The real estate market is going through a major shift. Unfortunately, there are few (if any) news outlets accurately reporting on this shift, which is leading to further confusion for the consumer. As a result, many aren’t adjusting to these changes. #realestate #market #shift
The L.A. Loft Blog finally brings this New Market Reality into the light. In this article, we’ll discuss what this major shift means and how it has redefined the market. We’ll also provide you with a guideline of how to maximize value so you can easily separate yourself from your competition.
This post will certainly provide great insights for every homebuyer and seller.
Let’s raise the bar on what it means to transact in real estate and, as a result, create a significantly improved experience.
THE NEXT BIG CHANGE
The real estate market has navigated many changes over the past few decades. That’s all been great practice for what we’re starting to experience now and what will continue over the next several years. Before we talk about the change, let’s discuss the potential phases of change. Any change in any aspect of life can cause people to go through four distinct phases. They are:
Confusion, Concern, Fear and Paralysis
Some people go through all four stages (as the real estate market saw in 2008), while those who are proactive and remain calm may only experience the first one or two. Our goal is to empower you with knowledge so you never pass the first phase, and thus help you to do the same. The change everyone is talking about now (and that will continue into the foreseeable future) is: • The perception that the real estate market is declining • Prices are depreciating (when actually appreciation is decelerating) • Sales are slowing • We’re going to experience 2008 all over again.
Because of this, many home buyers and sellers are in the confusion phase and on their way to the concern phase. Let’s set the record straight to clear up any confusion and concern, and to prevent you from moving into the fear and paralysis phases.
According to national statistics, the market is not declining. We are simply going from a hyper-charged, accelerated market to a completely normal market. Think of it like this: Imagine you are driving down the highway. The speed limit is 65 mph, but you and the many other cars on the road are humming along at 85-90 mph. You’ve been traveling this speed for well over an hour. You are making great time. You feel great. But then you notice that cars coming toward you are flashing their headlights. You know what that means: an upcoming speed trap. Lo and behold, in the distance you spot a car on the side of the road. You slow down to 65 mph, just in case, and as you approach the car you see it’s a police vehicle with an office pointing a radar detector at the traffic.
Because you slowed down, you don’t get pulled over for speeding, but now you and the cars around you are all traveling at the speed limit of 65 mph. Even though that’s the correct speed to be traveling, you feel like you’re moving at a snail’s pace. You’re agitated because you perceive that you’re moving so slow.
Are you really moving as slow as a snail? Of course not. Sixty-five miles per hour is fast. It’s also the normal speed limit. Going this speed, you will definitely reach your destination within a reasonable time. However, because you spent so long going so fast, your perception is that you’re barely moving now. This analogy describes the current real estate market perfectly. We’ve spent so long in a hyper-charged, super-fast market with appreciation rates well over 5%, that now that the market is normalizing to more historic appreciation levels (3.6%), it feels slow when it’s actually not. So, are we going to experience 2008 all over again? Certainly not. In fact, both Ben Bernanke and Warren Buffet have said that 2008 was worst than it needed to be due to panic and paralysis, not the events itself. That’s why we are sharing this information and putting it into perspective — so you never enter the fear and paralysis phases that further impacted 2008. The fact is that when you’re knowledgeable about the situation and truthful with yourself, you will emerge as a true leader in the real estate market. Remember that what you think, or even know, about the current housing market will have nowhere near as much impact as what the consumer believes. That’s why it’s your job to create a powerful narrative that simply and effectively explains what is actually happening and what it means to the families you serve. So, knowing that this shift is occurring, and knowing what your main role is, let’s address how you can best benefits from the evolving opportunities.
