Rising Tides

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There are too many assumptions made in the statement that claims a rising tide lifts all ships. First off, tides are anything but stable. They are predictable, sure, but they aren’t exactly trend setters. High and low, high and low, every day, all the time. There’s nothing steady about a tide except the time it comes and the time it goes. If tides were traders, they’re the options sort, buying and selling, buying and selling, never holding a position for very long. That aside, the biggest issue with that statement is that it assumes we all have decent boats. If your boat is a shiny new Hinckley and my boat has a giant hole in the bottom of it, I’m guessing your boat is going to obey the phrase while my boat seeks to barely maintain some level of neutral buoyancy.

The way I see this market today, is that a you, the buyer, have a very important decision to make. There’s definitely momentum here, a tide that has been washing in over the past three years has finally made its surge. There are buyers out there that feel this, and they are reacting to it. There are other buyers who feel this momentum and push against it, rowing and rowing, wishing not to be carried so high, so quickly. There are other buyers, too, who don’t understand what a tide is and cannot figure out why some people are body surfing it in, and others are rowing out against it. These buyers don’t know what day it is, either, so let’s not be too hard on them.

It would be easy to be a buyer caught up in this tide. If, indeed, a rising tide lifts all ships, then it stands to reason that we might as well buy something- anything- right now, and it’ll all be okay later on. Writing that in that way makes it sound incredibly naive, but in practice, nearly everyone does it. I’ll buy this now because it’ll be worth more later. I went to the Elkhorn Flea Market yesterday for a bit, and that’s likely what everyone there was thinking. If I don’t buy this old piece of metal that was apparently part of some larger metal piece that was really, really important, I’ll have to buy it for more money later. Of course these people are all wrong, but they sure do buy a lot of metal junk. Anyway.

The other sort of buyers resist the tide, and this decision can be fatal. If you swim against the tide for so long, it’s clear that you’ll grow tired, and weary, and sooner or later you’ll give in to the tide and be swept ashore, or worse, pulled to those eternal depths. The problem here is that you can’t hold out forever, and you end up giving in to the market on its terms, not on yours. If you feel the need to fight the consensus, I applaud your efforts, but I know you’re likely making some form of mistake.

The issue here isn’t that we shouldn’t give in to market momentum, but that we can’t count on it carrying us to safety. Why? Well, because houses are boats and some have great big holes in them. If you buy the wrong house at the right time, it’s still the wrong house. Buying the right house at the wrong time is more forgivable, as the right house will always find an audience in any market. Today, it seems to many like the right time, and as it feels that way, they’re going about buying the wrong house. Don’t tell them that, though, because bringing thoughtful insight to a transaction can spoil all those good feelings that mistakes can breed.

As I scan the MLS, I see properties pending that have absolutely no business pending. I see some buyers (not mine) paying prices that would have looked ridiculous in 2006, let alone 2014. Has the market recovered to where we’re beating peak values? I would say, without equivocation, no. If you disagree with me, I’d love to see the statistics that prove your point. If the market is so much better now, which I believe it to be, that doesn’t mean we shouldn’t still be hunting for value. Just because we’re happier now doesn’t mean we shouldn’t be smart.

I don’t necessarily blame buyers for their naivete. I understand that narratives are convincing, and if you like a particular house, you are entitled to buy it, no matter the ransom. Today I’d like to urge buyers to be smart, to be wary, to be aware of their surroundings, to scan those hulls for holes. It might feel great to finally buy a Lake Geneva vacation home, but nothing looks as good as lasting value feels.

About the Author

I'm David Curry. I write this blog to educate and entertain those who subscribe to the theory that Lake Geneva, Wisconsin is indeed the center of the real estate universe. When I started selling real estate 27 years ago I did so of a desire to one day dominate the activity in the Lake Geneva vacation home market. With over $800,000,000 in sales since January of 2010, that goal is within reach. If I can help you with your Lake Geneva real estate needs, please consider me at your service. Thanks for reading.

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