Several years ago, while on safari in Zambia, I had the privilege of seeing a black rhinoceros in the wild backcountry. This was a rare opportunity because, sadly, at the time, there were only 57 black rhinos in existence in the entire nation. Thankfully, these beautiful animals are now protected against poachers by armed guards. Federal law states that anybody looking to do harm to a black rhino is to be shot on the spot, their body left in the wild for hyenas to devour.
Back here, in the wilds of our local real estate reserves, I’ve come to realize that buyers, upon discovering a great property on the market for sale, are close to experiencing the same euphoria that I felt in the brush of southern Africa. Well-cared for homes in a great neighborhood that are appropriately priced are, like endangered wildlife, an increasingly rare and hard-to-find commodity. The dwindling numbers of this exotic product are staggering. In our six-county region, between 2013 and 2016, the number of houses listed for sale in the month of February, bounced between a low of 5,191 and a high of 5,977. In 2017, that figure dropped to 4,102. In February of this year, the number of properties listed for sale fell to a stunning 2,123. In other words, the inventory of homes available to purchase dropped almost 60% from its previous high! The whimpering and frustration that you’re hearing expressed by buyers in today’s market? Turns out that it’s justified.
Nobody has yet to identify exactly why it is that inventory has dropped so precipitously both here in upstate New York but, also, around the country. There are theories and ideas that will, eventually, be identified as causative. For the moment, it’s probably worth discussing a few of them.
- It turns out that, until recently, homeowners would stay in their residence an average of seven years before moving. Today, that number has increased to eleven years. Post-recession, people are simply more careful with their money. As an agent, I was always thrilled to hear that The Smiths were tired of the blue house and wanted to move around the corner to the yellow house. It didn’t make a lot of sense, but I was always glad to indulge their predilections. Homeowners today are behaving more like their grandparents or their great-grandparents who, post-depression, would save peeled potato skins to add to a soup or would wear the same pair of shoes for several months after the first holes appeared in the soles. Such behavior just made better financial sense.
- Similarly, during times of uncertainty, Americans traditionally refrain from making any large financial moves. They simply sit on the sidelines and go about their daily life waiting for a greater stability to settle in. Today, the President of the United States was elected, in part, because of his rather unorthodox approach to governing. This isn’t meant to be a criticism. It’s simply a statement of fact. Concomitantly, there are concerns about saber-rattling with North Korea, Russian infiltration into our electoral process, domestic unrest arising from the gun debate and race relations. Even the stock market, which has performed remarkably well the past sixteen months, is beginning to show signs of fatigue. Until the national zeitgeist is one defined by a greater steadiness and calm, the real estate market may continue to show malaise.
- During the past ten years, there have been seven or eight occasions in which the start of the spring real estate market began in the month of January. Warmer winters meant that buyers, in particular, began their search for their next home a full six weeks earlier than tradition indicated. Well, this wasn’t one of the years that we enjoyed spring-like temperatures in January. As a result, weather also conspired to forestall the onset of the local real estate season.
BUYERS VS. SELLERS
As a result of such unusual conditions, sellers are popping bottles of Dom while reviewing the dozen or so purchase offers that have been submitted by hopeful buyers. One lucky homeowner on Culver Road in the city secured 19 offers within 24 hours of listing his home for sale! I’m not sure if I’ve ever seen an environment that so favored sellers and supported their bottom line profit.
Buyers, on the other hand, are frustrated and anxious. After all, it’s hard to emerge victorious when competing in a field of all-cash buyers writing offers $20,000 over asking. There are, however, strategies. Strategies which seem to favor our buyers over the crowded field of the huddled masses. At the moment, I won’t bore you with the proprietary details. However, if you’d like to call us…..
For now, I will say that some buyers are starting to rethink their approach. Through the years, you’ve likely heard me mention repeatedly the need for sellers to thoroughly prepare their home and stage it for market. The fact remains that, for every dollar that a homeowner invests in aesthetic enhancements of their house, they’re going to enjoy a $1.50 to $2.00 return. However, not every seller has the financial ability or temporal desire to engage in making repairs and updates to their residence. This is where a more savvy buyer can succeed. Homes in need of upgrades and aesthetic enhancements continue to remain on the market for sale for a longer period of time than those that are in better condition. They also sell for less money. Slowly, ever so slowly, we’re starting to see some buyers behave in a manner that is a bit contrarian to their colleagues. They’re purchasing these diamonds in the rough without having to engage in a bidding war. They’re buying at a bit of a discount and, then, after applying some elbow grease (when was the last time you heard that term used?), they find themselves enjoying Thanksgiving dinner in their very own dining room while their friends are still on the hunt. Stated another way, a small but growing number of ambitious buyers are understanding market conditions and capitalizing on the opportunity. Sure, they might spend a few weekends removing wallpaper and painting out walls but, in their minds, this is nothing other than another cost associated with striving to create a more financially successful future for themselves and their families.
Everything in life follows a cycle. There are ups and there are downs, booms, and busts. Although I enjoy the freneticism and the adrenaline rush that comes with a more robust spring market, I’m not particularly worried. There are plenty of pundits, both local and national, who continue to assert that we’re still going to have a successful year albeit one that kicks in several months later than is traditional. That would be fantastic. However, even if they’re wrong I know that, long-term, the real estate market will bounce back. Owning one’s own home is part of the American dream. It’s part of the fabric of what it is that we define as being successful. It also makes great, long-term financial sense. After all, who, in their retirement years wants to be paying rent to their landlord? I’d rather host a mortgage burning party and fly off to Tahiti….
SOME FINAL THOUGHTS
Perhaps as a result of the reduced inventory of properties on the market for sale, my staff is receiving a greater number of calls from friends and clients looking for good contractors. We’re always glad to provide the name and phone number of good, qualified craftsmen. If you have a particular need, feel free to reach out and we’ll try to introduce you to somebody who will do a great job, in a timely manner, while reducing your levels of stress!
You may recollect that beginning last year, we added rental property management to the portfolio of services that we provide to our clients. Before offering up this opportunity to a larger number of landlords, we really wanted to be certain that we had become experts at the task and had ironed out all of the wrinkles. Well, thanks to the amazing oversite of Adrian Winter, our rental Property Manager, I can now say that we’re ready to take on more clients! If you need help or assistance in overseeing your apartments, feel free to me a call.