Fear is a powerful motivator. It can drive banks to failure, nations to war and people watching their growing waistlines to put down that third slice of pizza.
Extreme fear, mixed with hope, was behind recent manic gyrations in the world’s stock markets and has been the only reason why the buyers and sellers in Destin are real estate frozen. The Destin real estate market has so many buyer and sellers both wanting the same thing, a new home. Yet fear is keeping them from moving towards one today when the interest rates are low and the inventory is plentiful. Interest rates are expected to grow to 8% next. Whatever the buyer thinks he will save by waiting will cost him triple with a higher interest rate. Most buyers never calculated the cost of waiting. They will be shocked when they realize that the $10,000 they thought they would save by waiting actually cost them $200 more per month in a payment which equals a $72,000 loss over 30 years. It is sad for me to watch FEAR keep buyers from making a great investment decision. Remember in 1990 when the media said, “don’t buy real estate”. I bet everyone who bought in 1990 is very glad they did. 15 years of incredible appreciation is what they were able to take to the bank.
Hope also is a powerful motivator.
To think, the financial crisis gripping us today started when people imbued with hope purchased homes they could not afford. That misplaced emotion led to a massive housing market bubble.
The bubble started bursting in our market September 2006 because of the onslaught of hurricanes Ivan and Katrina. It appeared for awhile that Destin lead the rest of the national real estate market in the bubble burst because our economy is tied to the those markets crippled by these hurricanes. The reality is the Destin real estate market is expected to be one of the first markets to emerge from the busted bubble because as a second home resort market our buyer prospects remain credit and cash strong. Resort real estate markets are different that traditional homeowner occupied markets. We have many sellers struggling to sell and buyers afraid to buy for unrealistic reason caused by false fear.
The media and the financial districts both live together in New York. Doom and gloom live next door to each other. They see each other daily at the local pubs, delis and subways. Doom loves gloom because it sells their air time and the fall out for Destin of doom and gloom spending so much time together in New York is buyers missing great resort properties and sellers growing weary by waiting.
I just spent three days at a Mastery Weekend event with top REALTORS from all over the country. I spoke to agents from New York, Florida, Nevada, California and Virginia that reported 50 to 80 percent of their sellers are in short sale or foreclosure. The Destin real estate market is nowhere close to those numbers. Short Sales and Foreclosures have grown to approximately 35% of my market.
Destin did have a real estate bubble because our appreciation rates were so much higher than competing markets, Destin pricing has always been undervalued compared to similar ocean/gulf side resort communities. Hence Destin real estate was in the forefront of the burst; de-escalation of property values triggered by the Hurricanes was key. But there were a number of contributing factors not least of which were the increases in Property taxes, Property Insurance and our regional economies.
In September Florida continued to be one of the most desirable places to live in the U.S. Second only to California in 2007, Florida has remained one the top 3 states since this Harris Poll began. I am still thankful to be living and working in Destin Florida in spite of the fear I have had 2008 has been our best selling year since Katrina. I also have many other well priced properties sit and wait for buyers for no reason other than fear. Great properties, perfect condition, priced well and not sold because buyers are frozen with fear.
Anger, is also at play in the Destin real estate market.
It was a seller’s market more than 2 years ago and it is a buyers market Today. The industry always fluctuates between those two groups. As a result, buyers and sellers deal with different emotions depending on which way the pendulum is swinging.
Buyers are afraid to buy because they think prices are going to go down more and sellers are really angry. Sellers express anger by saying things like, ‘My neighbor got $50,000 more for their house a year ago. Why can’t I get that now?” “What are you going to do to sell my house?” “Why won’t buyers make an offer?” “I am going to take my home off the market and wait”.
By contrast, when we were in a seller’s market, it was buyers who were “really angry because prices were so high. Buyers found themselves competing with other buyers for the same house driving prices even higher. They experienced the frustration of losing homes they really wanted in bidding wars with other buyers.
While many buyers are afraid to purchase too soon, those that do make a bid on a home become very cocky. They come in with low-ball offers and they ask for everything! They want everything fixed, and they expect a low price too.
Desperation, of course, is another powerful motivator.
Amid financial chaos and the volatility of world stock markets, it is puzzling, yet somehow reassuring, that the most powerful forces controlling our economic destiny happen to be our own emotions. Isn’t it time to get them in check before our country implodes? It is a better plan to control those things that we can control – we have the power to control our emotions.
Richard Eimers, Lead Agent
richard@eimersgroup.com
Main: 800-775-5914 | Cell: 850-259-1798
