Waiting on the World to Change

Along with many other brokers across town and across the country, I have been counseling my clients of late as we navigate the uncertainties of a national economy mired in tariffs, legal battles and speculation on an unprecedented scale. It’s possible that things may never return to what we have been accustomed to, but there is also a chance that much of the current economic climate has been artificially destabilized and things may not stay this way for much longer. 

Along this line of thinking, there is a growing faction of investors on Wall Street who recognize opportunities in the current unstable environment and have started to capitalize on it, doing TACO (“Trump Always Chickens Out”) trades based on increasingly predictable outcomes as more savvy countries continue to call the White House’s tariff bluffs, and as the federal courts are stepping in with calls to reinstate the correct protocols for setting tariffs in the first place.

Whether they are temporary or permanent, these market adjustments are real, but in most cases for our residential clients, they are trading one house for another and both homes are generally impacted similarly by the surrounding market conditions. Economic environment aside, people still need to move from one home to another, and in most of these cases the price reduction they absorb on the home they are selling will be saved at the other end through increased negotiating power.

That said, we are seeing more price adjustment than we have in years, but it doesn’t necessarily translate to a catalyst for activity. In fact, a typical analysis for homes in the mid price range in most areas of our county these days will show a microcosm of something like ten listings for every one available, and that makes it difficult to stand out against the competition unless you offer a compelling value proposition, but most sellers have a bottom line below which they won’t go.

Perhaps correspondingly, the residential rental market has rebounded after a lull that saw higher vacancies than we had seen in years and had rents down by as much as 15-20% in some segments. The turnaround has been palpable over the past several weeks with rents on houses in particular coming back to previous levels and people moving into homes which in some cases had sat vacant for months on end. 

This is partly a seasonal phenomenon as the annual crop of students scramble to secure their housing for the coming year, but as rising interest rates have priced the cost of buying a home out of the reach of buyers who are coming in fresh and needing a loan, we see increasing numbers opting to put their plans to buy on hold and settling in to rent for the time being, in hopes that interest rates come back down after all the posturing on the world stage blows over. And with rents once again on the rise, we are also seeing a few more sellers choose to rent their places out to hang onto until conditions improve instead of taking a further price reduction.

Here's hoping that the waiting pans out.