“A year from now, my clients will be happy with their purchases”
How can you say that? You don’t have a crystal ball that prices will be stabilized, just as you don’t know if they will descend to a normalized rate. Ultimately prices will go where prices will go. If prices do drop dramatically and stay low for a long time, many of your clients will be hurt, very hurt. If prices stay flat and don’t move a lot, only some of them will be hurt (they will find it an expensive proposition), and if prices go up even past our crazy levels then you will be vindicated.
Are you actually asking your clients “Are you prepared economically for a medium term loss of equity on your asset?”, “Are you prepared economically if you can’t sell as easy as you bought (because the buyers are on the sidelines)”, “If interest rates go up, are you in a mortgage which will be stable?” If you don’t ask these questions you are selling them a dream which has already been punctured. I might have missed something – but do they all know that some folks are calling a bubble and a downward trend? And that we have had these cycles here in SD before (but never with such magnitude to the upside).
My personal belief is that we will go right back to the inflation adusted line that we have had since 1890. It always returns to that line (actually goes below it but averages back to it). Why is it that most people just ignore history as if they are in some “golden age”?
Anyway, I hope you are telling your customers that you have no idea where the market is going, you only have your personal opinion. I would get it in writing that they understand this (a disclaimer)… While it’s true that Realtors have literally no ethics requirements (thats not to say that some realtors aren’t completely ethical and some aren’t) you should take some responsibility in the product you push.
I personally have an awesome friend / elder statesman who is a realtor. He’s been around the block for a very long time. His kids are realtors. He thinks that anyone buying a house right now is insane. He is still selling (or not selling!) (mostly high-end condos to very wealthy people), but he thinks that not only the housing market but the stock market is poised to fall and fall big. He is completely in cash right now, and I am 90% in cash right now.
One point that I can’t stress enough… The data SUCKS. We aren’t seeing selling prices, we are only seeing the houses that do sell!!! What about all the inventory which is just sitting there? If the only things selling right now are the ‘perfect’ properties (and selling at a somewhat discount), what about the time-lagging properties which couldn’t possibly sell at even todays prices with the buyers staying away?
Just my opinion and can we please keep these forums interesting without personally attacking anyone and name calling?
