How Many Days Until the Market Comes Back?

By
Real Estate Agent with Sequim & Port Angeles Real Estate

Sequim Real Estate CalendarThere is good news and bad news. Let's start with the bad. We have until April 1, 2010 before the market begins the long process of a rebound to better days. No one wants to hear that, but let's face reality. We are in the worst economic slump, the worst real estate slump, the worst banking and mortgage slump, the worst automobile slump, the worst manufacturing slump, . . . need I go on? The list is very lengthy. But the slump is not just a little corner of the United States, or even a little corner of the world. This is a world wide disaster of major proportions. Every day the news headlines are not just peppered with a couple of corporate challenges, they are full of dozens of disastrous corporate reports of bankruptcies and other leading indications of a depression. Federal, State, County, and City governments are under extreme financial stress, too. Some think the stock market is perking back up, but the stock market has shown an uncanny ability to bounce up and down on political news with total disregard for fundamentals.

Okay, that's the bad news. We all know about the bad news. What's the good news?

The good news is that there will be an end to the chaos, and in my opinion that end will come on or about April 1, 2010. This is not good news just because there will be an end to the chaos, but because it helps us put our current business practices and our lives in perspective and to plan accordingly. If there are this many days left until we once again feel the warmth of sun upon our faces, and the economy shows signs of long term balance and growth, we know that we must plan for a long winter.

A foolish man does not plan ahead, even when the signs of the times are upon him. He will spend foolishly, hoping upon hope that somehow customers will buy his product and he will have the money he needs to make it through the long dark winter. He wastes essential cash reserves on old fashioned advertising that is both expensive and ineffective, because he has not been paying attention to moves in the market. He has not considered the dramatic shifts in consumer preferences and how they shop for and buy products. Such a man has not invested his time or his money in developing new products that will meet his customers' changing needs and desires, and just as important, this man has given little thought to the extraordinary tectonic shifts in marketing and selling that have been happening on the Internet. (We could also insert "board" or "CEO" for "man.") The foolish man is most often an arrogant man who stopped learning long ago.

The wise man, suspecting that the winter may be a long one, will be circumspect in how he exhausts his resources of time and money. He will seek to adjust his product lineup to meet the demand as it exists, not as he wishes it would be. He will pursue methodologies that will reach potential customers in the most powerful and cost-effective ways. The wise man knows he does not know everything, so he will surround himself with wise counselors who can help him. He will develop a strong network and affiliations that are mutually beneficial. He will stop wasting his time on defunct concepts pushed by those on a salary who have never actually been in business for themselves. The wise man has been learning in preparation for such times, so his mind is capable of being stretched and challenged. The wise man is a humble man who constantly seeks to learn and grow.

The foolish man will risk everything upon his expectations, and disillusionment will occur if those expectations are not met. The wise man plans and prepares for the worse, but hopes for the best. It is not the worse case scenario, but it is realistic to expect that our economy and consumer purchasing power will not begin to return with any strength for the long term until April 1st of 2010. (Is it just a coincidence that April 1st of 2010 will be April Fool's Day?)

Does this mean we crawl into a cave and wait until then? By no means. We are living in challenging times, but we are also living in times of great opportunity. That may be obvious to those who are serious about investing in real estate with prices down so far and the inventory so high. But opportunities are going to present themselves in almost every industry right now, and where one door is closed, another door will open. Creativity, open-mindedness, enthusiasm, and hard work are the American ideals that will be the driving forces for the successful business owner between now and the spring of 2010.

What can a business do today? If you lack customers, market, market, market. Reach out to potential customers wherever they might be. Work on refining your product or service. Glean new ways to connect with customers or clients. Figure out how to leave your competition behind while they wallow in the mud. Be excited, because when the market comes back, you'll be ready, willing, and able to meet the demand that you are preparing for now. That's what I'm doing. It gets me up early in the morning and keeps me up late. How about you? What drives you in these difficult times? If you face the challenges with vigor, you may yet succeed, but if you crawl into a cave, you are guaranteed to fail.

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Re-Blogged 2 times:

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  1. . 4Terra Land Brokers .. 828-776-0779 Asheville NC 01/06/2009 11:32 PM
  2. Gabe Sanders 01/07/2009 01:04 AM
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Rainer
55,551
Kelsey Barklow
Hurd Realty - Johnson City, TN
423/948-9154

Interesting prediction. We all need to be creative and flexible to make it through and I'm working on both right now.

