There was a day during 2008, just before the market was to shift, that buyers would look at homes, make offers on homes, and then buy either that home, or, if the deal didn’t work out, they’d buy another home. Then, on some cold day in March of 2009, when the market shift was apparent and unavoidable, that behavior changed. Buyers then would find a home they liked, make a bid on it, and if that bid didn’t work out for one reason or many others, then they’d retreat back to the sidelines, waiting for their number to be called again.
Many times, their number wasn’t ever called. They pulled back from the market to watch, to wait, to reconsider and to consider again. If you were a seller with a home that the now-retreated buyer was contemplating, you still held out hope. Maybe that buyer would come back. Maybe they just needed time. Maybe, just maybe, things were still going to work out. Often, that buyer never came back to the market. They made a bid on some sort of a whim, then they felt their feet grow cold, not from sneaking death but from growing fear, and they stepped back. They may have moved on to another home or a lesser lake or a worse state, but they made a foray into our market and then left, forever.
This is how things were from some strange day in early 2009 until some time last spring. Then last summer came, and fall followed, and winter too. Things changed. Buyers made bids, buyers pursued properties with purpose, and deals came together. Many, many deals. But this general improvement isn’t the topic. Buyers recently have made overtures at properties, and written offers. They have negotiated. They have tried their very best to succeed in purchasing a vacation home. The shift now is that these buyers will make bids, and then, if met with seller resistance (which is a growing condition), they will retreat. This is how it has been through the crisis. But these buyers today will retreat and instead of sulking and lurking and finding ways to do anything but buy a vacation home, they retreat, regroup, and then they go and hunt down another property. The market, has changed.
For sellers, of course, this poses a problem. Buyers are no longer content to sit and wait on indecision. They want action, quickly, and then they want to either reach an agreement and close so they can move in their furniture that they haven’t yet bought, or they want to wash their hands of the experience and move on to the next most potent object of their affection. They will not wait any longer. They write, they contemplate, and then, if the mood isn’t right and the seller isn’t game, they take their offer off the table and they drive down the road to the next seller will very well may be in the mood to negotiate just a bit more.
The lesson in this is for sellers, but in a way it’s also for buyers. Sellers are growing increasingly confident, which, if you’ll remember posts from the dark days of 2009, is the most important aspect of any market. Seller confidence is bad for buyers, just as seller apathy is the best thing that could ever happen to them. Today, apathy is low, and expected to go lower. If there were an Apathy Index, it would be low, and we’d still short it. The problem with seller confidence is that seller confidence can be based on fact, on comparable sales and on true market conditions, or it can be based solely on emotion. Seller confidence that is based on emotion is toxic, but most unfortunate is that it is also contagious.
Buyers, you have 7 days left before your lake-less Saturday mornings are going to feel absolutely horrible.