The Heisenberg-White-Stone Hypothesis on Real Estate
This agent, who lives in California, I wish I was half as brave as she was to talk about everything on her page- professional stuff, political stuff, personal stuff. It really got me thinking - why couldn't I do that? I talked to Kacy about it and after mulling it over for a good long while, I decided why not? I'm an entrepreneur. I work with who I want to work with. I have long held a "I don't work with assholes" policy and the older I get and less time I have for stuff that I enjoy (like writing, photography, etc.) I'm holding that policy tighter and tighter. SO yeah... Here we go. Welcome to the new Barely Keeping Up in which I get to talk and blog about shit whether it's work related or not. Don't like the language? Sorry my dudes, it's my blog. These are my thoughts. Don't like it, ya don't have to stick around.
SO... Real estate. Yep, I'm a Realtor®. I freakin' love it. I've been a Realtor® for over 8 years now and I'm having a blast. I'm also finally starting to come back around to the me that has fun. She's been kinda MIA the past few years (lots of shit going on) but hey- she's coming back. AND she has pink hair. That's definitely different!
But wait! There's more! I want to talk about that whole real estate market crash thing that is happening and my thoughts on it. Because, I mean, why not? Everyone else is, right? So, without further ado, I bring you my thoughts on the current market situation based on this wonderful meme that someone posted and have decided to call The Heisenberg-White-Stone Hypothesis on Real Estate. It's not a theory because it's just an educated guess on my part. These are, as always, my own thoughts. Take it with a grain of salt or some shit like that.
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You know what’s really hard? When you wake up in the morning and you’re getting ready for your day, listening to NPR, trying to keep abreast of what’s going on in the world and everyone and their uncle (including mine) is telling you “Don’t buy a house right now!” I will even admit that when I heard the dude talking about how it’s not the best time to buy a house and how you should be paying off your credit card debt and not use your credit cards, blah blah blah. I’m not proud to admit that I yelled “Well, DUH!!! Dumbass, you think I don’t know that?” And I did it a little louder than I should have, bringing my wife into the bathroom who promptly gave me a look and said “Oh, NPR,” and turned and walked back out.
The news and I? We don’t get along these days. I like to know what’s going on in the world, but it makes me cranky. So, I head over to TikTok. The first video I see? One of my friends, who is highly respected in the industry (and I still fangirl over the fact that I know this person IRL), talking about how the market is crashing. Insert eye roll here and off I go looking for kitten videos. Here’s the thing though. I have a theory, actually it’s more of a hypothesis, that we’re not in a crash at all.Oh, there was a crash but it’s not like you’re thinking. The bottom didn’t fall out of the market like it did back in 2006-2010. Back in 2006 there was plenty of inventory for people to buy and banks were lending like never before. Remember those car commercials that would be like “Good credit, bad credit, no credit at all? No problem!” (I even made a spoof commercial for my Spanish class one year about a bad credit car lot.) Yeah, there was a lot of subprime mortgages flying around and people that had no business buying a house were able to buy a house and a lot of them did. 
And then, much like the Saurian Swinoid that was beamed aboard the NSEA-Protector, to quote my dude, Teb the Thermian, “It exploded.” (Galaxy Quest Reference for all you non-Nerds.)
Shit when South faster than a retired New Yorker heading to Florida for the winter. How you doin' snow birds? Confused yet?
The tl;dr story back then is this: the economy completely tanked, people were laid off, people couldn’t pay those mortgages, the bank foreclosed and we had a ton of inventory. Those houses, however, weren’t worth what many paid for them. In fact, according to NAR data, sales in March 2007 were down 13% with the average median price for a house falling in March from $230K to July - $217K , which is a nearly 6% decline. The reason for the decline? All of those foreclosures. A Bloomberg News story from June 2007 citing John Kilpatrick from Greenfield Advisors stated quite succinctly that if you were in an area that had a lot of foreclosures it would result in a 10-20% decrease in property values. Mr. Kilpatrick went on to say “The innocent houses that just happen to be sitting next to those properties are going to take a hit.” They did.
But what does that have to do with our current situation?
I’ve heard lots of people talking about a crash. I talk to people all the time that are like “I’m waiting to buy until the market crashes.” Y’all, we are there. This is your crash, but it’s not like what you think. My hypothesis (because it’s not a theory until it’s been scientifically tested, they taught us that in school, yo) is this: This isn’t a crash. This is a giant fucking brick wall that we’ve run straight into while we were busy playing Candy Crush or watching TikTok on our phones.
