Sunday, August 18, 2013


"Congratulations, you sure showed them!"

That’s the first line of a “mental letter” I have composed many times this year.  It’s been “written” to many so-called buyers who, over the past two years, have discarded my advice, once-in-a-lifetime financing opportunities and overwhelming demographic evidence to die on the hill called “looking backward”. 

These are people who kicked the tires on dozens of houses, perhaps wrote a handful of lowball offers, never got close to putting a deal together, and now sit on the sidelines, complaining as rates have risen and prices have gone up 10% or more in the past year.

As I said, you sure showed them.

You cannot successfully use 2010 strategies in the market of 2013.  You cannot tenaciously hang your hat on dated comparable information (thanks, Zillow) and predatory buyer psychology when inventory is down 70% from the peak and anything that shows well and is priced within reason is almost immediately subject to multiple offers.

This is now a forward-looking market.  It was over two years ago now when the giant ship finally turned and began sailing in the right direction.  Prices are not going lower, they are going higher.  Interest rates are not going lower, they are going higher.  Sellers are going to ask for more, not accept less. 

You had a unique, incredible window of opportunity, and if you chose to overplay your hand (as many did), you blew it.

Now the question is, what happens if you wait another year?  Do you think affordability will be higher 12 months from now than it is today?  Do you think prices are coming back down because banks made loans to people on homes that generally cost less than replacement value who had sizeable down payments and excellent credit? 

I’m not feeling that bubble-thingy you keep talking about… at least not yet.

As I’ve said before, I’m going to judge this market by the quality of buyer in the front seat of my car.  As long as they have large down payments, excellent credit and real jobs, this run has a ways to go.

But for those of you who cannot change in the midst of changing circumstances, that’s okay.  You keep right on renting and every month, you’ll be moving someone else (namely, your landlord) one step closer to financial independence. 

As I said, you sure showed them.