Never ask the barber if you need a haircut
Never ask the barber if you need a haircut.
My head is spinning from the myriad differing claims by all sorts of people about the economic ramifications of the current Covid-19 pandemic. Especially regarding the real estate market. Washington has been under the strict “Stay Home, Stay Healthy” order since midnight March 25th. To nobody’s surprise, it is now in force through at least May 4th. The Washington State Employment Security Department said that unemployment claims in WA jumped 811% from the prior week for the reporting period ending March 21st, 2020. Downtown Bremerton is deserted. Bars, restaurants, salons, spas shuttered. Construction is at a standstill. The ferries and buses have changed their schedules. “Wear masks, we’re told.” “Only go to the grocery store when absolutely necessary.” Parks are closed. Weddings are cancelled. Weddings are cancelled.
And yet… Facebook is full of real estate brokers (and hopeful sellers) saying that the real estate market has not been affected. Or soon will bounce back. “Now is a great time to buy(!), or sell(!)” “Better than ever,” they say, “because (fill in the blank with hopeful whistling.)” “We have virtual tours! We can sign contracts electronically! We have Zoom! And by the way? Interest rates are incredible! ”
What planet do they live on?
Wait. Here comes the doomsday brigade: Economic collapse is imminent. Unemployment will be more than 25%. Fannie Mae and Freddie Mac will soon implode. Credit will cease. “Have you tried buying (fill in the blank)?” First deflation, then hyperinflation, then worldwide depression. Forget toilet paper, try to find a good handgun or ammunition these days. Preppers are overjoyed; the day they’ve been waiting for is just around the corner.
Today, The Northwest Multiple Listing Service published its press release for March’s numbers.
Here are some nuggets:
“Windermere Chief Economist Matthew Gardner described the numbers for March as “essentially irrelevant given the fact that the economy went into freefall during the month.” He also noted that for a period, real estate was not considered to be an essential service, which he said “suggests that April’s numbers will also not be an accurate representation of the market.” (NWMLS 4/6/2020)
“The ability to transact business at all has been facilitated and allowed with tight restrictions and major concerns,” stated Dick Beeson, managing broker at RE/MAX Northwest Realtors in Gig Harbor. “Like Interstate 5, if there’s an accident ahead, you creep along as you pass by it. The market is not totally stopped, but around half the business is on hold. And we’re creeping along right now.” (NWMLS 4/6/2020)
Which brings to mind the business truism “Never ask the barber if you need a haircut.” Many people attribute this saying to Warren Buffett--who did in fact say it at an annual meeting in 1994. The earliest use of the phrase dates to at least 1909. The advice is sound. I take it to mean this: don’t delegate your decision-making power to the ‘experts’ in a field. Especially not to someone who would benefit financially from the advice s/he is giving you! No one knows your financial situation like you do. No one knows your needs and wants and plans and goals like you.
Real estate firms and brokers are in the business of helping people buy, sell, and lease real estate. That’s how we make our money. Most of us are not financial advisers, or economists, or prophets or seers or magicians. We don’t know any more than you do what the next day will bring. We know what the current market conditions are. Not what they’re going to be. March was a perfect example of how quickly markets can change.
So, what’s this barber’s advice? If you have decided to buy and/or sell real property, I will help you do that. If you want help thinking it through, and have questions that are specific to this market, I’ll help with that. I’ll give you honest feedback and opinions. I’ll negotiate strongly on your behalf. I’ll advise you about transaction norms and the contracts which are our bread and butter, but which are unfamiliar to you. I’ll help you meet your real estate goals. What I won’t do is tell you if it is time to buy, sell, or rent. That’s a decision that you get to make on your own. Real Estate brokers, like barbers, provide a useful (I would say an essential) service. You get to decide when to use us!
Here’s some resources to help you make your decision. https://www.fool.com/millionacres/real-estate-market/coronavirus-resources/