Jan 06, 2009 10:42 AM #6
Rainmaker
76,710
Chuck Marunde
Sequim & Port Angeles Real Estate - Sequim, WA
Sequim Real Estate Broker

Joetta, point well taken.  I agree with you, but let me refine our reasoning a bit.  We need to be smart about how we go about advising clients to get in there and buy.  We need to be honest about the market conditions.  It is not true that it is always a good time to buy, and it is not always true that when the market is bad it is time to jump in.  Robert Kiyosaki would agree in Rich Dad, because buying in a bad market means buying when it makes sense, not just throwing money at any bad market.  Our clients expect us to be intelligent and wise, and they rely upon our counsel, so they should buy when the market is bad, but timing is everything.  When should they buy?  How or what should they buy?  If you had told a client 8 months ago to buy, because they should jump in when the market is bad, your advice would have been the worst advice they ever received.  Since then, depending upon the location, they might have lost as much as 30% in the investment you recommended.  We may or may not be at a bottom, but we can't say for sure this is the right time to buy.  What we can say, and I think you will totally agree with me, is that a particular house may be a really great value right now, and with interest rates at historical lows, and with this being a buyer's market, a particular house may actually be a fantastic buy right now, especially because we have houses that are $100,000 to $300,000 below where they were a year ago, and it may be listed as a short sale.  Even if the market goes down somewhat further, this kind of transaction could be a great deal.  I do think clients are intelligent and want to hear the whole story, and listen to our reasoned opinions about the market and timing.  What they don't respect is Realtors constantly saying, "Now is the time to buy!  Now is the time to buy!"  Many of them have seen how that advice turned out this past year.  Good clients will buy when the timing seems right and the investment looks good.  It's our job to help advise them as best we can.

Jan 06, 2009 10:46 AM #7
Rainmaker
431,726
Frances C. Rokicki
Fran Rokicki Realty, LLC - Bolton, CT
Broker-Mentor,CRS

Oh, if only crystal balls worked.  I can tell you that I have been through tough markets before.  Interest rates of 18%!  I wish I knew then, what I know now.  Don't we all feel that way as our experience grows.  The market grew too fast, too much.  The correction is devastating, but, it has to be.  We are all learning to live on what we can and not borrow against time.  It is a hard lesson to learn, but, one that had to be taught.  I believe we will be better professionals for it.

It's a Good Life!

Fran

Jan 06, 2009 11:02 AM #8
Anonymous
Reva Harris, Brevard Real Estate Services, Titusville, FL

Great writing and quite informative. As an investor and agent, I have always believed that the only real money is made when one buys the property. If one has appreciation, great - that is a bonus as far as I am concerned. I buy and so do my active investors properties that cashflow. I always am concerned about buying a great location and with obtaining the best financing. I am happy to report that I am selling a property that I bought about 6 years ago for about $500,000 profits (before Uncle Sam). It was positive by over $2000 per month all but the last 6 months when it was in contract. The mortgage was paid down by over $100,000 (by the tenant).

There are now almost too many opportunities to evaluate! I can't wait. I am working with "flippers" who are making more money than ever in this "terrible" market  - and with less risk. Yes, one door closes and another opens. Open the door!

Jan 06, 2009 11:13 AM #9
Rainmaker
519,075
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

Chuck ... I was at Sequim and Port Angeles years ago for a beautiful week and pleasant time now days gone by.

I agree that the wise man will prepare for the long winter, be careful with esources, adjust something about the products he sells, use new methods, reach new cusomters, be careful about costs, surround himself with wise people, develop a strong network of friends and business associates, people to help each other,  not waste time on old concepts, prepare for other such times, be stretched and challenged, be humble and seek to learn.

The wise man will also put the needs of his clients and customers first.

Best wishes to you. Harrison

Jan 06, 2009 11:27 AM #10
Anonymous
Marla Schneider

EXCELENT and so well written..I do agree that those that are well positioned when the market turns will be in great shape. Now is truly the time to work on marketing, network like mad, take classes, refine your website. I have started blogging about short-sales, good values, and current market conditions in my area.... People like working with someone in the " Know"....  good luck to all !

Jan 06, 2009 11:51 AM #11
Rainer
59,263
Ray Logan
RE/MAX Platinum - Ann Arbor, MI
I'm An EXPERT Online Marketer & Realtor!

Sure, when the market is down it's generally a good time to buy. BUT only for those that have the disposable income and can afford to ride it out long term. Most of the population cannot afford to go out and buy just beause prices are down. Incomes are down as well, in fact, income stability and job security are no longer the case, but the exception. These people (myself included) need to take a honest look at their economic situation and plan for the worst while hoping for the best. Waiting the economy out is not an option, responding to it is. Look for a market that is expanding, growing. It may not be in real estate or what you want it to be, but there are opportunities if you are willing to look. Create a seperate stream of income to supplement any losses you are currently having or what you project happening in the future. Don't worry about what the grasshoppers think, do what the ants do, and that is "get busy doing what works and quit doing what don't."

If you need an option and are willing to talk, contact me. What I'm doing is really taking off all over the country. It may be for you, it may not, but you never know unless you look.

Jan 06, 2009 01:13 PM #12
Rainmaker
131,417
Mike Henderson
Your complete source for buying HUD homes - Littleton, CO
HUD Home Hub - 303-949-5848

One of the best posts I've read about the market lately.  Thanks god I've got a lot of nuts stocked away.

