and weight loss resolutions. Once the New Year took hold, the pent-up desire to purchase or sell property that had been growing in the preceding six months started to begin its release. Diverging from previous markets, this year’s spring market began, in earnest, the third week of January. This may have been due to the fact that, regardless of one’s political leanings, consumers took some comfort in knowing that, yet again, the peaceful transition of power from one president to another had taken place. This particular set of circumstances helps us to understand the local real estate market during the first six months of the year. Then, everything seemed to change…
So why is it that the stock market is dancing with historic highs while home sellers are behaving with a lethargy not seen since 1997?
My personal theory has to do with the fact that Wall Street, an industry obviously populated by CEOs, tech titans and other big business hot shots, have applauded our current President’s pro-business agenda and as a result, the stock market has been sent soaring upward. Main Street and residential real estate, on the other hand, are industries populated by average Americans whose personal fortunes and sentiments don’t reflect the mindset of New York's financial district. Wall Street, for the moment, seems willing to ignore some of the uncertainty emanating from Washington, hedging their bets on the fact that the President’s pro-business agenda will ultimately lead to higher profits. Ma and Pa homeowners, however, seem less willing to risk potential loss. The President’s underlying “renegade approach” to governing is concerning to many and unfortunately, perpetuates the phenomenon that began to define the real estate market beginning 12 months ago. As a result of this mindset, average Americans are either
a) Remaining in their residences or,
b) If not currently a homeowner, are looking to the safety that is traditionally associated with homeownership.
In other words, high demand and low supply.
So where are we headed?
In all honesty, for twenty six years, I've written these updates and prided myself on having a very accurate crystal ball into the future of the real estate market. Going back and rereading, I was always pleased to see that, indeed, my previous newsletters and posts were surprisingly accurate. Unfortunately, my crystal ball is now a bit foggy and I’m unable to discern where it is that the market is headed. In the short term, it looks as if the next two and half months will be very strong. Personally, my team and I are listing sixteen new houses for sale in the next two weeks. As a result of the lack of good product, we're fairly certain that these properties will sell rather immediately.
Once November 15th arrives, we will, of course, experience the traditional slow down that sets in during the holidays. That brings us to the New Year and, unfortunately, anything beyond January 15, 2018 is an uncertainty. Your guess is as good as any… That being said, my gut tells me that it won't be all doom and gloom for the real estate market. The stock market continues to do well, unemployment numbers remain low, and despite Janet Yellen's stated desire to raise interest rates, a homeowner's ability to borrow money will still remain an incentive to purchase. An enormous uncertainly remains – Donald Trump. Let's face it. The first year of most presidencies is rocky until our Commander in Chief learns to navigate the hallways of our nation's capital. If the current occupant of the White House is able to learn from his missteps or, at the very least, create a greater sense of stability in the minds of Americans, next year's real estate market could be rather spectacular. Only time will tell!