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REAL ESTATE IS BOTH LOCAL AND NATIONAL
For decades, home buyers and sellers have been taught to be fully informed on their local housing market. This is certainly valid advice, even today. However, true real estate professionals know that the national housing market has a big impact on the local market, and they have the tools to cultivate that knowledge and apply it to their lives. Why is the national housing market so important now? Realize that when a consumer has an interest in buying something, whether it’s a house, a car, or even a gym membership, they go into a hyper-sensitive state of awareness. You’ve probably had this occur in your own life but didn’t even realize it was happening. Here’s a classic example: Let’s suppose you decide it’s time to buy a new car. You start researching the type of car you’d like. You look at safety features, gas mileage, and performance records. Ultimately you decide on a Mercedes E-Class Wagon. The car meets all your criteria, and it’s unique because you don’t see a lot of them on the road. Once you make this decision, though, and start visiting dealership and test driving the car, you notice something odd. Everywhere you look you see a Mercedes E-Class Wagon … at the grocery store, on the highway, and even in your own neighborhood. Even when you’re watching television, you see ads for a certain type of car – the Mercedes E-Class Wagon! What happened? Where did all these cars and ads come from? The fact is that these cars have always been on the road in great numbers, and the car company has always advertised this model. But because you weren’t interested in them, you didn’t notice them. Now that you’re in the market for that very car, you have a heightened sense of awareness for them and see the car type everywhere.
“We would never suggest that a real estate company could be successful without fully understanding local market trends. But ignoring macro trends or assuming they do not carry the same weight would be an equally erroneous suggestion. In our experience, the most effective market leaders appreciate the appropriate balance between the two ends of the spectrum.”
The same thing happens when someone decides to buy a home (or sell their home). While prior to this decision they ignored the housing report on CNBC, today they turn it up and really listen to it. A few weeks ago, they skipped the housing articles in The Wall Street Journal, but today they read every word (and even bookmark it). In fact, now that they are in this hyper-sensitive state of awareness, they can’t help but listen to and read all the national data. For most consumers, their first context of the current market will be that of the national market, not the local market.
And that’s precisely why you as the real estate professional must address the national market first, before you start talking about the local market. As Ivy Zelman, Hall of Fame Institutional Investor Equity Research Analyst, said, “We would never suggest that a real estate company could be successful without fully understanding local market trends. But ignoring macro trends or assuming they do not carry the same weight would be an equally erroneous suggestion. In our experience, the most effective market leaders appreciate the appropriate balance between the two ends of the spectrum.” For home buyers and sellers, this means addressing the national trends before taking action on the local market trends. It can be as simple as knowing, “This is what’s happening nationally with real estate …. This is what’s the same and what different from that in our local market …” Taking this approach adds to your confidence and positions you as a knowledgeable and capable player. So, yes … real estate IS local. We are not dismissing that point. However, not taking into consideration the recent shifts in the national market would be like sitting on the beach in Miami on a beautiful day and not thinking about a hurricane forming off shore. We did that in 2005-2006 when we, at first, convinced ourselves that the downturn in the market was limited to just the “sand states.” This shift in the market we are currently experiencing is nothing like last decade. But, being oblivious to the shift will deepen its consequences in your local market unnecessarily. Let’s not repeat history and make that same mistake again.
WELCOME TO REAL ESTATE’S NEW MARKET REALITY
How This Change Redefines Real Estate Strategies
“There’s a large gap between information and actionable knowledge.” Powerful words.
What it’s saying is that information by itself is essentially useless. What’s truly important is being able to understand, analyze, and use the information for the best outcome. And that’s what your job as a real estate professional has become!
So let’s face a few realities:
The real estate business has changed forever. What worked in the past to make you a successful home buyer or seller won’t work today (or tomorrow). You need new skills for this New Market Reality. What the consumer expects of real estate professionals today is very different than what they expected of them only ten years ago. The home buyers and sellers who don’t evolve into what the market now demands will not achieve satisfactory results. What you really want is ability to analyze all of the available information, connect the dots and know if now is a good time to buy or the right time to sell. Take the time to learn all of the options—simply and effectively. It’s a big change…and it’s one you need to embrace to move forward. To help put the change and the need for evolution in perspective, think of real estate as a NASCAR® race, and you are the racecar driver. Right now, you’re driving in that race, and the track is taking a sharp turn. To some home buyers and sellers, this might be scary. But this is actually a tremendous opportunity. Why? Because successful home buyers and sellers, like great racecar drivers, don’t get paid to navigate the straightaways. Think about it … if anyone got into a racecar, hit the gas, and kept the wheel steady on a straight, empty road, they could drive very fast without a problem. Navigating the straightaways is easy. But approaching a turn at 180 mph without either slamming the brakes or crashing into the wall requires true skill. Right now, your car is going fast—very fast—and you’re in the beginning of this turn (the shift in the market). What do you do? When things change dramatically, some home buyers and sellers (like novice racecar drivers) will hit the brake. Yes, some even stop the car, pull over, and get out. On the other hand, some home buyers and sellers keep going full throttle and crash. We don’t need to explain why this is not a great strategy. But the successful home buyers and sellers (like the great drivers) see the opportunity in this turn. It’s an opportunity for them to separate themselves from their losing competitors. As they begin the turn, they may let up on the gas and downshift, but halfway through the curve they do what the great racecar drivers are taught to do: They accelerate dramatically!
