Fischer: Take it from me, we aren’t headed for a housing crash
Most of us know the sickening sound of metal crunching against metal from unfortunate personal experience. Statistically, the average person will crash their car at least three to four times in a lifetime. While it may not be something to brag about, I am way above average in this category. In fact, between the ages of 16-18 years old, I had already been in five car crashes. Only four of them were my fault. Once I got my revoked license back, however, I was more cautious. Between car repairs, insurance rates and a lawsuit, I realized I was speeding down the proverbial road toward bankruptcy at a pretty quick pace. Since that time, I try to keep my crashes to a minimum; however, I do have enough experience to consider myself a “crash” expert.
Just before an impending crash occurs, the brain sends a signal to the body to either react or freeze. This is more commonly known as fight or flight. As a result of these chemicals, all critical thinking skills shut down, as do more advanced thought patterns. This is not a time when good old-fashioned common sense kicks in. Proactive responses can not exist at the same time as fear or anger. As a result, the responses are reactive. An acorn dropping off a tree quickly becomes “the sky is falling.”
Rest assured, Chicken Little, the sky is not falling. Although interest rates are high, as are gas prices, food prices, entertainment, travel, cars, furniture and utilities, these factors do not override the law of supply and demand. There are still significantly fewer homes than buyers. This has been the case for the last several years and it will continue to be the case for the immediate future. We keep making more people, especially in Utah, and these people need places to live.
For those who are feeling fear, I get it. I was around when the sky did fall back in 2008. The market crashed. Demand dipped dramatically below supply and housing prices plummeted. This was the first time in nearly 100 years that prices dropped substantially. Within a few years, however, the market recovered. Since that time, our housing inventory nationwide has dropped to nearly half of what it was in 2007.
Our population has grown since then and supply has not kept up. While some buyers are “waiting” due to higher interest rates, this is only contributing to a more “normal” number of days on market for existing listings. Rather than 25 offers in two hours, it may take a few weeks to receive an offer on a current listing. Some sellers are contributing to closing costs, but this is not going to contribute much to lower pricing in the market.
Back in the 1980s, interest rates hovered between 14%-18%. Houses were still selling due to supply and demand. Interest rates go up and interest rates go down. When they go down, we will begin to see supply shrink faster and we will be back to multiple offers, no negotiations and desperate buyers.
The purchase of a home is a big deal. It is one of the largest financial decisions you are going to make in a lifetime. This decision should not be made at a time when advanced thought patterns have shut down. The best time to buy a home is when there is less competition, more negotiating power and no impending crash. There are no screeching brakes, no burning rubber and no continuous horn blare. I’ve had experience. I would recognize it if there were.
Jen Fischer is an associate broker and Realtor. She can be reached at 801-645-2134 or firstname.lastname@example.org.