Everyone Wants To Know, "How's The Market?"
How is the market? That must be the number one question I get as soon as anyone finds out that I am in real estate. The follow up question usually is, "do you feel that it's recovering?"
Now while I understand why people would ask this question, I do find it rather humorous. Why? I find it humorous because they do not ask, how is the market in Rancho Santa Fe? Or, how is the market in Chula Vista? Or even how is the low end doing or the high end? Nope. Just a simple, "how's the market."
I can't answer that question without knowing what part of town you are talking about and at what price point. Also, from whose perspective?
Ask a seller in Chula Vista and you will be staring into the eyes of a person that has most likely just lost their shirt. Chances are that they think the market is pretty crumby. Ask an investor in Chula Vista how the market is that just picked up a property at auction a couple months ago and is flipping the home and that person may think the market is great.
How can that be? It can be because real estate is not a one size fits all game. You see, the Chula Vista market is incredibly competitive with multiple offers on nearly any decently priced and decently cared for home. However, you have to look at the reason that it is so competitive. It is that way because prices have come down so far that many buyers and investors have taken action. Furthermore, other seller's that are not willing to sell at those prices have gotten out of the way and taken their homes off the market. This has caused inventories to drop, making the competition for buyers even more fierce.
Ask the buyer in the above scenario how the market is and they will say something along the lines of, "it's crazy how fast property is selling. I have made seven offers and still haven't been able to purchase anything." Ask someone that bought their home in 2005 that is selling under this same scenario and you will get a different answer. It may sound something like "Buyers are really tough. I was getting no activity on my home until I dropped the price far lower than I ever thought I would go. I can't believe how low the market has gone." The good news for Chula Vista is that it is finding its equilibrium faster than other communities because sellers have become realistic.
Change the neighborhood to a place like Rancho Santa Fe, where you have an entirely different real estate picture and you will get an entirely different answer from both the buyer and seller perspective. In Rancho Santa Fe, buyers are likely to tell you that they feel prices should come down further and are willing to wait. Most of these buyers do not buy out of need but out of want. Seller's will most likely tell you that they have dropped their price to a certain degree but are not willing to go any further. They will then give you a lengthy, and at times impressive, answer as to why. The sellers in this community usually sell out of want and not need.
This means that Rancho Santa Fe real estate, unlike some other communities like Chula Vista, is taking a slower approach to finding an equilibrium between buyer and seller expectations, and therefore has more downward price pressure than some of San Diego's more modestly priced communities.
So the next time somebody asks you, "how's the market" you can ask them "where, at what price point, and from whose perspective."
If you have any funny stories about people asking you "how's the market" please leave them here.