One of the benefits of 20 years' experience in real estate is that very often, the market that you see today is one you've seen before. 2008 is not the first time interest rates have fluctuated rapidly -- up ,down, seemingly sidweays sometimes.
I remember back in the early 1990's, we were seeing similar fluctuations. I also remember what a real estate veteran told me then: "Contrary to popular opinion, people DO NOT buy homes when interest rates are going DOWN. They buy homes when they are going UP."
"Nonsense," I thought. Then I started to see the market move -- as interest rates started to climb -- and it became perfectly clear. As interest rates fall, buyers "kick the tires." They go out shopping, looking, wandering about, but they don't BUY." When interest rates turn around and go up, they start to jump in and start to make decisions.
Why? It's simple. Fear of Loss. They are afraid of losing that low interest rate so they start buying before it goes even HIGHER.
Recently, I attended a RE/MAX Regional Conference where David Knox was a keynote speaker, One of his major points was this: All buyers want to buy at the BOTTOM OF THE MARKET. They want to buy at the lowest price and with the lowest interest rates. "Now there's no-brainer," I thought when I heard that.
What is the ONLY way you can know where the bottom of the market is? In hindsight. The only way to know where the bottom of the market WAS is after the prices or interest rates have already risen.
If you are watching interest rates, you should be calling every one of your buyers, telling them to start buying NOW so they don't lose the lower interest rates. Then you should be showing them every one of MY LISTINGS. As rising interest rates spur the market to action, there will become more competition for MY LISTINGS, and home prices will begin to rise. Simple Economics 101.
Have we already seen the bottom and we are starting on the way up? I don't know for sure. But there's a good chance of it.
If YOU are not watching interest rates and calling your buyers, rest assured, THEY are watching the rates. They're wating for you call.
Comments(5)