Dissent

Dissent

Dissent

I’ve been bothered by a comment that was made on this site recently, and I feel the need to discuss it further. The comment implied that my job as an agent is to drive prices down to make more sales. The comment is a typical, if tired, trope that easily assigns to anyone in a commission based business. At least, until you think it through a bit. Do car salesmen want to drive down the prices of cars so they can sell more of them? Do art dealers want to drive down the price of art so they can sell more of it? Do jewelry saleswomen work to drive down the price of Rolex’s so they can sell more of them? Do you see now how silly this is to suggest?

What would actually make real estate easier to sell is a never ending bull run, one where every house that sells is worth more the day after it sells. And the year after and the year after that, in perpetuity. Then we can all get rich and never, ever have to concern ourselves with market shifts or market forces or market trends. We can just forever pretend that prices only go up, and while we’re busy pretending that, everyone will be happy and no one would accuse me of wishing for anything but sunshine and 20% YoY price gains.

But we live in the real world, and we know this isn’t how any open market works. We know the steel Rolex’s used to sell for their MSRP, and we know that when you bought a turbo 911 it was worth 10% less the moment you drove it off the lot, not 20% more. We should all be smart enough to know that markets are unpredictable, and if we’re trying to understand our forward looking perspective, then we have to approach it with some base level of market knowledge. Here’s a good one: When rich people are confident they buy expensive things. When rich people are concerned, they hold onto what they already own and cease expansion. Luxury goods rise and fall on those two outlooks, and if you aren’t aware of the shift in outlook, then I’m not entirely sure what to tell you.

Interest rates have doubled in the last six months. Equity accounts, unless hedged, are off 20% or more. Crypto is busily marching to zero. It should be noted that the last time crypto cut itself in half (or more), very few people owned it. Today, most people own some crypto, making the pain from this current sell-off much more impactful on the real economy. Or so goes my theory, as I check my Coinbase account and feel happy that I only own a few pennies worth (it was a few nickels worth a few months ago). How can we pretend that luxury real estate is immune to a stark reversal in the primary catalysts that fueled its remarkable growth? I contend we cannot, and because I say that here on this blog, some people who wish for the price acceleration to continue uninterrupted discredit my commentary. To that, I would suggest that price declines are not inevitable, but the fearless march into a frothy future has, at the very least, been slowed.

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