Seeking Rest

Seeking Rest


Nothing feels better, after a long days work, than some quality rest. There’s a big difference between sleep and rest, perhaps not for the body but certainly for the soul. Sleep is sleep, and rest is all sorts of different things, but rest is most certainly not sleep. Rest is what we lack, even after nights where we achieve a substantial amount of sleep. Rest is what happens when we sit on a couch for an hour and read a book by lamp light. Rest is what happens when we sit down on a porch and look through a magazine without really reading any of it. Rest is what happens on the bow of a boat, floating on a gentle sea, with our eyes closed and our face aimed towards the sun. If you know someone scattered and tossed about by life in general, there’s a chance that sleep isn’t what they’re missing- it’s rest.

Rest isn’t just for us, and it wasn’t solely for Him, but it’s likely the most integral, overlooked part of a housing recovery. During the heated moments of the real estate boom, there was little time for rest. Not for us and not for the housing inventory. During the downturn there was a bit of forced rest, both for us and mostly for the houses, a climate where no matter how hard someone wanted to work or a house wanted to sell, there was nothing but surface rest as the market sat idle. This is also not the sort of rest that I’m talking about. The last time the sort of rest that I’m speaking of was prevalent it was sometime around 2000, when the housing bubble had not yet scratched the surface of its impending girth.

Back then, individual real estate segments would rest, at alternating times. Glenwood Springs rested for perhaps a year or more at a time, less a rest and more a hibernation of sorts, but still. Buena Vista has been in a near perpetual state of rest for the better part of two decades. The Harvard Club rested during most of the first decade of the new millennium, and Belvidere Park rested for 20 years or more before finally waking on a fall day during 2011. It turns out that it isn’t activity that spurs a market on, it’s activity followed by long periods of rest.

The market today is active. It has been active for most of the downturn that began in late 2007 but only seemed real by late 2008. The activity in the market has been less normal activity and more a purging of sorts, more the active work of a serious cleanse. The market from 2008 through sometime in early 2012, was a market that lacked any normalcy, but was instead awash in the gyrations of a market seeking bottom, seeking renewal. Foreclosures came and purged weak ownership, prices were lowered to relieve disinterested ownership, and the functions of the market became, by 2012, somewhat normal. Bad inventory has been mostly purged, new buyers have arrived and continued the gentrification that began in earnest during the housing boom and took only a few recessionary years off.

So, the market today is active, but there is something today that the market needs if it is to increase in overall value and pricing anytime soon. The market needs rest. Perhaps not the broad market, but certainly individual segments. When I prescribe rest for a market, what I mean to scratch on the RX card is a simple silencing of inventory. When market segments grow desirable to a broad market, they generally do so only through a lack of inventory. If we are to mend markets fully, we need something very simple: A complete and thorough lack of inventory.

For a buyer, this obviously is not a good thing. But today we’re talking about the overall health of the market, not the individual needs that exist in that market. The South Shore Club is a tremendous example of a market in need of rest. After a 2012 where we had three re-sales, there is new life in this prized lakefront enclave. I envision at least one, probably two, sales in the SSC this current year, and what the SSC needs badly after this year is a period of time where nothing built is available. The SSC needs a period of time, perhaps a year or two, where not a single home is available. Buyers will then call their broker and ask for inventory here. Brokers will say there is none to be had. Then brokers will call each other and ask for inside, private listings. When there are none still the buyers will leave little notes on owners doors. Buyers will grow restless. And then, on some normal day during some normal week a South Shore Club home will hit the open market and those buyers who have been waiting for such an offering will rush to see it. This is the scenario by which demand grows, and along with it, pricing.

I expect 2013 will be another year of increased volume. There are plenty of market remnants that must be sold this year, and there is plenty of new, good inventory that will hit the market and be quickly absorbed. Assuming this year remains solid, at some point in the next 24 months I think we can expect to see several of our individual segments grow quiet. I think certain associations will once again lack inventory for spells, and this rest is exactly what the doctor ordered.

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  • DS March 7, 2013 at 5:44 am

    So you’re saying prices will recover when supply decreases. During the boom prices increased while supply increased because demand increased more. This was from low rates and silly mortgage standards and structures and a herd mentality to buy any and all real estate as a ‘can’t lose’ investment. While lending standards are not as whimsical and carefree as they were, rates are even lower. But you don’t seem to expect increasing demand being a driver of price but rather a recovery driven by a scarcity premium. Why is this?

  • David Curry Author March 8, 2013 at 7:29 am

    I think each market behaves differently, and is driven upward by different activity. Lake Geneva is a low volume market even in times good, so the prospects of a pricing recovery driven by ample inventory set against greater demand doesn’t seem realistic to me. It might happen that way, but it probably won’t. If inventory shrinks back to a level where we have 25 or so lakefront homes available at any given time (we’ve recently averaged more like 40), then we’ll be able to have a nice sales pace of 15-18 sales annually and prices will have no choice but to slowly increase. It would be wonderful to have inventory high and sales high, but historically that doesn’t seem to be Lake Geneva’s preferred mode of appreciation. Also, Winter Blows.

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