Jan 06, 2009 02:34 PM #13
Rainmaker
142,685
Cristal Drake
Prudential California Realty - Fullerton, CA
Realtor - Fullerton Real Estate

Ok, I hope you are right because I have just about enough to last until then! Thanks for a great post!

Jan 06, 2009 03:57 PM #14
Rainmaker
88,748
Charles Gardner-Realtor/Investor
ZIP Realty, Inc-Houston District - Humble, TX

Chuck,

Great post and reminders to all of us who need to be 'wise men'.  A famed basketball coach once said 'never, ever give up', so that;s what we should all be about.  Preparing for tomorrow and how we can get better and make things work for the best.  Much success in 2009.

Remember-'2009 is mine'

Jan 06, 2009 04:02 PM #15
Rainer
44,689
Olena Osipov
Maple Ridge, BC

Chuck, I love this deadline! It's fine with me:) Crawling into a cave is a sure way to fail, that's right. Not everybody can uncrawl unfortunately...or fortunately:)

Jan 06, 2009 05:56 PM #16
Rainmaker
169,067
Larry Bergstrom
Crescent Realty, Inc. Spanaway, WA. - Spanaway, WA
CNE, CRS, GRI

Darn, I was hoping for March the 10th.

Jan 07, 2009 12:39 AM #17
Rainer
139,927
Kelly Sibilsky
Licensed Through Referral Connection, LTD. - Lake Zurich, IL

Market recovery is going to take a long, long time and come in fits and starts so being prepared and making good business decisions is key. I agree that "the wise man plans and prepares for the worse, but hopes for the best." Just because someone gets a real estate license doesn't mean they will be a good business owner. Failure to plan is planning to fail.

Jan 07, 2009 12:41 AM #18
Rainmaker
4,797,386
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks Chuck for an excellent post.  I hope you are right.  (Though I do wonder about your choice of April Fool's day for your prediction).  As you know, real estate remains local and it may be different for different parts of the country even different neighborhoods.

Jan 07, 2009 01:04 AM #19
Ambassador
553,475
Larry Story
Total Care Realty - Greensboro, NC
Total Care Realty, LLC, Greensboro, NC Real Estate

Chuck the market is where you find it.  Transactions happen everyday.  You simply shift your focus to be where the business is.

Jan 07, 2009 01:20 AM #20
Rainer
179,139
Mark MacKenzie
Phoenix, AZ

Hi Chuck,

I agree with this, "but the stock market has shown an uncanny ability to bounce up and down on political news with total disregard for fundamentals."  The stock market has proven that it is no longer a leading indicator of anything.

Is there any reason you picked April of 2010?

Jan 07, 2009 01:43 AM #21
Rainmaker
76,710
Chuck Marunde
Sequim & Port Angeles Real Estate - Sequim, WA
Sequim Real Estate Broker

Mark, I picked April 1, 2010, because I think it is the earliest we might see some real strength come back in the market.  There are simply far too many economic indicators, major and minor, pointing to more negative news.  I think it's going to be quite a while before we see companies turning around by hiring thousands of employees that have been laid off, seeing consumer demand return and net profits come back, and it's going to take a year at least for the housing inventory to begin to work through the mass destruction that has occurred, and foreclosures and the mortgage market are just part of that problem.  We have huge problems underlying all of this with the bankruptcy and shakiness of our banks and mortgage companies, and the securities backing the mortgage market, including deriviatives on top of derivatives with high leverage.  I believe the problems in the market are deeper and wider than the average person realizes, and that's okay, but all of this is going to take time, and the spring of 2010 is probably a very optimistic assessment.  While I think it is good to have a big picture of the economy and the real estate market, this still does not mean that there won't be some incredible investment opportunties for astute real estate investors, as can be seen from one of the comments above.  We definitely are in a poor real estate market for a while, but we can also say that there are and will be individual bargains far too good to pass up, at least for the buyer who has funds and/or good credit.

Jan 07, 2009 03:12 AM #22
Rainer
6,018
Eugénie Eckler
Right At Home Realty Inc. - Oakville, ON
Oakville, Ontario

My husband got a kick when I told him that all will be good again on HIS birthday... yes, I have an April's Fool's baby on my hands!

Jan 07, 2009 04:16 AM #23
Rainmaker
487,190
TIM MONCRIEF
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

I really could care less when the market comes back.  This is a great time to increase our market share.  The more agents that drop off the greater the market share.  I would really like another down year before the market picks up.  In Austin we have gone from 12k to 8500 agents.....and I would like to see that get down to 6000 or less.  It is a bit tougher to make money, but we will sitting sweet when all does turn around.  That is what I love about this business as any market is good news with the right mindset.....

Jan 08, 2009 11:54 AM #24
Rainer
11,334
Kim Wolcott & Krista Butler
Republic Mortgage Home Loans - Orting, WA

It is always intresting to reay what you write.  Keeps me up to date on things.

P.S.  Thanks for helping Ladd out

Jan 13, 2009 04:54 AM #25
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Chuck Marunde

Sequim Real Estate Broker
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