The Reality of Real Estate Today.

I saw this article and thought it was a perfect description of what we’re experiencing today.  It’s written by Brian T. Larrabee, the founder of Estate of Mind, Inc.

The housing market right now is like a boxer whose face is covered in blood.

 

Underneath the mess, however, is a far less than life-threatening cut. Only the sweat of his efforts and the 

pounding from his opponent’s gloves serve to spread the appearance of greater damage. The crowd’s 

attention is zeroed in; the announcer is at full tilt and fanning the flames of perceived doom. The gasps 

and horrified looks are evident all around and precious few in the room sport the desire to step into the 

ring. They are, indeed, just there to watch. 

 

Road to the Ring

How did we get to this point? Post 9/11, the housing market enjoyed a period of robust appreciation. 

Quickly referred to as the “bubble” by just about any stock analyst or pundit trying to now seem prescient 

after failing to predict the crash of the NASDAQ index, which only after the fact was anointed as the “tech 

bubble.” This buzz word soon found a new target in housing prices and caught on like iPods at a pajama 

party. 

 

Not wanting to be left behind while the spoils of new found wealth by equity brought “Beemer’s” to the 

driveways where once only Chevrolets dripped oil; thousands of first time buyers found access to easy 

financing and happily signed contracts to partake in their slice of the American pie. In some cases, these 

were folks whose credit ratings had gone a few rounds in the ring and bore the scars to prove it. 

 

Meanwhile, the global thirst for yield and the inventions of Wall Street wizards drove an insatiable 

demand for more and more “paper.” Higher and higher rates of return were asked for and lower and lower 

credit quality was delivered. Never mind the bruises; we’ve got a hungry crowd to feed. 

 

So the investors demanded, Wall Street created, the bankers loosened the screws, the brokers complied, 

the buyers signed, values accelerated and the crowd roared with approval. 

 

Alas, most commodity prices, including houses, are prone to cycles. Yet a boom is not a bubble. Most 

Internet stocks were proved to have little permanence. The “bubble” term is wholly applicable to paying 

ridiculous prices for a stock backed by a web site and a business plan concocted by some high school 

junior. Land, on the other hand, is not only permanent and limited, but permanently in demand. Anyone 

comparing tech stock bubbles to housing is only demonstrating their ignorance. We can live without 

stocks, yet as long as we’re alive, we need a place to live. 

 

Though the acceleration in housing prices was rapid, it came after a long period of slower-than-average 

growth. Accordingly, the market was simply catching up to its historical trend rather than creating a 

bubble. Of course, some areas grew faster and higher than others. Some areas saw an abundance of easy 

money enabling a multitude of formerly non-financeable buyers. Some areas saw not only first timers, but 

first time speculators, lining up to fill their pockets with the sparkling spoils of the real estate rush. Rapid 

rates of appreciation are great, but they’re not perpetually sustainable. History proves this. 

 

What Direction is Up?

Buy low, sell high. Everyone knows the words, precious few engage in the practice. Since we can’t do too 

much to counter the prevalence of bad news, let’s instead, use it to our advantage. I, for one, prefer to do 

my buying when I’m the only one in the store. Not only does that give me all the attention and assistance 

I may need, it affords me the opportunity to bargain at my own pace rather than that of the otherwise 

hurried “no soup for you” counter clerk. 

 

Right now, most are afraid to even peer through the window much less actually enter the store. Good! 

That’s the best signal you can ever have that now may just be the best time to buy. 

 

The Bottom Line

Let’s strip all our fear from the equation and just look at the facts. Prices have fallen in many areas and 

mortgage rates are back near historic lows. Home sellers are abundant and begging for someone other than 

the sales agent to show up at their open house. Sounds like a pretty good time to me. 

 

The foreclosure numbers we see plastered across our screens and mental chalk boards are predicated on 

subprime loan resets where the interest rate will rise precipitously. The worst predictions are for over a 

million homes to be lost this way. Currently, there are over 110 million homes in this country. So by my 

count, that’s a million or so that might, and 109 million that won’t. Fear and panic can drive a market. But 

are we being driven in the right direction? 

 

The real deal here is that while most everyone on the news conveys the bleeding in the market with that 

practiced frown of worry and concern, I remind myself that there are two sides to every trade; one entity 

that is selling on the “cheap” and one entity that is buying cheap. I’ll take the latter side of that trade any 

day. 

 

So while many will avoid the market, a brave few will relish it. How many times have we thought to 

ourselves “if only I had bought back then?” Well, for those who study the boxer’s face not in the ring but 

after the trainer has revealed the true extent of the damage by the simple splash of some water and the wipe 

of a towel, that time we will look longingly back on is now!

 

Opportunity is knocking and if you are prepared, I’d love to help you open that door and find a truly solid 

investment property.  

 

Jen Hudson, GRI

(206) 293-1005

(360) 652-1200

jen@jenhudsonhomes.com

www.jenhudsonhomes.com

Realtor with RE/MAX Signature