If we have 100 buyers, some slowly seeking and others desperately seeking the real estate that their heart desires and their wallet affords, how many of those buyers does it take to create market momentum? If all 100 are indeed buyers, even once we’ve established that they are, as they say, buyers, it’s true that 15 of them will prove to be anything but. If they say, I’m a buyer, this is how we know that many of them are not what they pretend to be. Where once we had 100, we now have just 85. Once we look over those 85, some bold and others shy, some in a hurry and others barely aware that there is a housing search in progress, we should likely place 35 of those remaining 85 into a group where we’ll justly label them as lookers. They are still buyers, and they aren’t the pretenders that the first 15 were, but of all the things they are, most obviously they are not soon-to-be-buyers.
And what of the 50 that we have left? If those 50 are all standing, some sitting, and we survey the group, it wouldn’t be a stretch to say that 20 of those buyers are exactly what they say they are, but they are the sort of buyers who find no particular urgency in the search. They are, by my eye, the sort of buyers that are planning to live forever, and even some after that, so they feel no particular motivation to enjoy their life now, because, as they know, there is plenty of time for such enjoyment at a time when they have traveled farther down this road. If they live to be 200, they may find the time to vacation here on their weekends, which is fine by them, because to this select group time is the one thing they have on their side. Of course, they are wrong, but don’t dare tell them that. You’ll spoil their immortality.
The 30 that remain are true, bona fide, legit, cream of the crop buyers. Of those buyers, 22 are patient, but intelligent and wise. They boast knowledge, fueled by their own research and fueled by this commentary, and hopefully, some of them will actually work with the writer of this blog, instead of just gleaning keen insight here and bringing it to the table of another Realtor. It should be a given that those who read here will reward the writer, but this assumes loyalty and loyalty is nothing if a difficult thing for a few buyers to grasp. This is for their shame, not ours. Even so, of those 22, they are sharp. They are aware. They are fully involved and they know that they too will someday find their piece of vacation home nirvana. They expect that this will happen soon, and they effort for it to, but they cannot control inventory and as such, they must be forced into a patient stance.
The other 8? The other 8 have bought into the feeling that 2013 is once again 2006, and that if they do not buy at this exact moment they will be forever turned away. They are the buyer who looked at a home for $2MM and passed on it only to buy the home next door that came to market for $2.5MM. And they pay ask, or close to it, because they are, after all, in an extreme hurry. They have thrown caution to the wind, which I don’t entirely mind, as long as they have plenty of caution lying around and they feel comfortable sparing some of it, or lots of it. No matter, these buyers are rushed, they are excited, and excitable, and they have an agent who will feed them whatever looks right at the moment. They will pounce on a market with low inventory and buy something, anything. They are as the buyers on HGTV and others, and they have 30 minutes to view three homes and then sit on a park bench and make a decision by playing rock, paper, scissors. But this group has no time for childish games, so they abandon the scissors and plan ahead of time to call paper, so they might more quickly cut to this chase.
These are our groups, and it isn’t difficult to know how many of these 100 must fall into the last group in order to spoil the market for the remaining 92. It take just 8, or fewer even, to take a market that is mending methodically, patiently, stably, and turn it on its ear. These buyers are out there today, for the first time in four or more years, and they are reckless and indefatigable. They will not be stopped, and they will pounce on over priced real estate in whatever form it presents itself. Of course, the trouble for everyone else is that these buyers can skew a market significantly, and it doesn’t take many of them to do so. I’m wildly in favor of market recovery, but I’m in favor of a sustainable one. I’m in favor of market forces working with purpose, and buyers building slowly on the momentum. I’m in favor of a home selling for $1.2MM and then seeing the neighboring home sell for $1.25MM. What I don’t like is the thought that a $2MM home sells and the neighbor, trussed with unearned confidence, asks $2.5MM. Worse yet, if one of our gang of eight rides in and the sunset is right, he just might get it.