When I was younger, I loved to play baseball. Countless summer days turned to dusk and my friends and I would still be out there...playing with passion to the best of our ability... until we could no longer see in the dark of the warm summer's night. There's something about the feel of a well hit baseball on a good wooden bat. You could feel it in your hands at the moment of impact. It felt good... solid and strong. You immediately knew that your chances were good for getting on base. The coaches referred to this as "getting good wood on the ball', and it is what they tried to teach practice after practice. "It's a matter of good body mechanics and good timing" my coaches would say. But for me, it was mostly about timing.
When the game was slow, I was a real slugger. But as the kids grew bigger and stronger, their pitches came faster. Once they learned how to make the ball curve and slide away from me at the plate, the game got much, much harder. No longer would it be enough for me to get by with good body mechanics. Now I had to properly time my swing as well. I needed make a good decision as to what kind of pitch was coming, and I needed to do it quickly. Would it be a fastball or a curve ball? They all looked the same to me as they left the pitcher's hand!! I found myself taking far too long to decide which pitches to swing at. ‘Stop over thinking it" my coaches would instruct. "Just get some good wood on the ball!" But try as I might, my swing came too late. If I was lucky enough to make contact, it was rarely on the good wood...the "fat part of the bat". The feeling in my hands became different. The contact felt "thin" and weak. At times... especially on colder days, my hands stung. I finally came to understand why playing competitive ball...I mean really competitive ball...is enjoyed by so few. It's so damn hard to see the ball, decide what you're looking at, and know what to do about it before it gets past you. All the body mechanics in the world couldn't make up for this fact. And it was during these split seconds of indecision at the plate that my childhood dream of playing professional ball died.
I fear that so many of today's buyers are at risk of suffering the same cruel fate. As the market as cooled over the past few years, so many have decided to wait...believing that they can "properly time their swing" in the marketplace. The have become real scholars of price trends and watch interest rates like a hawk. I would argue that there are some that have an even better handle on these issues than many licensees working out there today. But the problem with timing the market lies in the complex ingredients that make up affordability: price vs. interest rates. Let's oversimplify things a little and plot them both out on this "V" diagram. Historically when prices are on the higher side of the diagram, affordability is achieved through lowering the interest rates on the other side. When prices are on the low end of the diagram, banks can charge a higher rate on their side without diminishing affordability too much. We are finding it helpful to have our buyer's mark a diagram like this one with the points where they believe price and interest were during different markets. During the late 1970's it was low prices vs. high interest. And in our recent run up market? We were dealing with low interest rates vs. higher prices. But what about today's market? Today's buyers are facing an unprecedented opportunity with historically low interest AND affordable prices. And yet so many of them are still waiting.
I call the bottom part of this diagram (the part circled here) the "sweet spot" in this housing market. It's the point where you will get good wood on the ball if you decide to swing. And it's the place where the market is TODAY. Could you wait just a bit longer and get to the absolute bottom point on the diagram...where prices and rates are both the lowest? Probably not. The only way to know for sure where the bottom lies is to see it from the other side. And today's real estate game is getting harder. It's tougher than ever to see the ball, decide what you're looking at and decide what to do before it gets past you. In my market, there is an enormous amount of pent up buyer demand. When the media finally shouts "swing" from the stands, it will be far too late for many. "Stop over thinking it" we implore our buyers. "Just get some good wood on the ball!" The buyers who are listening to the coach are making contact and achieving success. The ones who are still waiting at the plate could easily strike out...their dream of home ownership going the way of my major league baseball career.
"Caught looking" is what my coach used to write in his notebook when I returned to the dugout. And let me tell you first hand...it's a lousy feeling.
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