Why Markets Change
November 27, 2007
Why do sellers' markets change and why do buyers' markets change?
I asked myself this question after being queried by my 24 year old grandson as to what happened to change the real estate market. In my 40 years in Redlands, first 9 as a buyer and homeowner and the past 31 as a real estate agent, I have experienced both types of markets. Typically a sellers' market is called an "up" market and a buyers' market is called a "down" market.
When we moved here in 1967, Redlands was experiencing a "down" market; the result of overbuilding. In 1976-1980, it was an "up" market. Probably the result of the pent up demand after 9 years of virtually no new home construction. Then in the fall of 1980, interest rates began to rise rapidly from 9.75% in September to 16% by April 1981. The rise in interest rates and "stagflation" put an end to the "up" market. (But we still sold houses!) The market during the 1980s was more "flat" than "down", but it was a buying opportunity for buyers who could qualify at the high interest rates. By the end of the 1980s, the market was picking up, but at the invasion of Kuwait, it was as if someone slammed the door shut and sales slowed. With the closing of Norton Air Force Base, and the disappearance of the air force personnel, we entered a true "down" market.
Marketing foreclosure properties was big business and lasted into the late 1990s. Then the market began its recovery. At first slowly and by 2003 the frenzy to buy a home was everywhere. The frenzy slowed in the fall of 2005, but the job market was good, the Inland Empire economy was good and it looked like it was a pause, not the continued deterioration of 2006-2007.
Frankly, I can not discover the underlying cause of the present "down" market. Real estate markets have always been cyclical, but usually some economic event can trigger the end of a cycle.Some want to blame the media for constantly printing that the bubble was about to burst. Some want to blame the "subprime" loans. Perhaps prices finally rose too high and buyers ceased to see value in what they could afford to purchase.
If any of you reading this blog have a thought as to what changed in 2005-2006, click on "comment" or e mail me at shirleyh@loislauer.com.
Why do sellers' markets change and why do buyers' markets change?
I asked myself this question after being queried by my 24 year old grandson as to what happened to change the real estate market. In my 40 years in Redlands, first 9 as a buyer and homeowner and the past 31 as a real estate agent, I have experienced both types of markets. Typically a sellers' market is called an "up" market and a buyers' market is called a "down" market.
When we moved here in 1967, Redlands was experiencing a "down" market; the result of overbuilding. In 1976-1980, it was an "up" market. Probably the result of the pent up demand after 9 years of virtually no new home construction. Then in the fall of 1980, interest rates began to rise rapidly from 9.75% in September to 16% by April 1981. The rise in interest rates and "stagflation" put an end to the "up" market. (But we still sold houses!) The market during the 1980s was more "flat" than "down", but it was a buying opportunity for buyers who could qualify at the high interest rates. By the end of the 1980s, the market was picking up, but at the invasion of Kuwait, it was as if someone slammed the door shut and sales slowed. With the closing of Norton Air Force Base, and the disappearance of the air force personnel, we entered a true "down" market.
Marketing foreclosure properties was big business and lasted into the late 1990s. Then the market began its recovery. At first slowly and by 2003 the frenzy to buy a home was everywhere. The frenzy slowed in the fall of 2005, but the job market was good, the Inland Empire economy was good and it looked like it was a pause, not the continued deterioration of 2006-2007.
Frankly, I can not discover the underlying cause of the present "down" market. Real estate markets have always been cyclical, but usually some economic event can trigger the end of a cycle.Some want to blame the media for constantly printing that the bubble was about to burst. Some want to blame the "subprime" loans. Perhaps prices finally rose too high and buyers ceased to see value in what they could afford to purchase.
If any of you reading this blog have a thought as to what changed in 2005-2006, click on "comment" or e mail me at shirleyh@loislauer.com.
posted by shirley harry at 8:38 AM
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