That acceleration drags them through the second half of the turn and allows them to hit the next straightaway at maximum speed. And the home buyers and sellers who navigate the turn at the highest speed will reach that straightaway before the competition. They’ll create a lead so great that not only will their competition not be able to catch them—they won’t even be able to see them! The turn we’re facing in the real estate market right now is a tremendous opportunity for those who navigate it properly.
EDUCATION AND EXPERT ADVICE
This is called excellent strategy. You can’t know the future. However, you can plan and take action based on the information and situation at hand. You can maneuver through the process and make the necessary changes along the way. and that’s exactly what you want… and deserve!
What does it really mean to follow excellent strategy? Two things: It means that your knowledge becomes confidence and certainty. It means that your knowledge alleviates concerns. This is about a depth of knowledge. You will know what your options are based on what’s taking place in the market. Ask yourself three questions: Do I know what is truly happening in the market? Do I know why it’s happening? Can I simply and effectively know and take advantage of what’s happening and why it’s happening? It’s what enables a buyer or seller to say, “I am going to have the courage to move forward. I’m no longer afraid of making a decision.” Education is the greatest resource in shifting markets. This means you not only have to analyze the information well enough to understand it and implement it.
WHERE’S YOUR HEART?
Discover what your options are, learn the pros and cons of each of those options, and then make the decision that is best for you.
LEARN BEFORE YOU TAKE ACTION
Prior to 2008, many home buyers and sellers didn’t realize their strengths and weaknesses. That’s because you can’t prove how smart you are during calm times. You prove your greatness during changing times. Why is this important? Imagine if the captain of a ship, at the first signs of rough waters, started running up and down the deck screaming “We’re all gonna die!! We’re all gonna die!!” The crew would start jumping off the sides of the ship and eventually the captain-less vessel would crash and sink, destroying any cargo on board. Ladies and gentlemen, we are the captains of our own ships. There is a shift taking place in the market (rough waters). Let’s not panic. Let’s calm down. Let’s simply plot a course that will bring our crew, our ship, and its cargo safely into port. And, let’s not forget the value of the cargo we carry. It contains our dreams, the dreams of our loved ones. If you are confused about what the shifts in the market mean to you and those who rely on you, the L.A. Loft Blog was founded and built for one reason and one reason only: to be the lighthouse that the astute can depend on to help navigate difficult waters and bring their ship home safely. So now it’s your turn. It’s time to reflect on how far the market has come over the last ten years and then make a plan based on where it will be going the next ten years. Thanks to this article, you have the tools to start planning your path to success now. Remember: The home buyers and sellers who embrace this New Market Reality are going to be the successful players moving forward. They are ones who will win the race! As you move forward into your real estate endeavors, remember to plot out these three steps along the way:
Step 1 – Continually educate yourself. Whether you read the L.A. Loft Blog or some other educational means, know what’s going on and why it’s happening. as Albert Einstein said, “Wisdom is not a product of schooling but of the life-long attempt to acquire it.”
Step 2 – Be able to take action on what you learn.
In real estate, this means making sure you receive the most impactful, relevant information that will help you gain clarity from the confusion in the market. Step 3 – Keeping current matters! You can have a tremendous understanding of key factors and wonderful visual materials to help make it easy for you, but if you’re not updating these things on a constant basis, you’re lost. Don’t be caught with outdated information. Do your homework and be on top of all the major news that will impact the current real estate market.
For most, buying or selling a home is one of the most important personal decisions and possibly the largest financial decision they’ll ever make. They are looking for the best information to help them through this process. Remember that the purpose of the information is to take proper action. As the wealthy and wise king Solomon observed: “He who watches the wind will not sow and he who looks at the clouds will not reap.” 2-STORY LOFTS | SOLD
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Copyright © This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE#01889449 We are not associated with the homeowner’s association or developer. For more information, contact (213) 880-9910 or visit LAcondoInfo.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.