The 2022 market is a lot different than the 2008 market. For starters, there was inventory back in 2008. A lot of inventory. Right now, there is significantly more demand than inventory. It’s been that way for a few years. Houses just cannot be built fast enough. Add in a pandemic where people couldn’t go to work let alone leave the house; the supply chain for pretty much everything came to a screeching halt and has been slow to recover. We all finally went back to work, school, etc. but the supply chain has yet to catch up and while I had a lovely little (and well-deserved vacation), it was less than a month before I was getting calls from people wanting to buy a house thanks primarily to the lowest interest rates since Freddie Mac (The Federal Home Loan Mortgage Corporation) started tracking them in 1971.
With the interest rates being as low as they were, people who previously didn’t think they could afford to buy a house found the “American dream” of home ownership in their reach. People started buying but then, so did corporations like Zillow, Offerpad, Redfin. People who wanted to buy bigger houses jumped at the chance. Being stuck at home for a year spurred a lot of people to start looking for bigger homes, homes with different amenities that they could not have afforded before now, and even homes in different areas of the country. I've even heard some people call it "the great migration."
Our family moved to Florida from Indiana three years ago, just a few short months before the pandemic started. In those three years, in spite of the Pandemic, I have seen a population explosion, the likes I have never experienced. There are even new townships popping up! While the market has certainly slowed and our prices are now just starting to do a course correction, demand, especially in the “lower” or “first time home buyer” price ranges (here where I am in FL the median price for sold is around $320K). For new builds, you’re going to be looking at a higher price tag than that. Anecdotally speaking, I would drive past this new subdivision that was just starting to be built when we moved here. When we started looking for houses, we checked out the subdivision and the houses 3 years ago were starting in the $250K range. Those same houses just three years later are starting around $450K the last time I drove past, all of 3 days ago.
So, what’s the deal with the brick wall?
Well, we have, for all intents and purposes, been running not walking towards this brick wall. We saw it coming a while ago and were like “Ooh, what’s that?” We saw it, but we didn’t really SEE it.
While home values have not gone up anywhere as fast as they have in even just the past year (18% according to the S&P CoreLogic Case-Shiller US National Price Index - they track 20 cities across America) they’re still going up. It doesn’t help that on the on THIS side of the wall, where people can still buy if they’re qualified, there has been about a 27% DECREASE in actual houses on the market (in my particular area).
While home values have not gone up anywhere as fast as they have in even just the past year (18% according to the S&P CoreLogic Case-Shiller US National Price Index - they track 20 cities across America) they’re still going up. It doesn’t help that on the on THIS side of the wall, where people can still buy if they’re qualified, there has been about a 27% DECREASE in actual houses on the market (in my particular area).
People are hurting. Like REALLY hurting. I really love being a Realtor. I not only think it’s fun but it gives me a great dopamine hit when I help people. I love walking into a house with a client and seeing the look on their face when they realize that it is the one. Not gonna lie, it’s been a hot minute since I did that. I’m talking to people daily that are looking at my listings. I am a full time realtor and while I did have a great year, I see the signs. I see people wanting to buy houses and they can’t. I have had friends looking for places not just to buy but to rent and they can’t afford to pay the first and last months security deposits. It’s said that many Americans would be in serious trouble if they had just a minor issue of $400 come up! It’s fucking scary out there and that’s without the current geopolitical climate - not just here in the US but across the world.
Call me naive but I would love everyone in the world to have a safe place to live, good and healthy food to eat, running water, heat and/or AC. Call me crazy but people shouldn’t have to choose between eating and having a place to sleep. People should not have to worry about going to the doctor if they’re sick because they can’t afford it.
The world is a fucked up place. I want to try and help. I try and give as much of myself as I can - whether that be donating to a specific cause (or person as the case may be) or just giving someone a hand grabbing something off the floor that someone dropped. I personally try to be as kind as I can. And yes, it does get me taken advantage of more than I’d care to admit. BUT if I let those people who do take advantage of me change me into a person who doesn’t help? Well, then the world is a little worse off than it was yesterday and I would rather contribute to the good than the bad, wouldn’t you?
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