When people ask me how the market is, I generally and consistently assume they’re asking me in a rhetorical manner similar to when the check out girl at Sentry asks me how I am. She doesn’t really care how I am, does she? Could she? Doubtful, but she asks anyway, time and time again, asking me, asking the guy in front of me and the lady behind me. She asks all day, never particularly caring what the answer is. If I were to say that I’m fine, she’d tell me that was good. If I were to say that I was having a bad day, she’d probably say something sympathetic. Feigned sympathy I imagine. If I were to tell her that my cat just died, she’d tell me that she had a cat die once too. I don’t even own a cat, but she wouldn’t know that. But when people ask me, daily, just how the market is, I don’t really know what they expect. I usually tell them it’s fine. Then they say that it seems to be picking up and getting better, slowly, in pockets, then I nod and smile and walk away knowing that I had temporarily restored their faith in brighter day that lies in wait just around the corner.
There is a strange sentiment out there right now. A mood that seems to say outwardly that the market is improving, while inwardly people know it isn’t. There’s hopeful optimism, buoyed by the housing reports of that day or week, but sometimes tempered by those same reports. There is a consensus among the unknowing and the unengaged that the market is, quite simply, improving. At least this is what they tell me when I talk to them. These people whom I do not know, tell me this and reaffirm it when they glibly ask me how the market is. When I reply that it might be okay but it’s not getting better, they probably assume I don’t know what I’m talking about. To them, to most, things are somehow getting better.
If those people were to ask me how the market is, and by “the market” they were to say “the lakefront condo market”, I would easily and confidently answer their question. I would tell them that it’s a tough market right now. I would say that buyers are reticent in this segment, and when they would suggest that the slow nature is because of tighter lending regulations I would tell them, kindly, that they are wrong. I would tell them what has sold and what hasn’t, and I would tell them about what is a deal right now and what isn’t. I would spend three, four, maybe ten minutes with them, and we would discuss the lakefront condo market. When we were done, they’d know exactly how the lakefront condominium on Geneva is faring. But they rarely ask with such specifics.
The market, to most, when it works its way into conversation, assumes that a broad region makes up one market. How’s the market in Wisconsin? Well, that depends if you’re asking me how the $1.5MM lakefront market on Geneva is or the $55k market in Beloit is. There’s a difference in these markets as wide as the gap in Mr. Strahans front teeth. Most people know this. They know that markets are different and that they are highly segmented, but they ask in generalities anyway. How’s the market? Well, sir, you see, umm…. it’s fine. Just fine. Now please go on your way and don’t ask me questions that you don’t want to know the answers to.
Of course I wouldn’t answer that way. I am, after all, a nice guy of sorts. The market, however, isn’t. The market is overwhelmed with mood swings. Had I not caught a bit of a movie called A Funny Thing Happened last night, I wouldn’t have told you that the market behaves a bit like the Egyptian guy in that kids room, but since I did catch a little of that movie, I will tell you that the market behaves just like that Egyptian guy in that kids room. The market cannot be bothered. It sleeps a lot. It is moody and it is strange, but play the right music and offer it pizza and it will dance.
The market doesn’t do well and it doesn’t do badly. It just is. It is fine and it is fragile all at once, depending on who you ask and when you ask them. Last week, I lost a deal on the Harvard Club cottage listed for $449k. The buyer walked, which is fine, if upsetting. But ask me how the market was right before he walked and ask me how it is three weeks from now if I haven’t yet found a replacement buyer and my answer just might be very, very different. I see the lakefront market right now and I think it’s pretty decent. With five properties pending, maybe six by the time the week is out, I don’t think anyone can say it’s slow. But what if you’re one of the several lakefront properties listed for sale right now that doesn’t receive so much as a showing during a normal month? Then is the market hot and fun or is it cold and miserable? Or is the market fine and acting as it should and is your property the problem? That’s an easy answer.
The market isn’t easily gauged, nor does it allow for one to carelessly take its temperature. There are reasons to believe the Lake Geneva real estate market is improving, but that depends exactly on what segment you’re concerned about. The market as a whole is stagnant, with fits and starts and halting moments of success, but I don’t think anyone can say it is consistently improving even if numbers might be twisted to bear that out. If I borrowed a couple of Groupon’s accounting measures, then I could make things dazzle. The market has stabilized, yes, and we should be content to bounce along the levels we’re at right now, possibly for years to come. For buyers this creates lasting opportunities to pursue vacation home perfection. For sellers the soft state of the market makes it even more obvious that this is a battle that has turned into a war. So, how’s the market? Well, that depends on whether you’re asking that on a Tuesday or a Wednesday.