Nothing to Fear- in Life or the Real Estate Market

This article written by Alisa Winslow (someday we will fix it so our blog doesn't automatically credit Bill with authorship).

I don't miss my corporate job. Its not something I spend a great deal of time thinking about, but last week it was front and center in my mind when my old boss reached out to me to see how my new career was going. He shared the company had just completed a restructuring of my old department and it caused me to think about the decision I made to leave a ridiculously good job after 20 years of loyal service. I've been through more mergers and reorganizations than I care to recall and my heart goes out to my old friends in their career change and uncertainty. However early in corporate life I learned the seasons of organizational change create tremendous opportunity for personal and professional growth, and fear in times of change always does more harm than good.

It is during these shake-ups when jaded, tenured employees start bellyaching and damage their personal brands, while others embrace the new vision and catapult their careers. Up until the time I left the bank I was solidly in the latter category. Which is how I knew it was time for me to go when I learned our bank bought a smaller institution and my team again was asked to bring culture to the newly acquired bank. For the first time in 20 years it didn't excite me. Like, not at all. And I knew in that moment I was done, because there was one thing I knew I could not do despite the cushy salary and benefits. I could not become a ROAD warrior (Retired on Active Duty) and join the ranks of friends I have seen hang on for the paycheck but just dial it in, day after day. Year after year. 

No, it was not the way I wanted to spend the sunset of my career and I couldn't do it to my team either. The time was right to make the move and get excited about my job and my future again.

As I made the transition from the corporate world into real estate, I tried to relate as many of the lessons I learned in my first career to my second. And one of those key lessons was definitely the importance of avoiding unwarranted fear. In the banking business, fear of restructuring or merger was debilitating to some. It caused anxiety which bred poor decision making, attitude and performance.

In the real estate business the source of fear is quite different but equally powerful and as damaging.

November in the Northern Michigan real estate market can be scary even in the most booming of years. There are still plenty of sales booked this time of year, in fact the fourth quarter is always the second strongest in our local market.  But as the weather grows colder and the days get shorter, activity slows and the pipeline starts to get a little thinner. It can be unnerving even if you know its temporary, especially when all your family income is tied to a commission based role and you are carrying all the fixed costs associated with having a team model with a big marketing expense line.

November 2022 could be downright terrifying when you factor in fear mongering about recession and bubbles. A real estate agent could easily find herself in a fear spiral. However we stand unafraid, in fact eager for the future and the opportunity we know is ahead of us. Why?

1) The risk of a market crash is incredibly low and not supported by data

2) Change always brings opportunity to those who are ready and able to embrace it. 

Let's talk about the local market data.

Looking at the numbers from October sales, there is little to fear yet. Interestingly, I had a conversation last week with a seasoned competitor agent who posed the question of whether home prices in our market would ever return to where they were last summer. I gave him a bit of a hard time because I had just run the numbers and knew as of October prices in our market were actually still going up!

October sales in Emmet County showed appreciation of 10% against same period 2021. Charlevoix County was even stronger at 18%. Make no mistake, I am not laughing at or disparaging my very capable and successful friend at all, because if I had not just completed our market report I would have agreed that it feels like prices were lower. Our inventory is no longer flying off the shelves in multiple offer situations, we are seeing more price drops  than new listings in the MLS some days, and we are all having tough conversations with our sellers which simply did not exist a year ago. We have even seen the return of the price renegotiation or concessions as a result of inspections again.

Eventually all of this currently anecdotal evidence will become more profound. Ten percent appreciation is markedly lower than past months, days on the market are starting to climb up a very little bit, and fewer deals are being put on the books at or above original asking price. Sales booked in October admittedly were negotiated and put under contract in July or August, so it's very much a lagging indicator. We expect these trends to continue despite the recent relief we saw recently with the improved consumer price index, better long term interest rates, and a small rally in the stock markets.

However while we expect more pressure on price in the near future, we still do not predict a significant downward adjustment in home prices. The simple fact is we saw many buyers put themselves on the sidelines as prices and interest rates adjusted up over the last year. But unlike in 2008, demand is not going to completely disappear. We still have a very well known and substantial mismatch with supply which will not be corrected in a matter of months or even years. Interest rates, inflation and recession may temper demand, but those factors won't decimate it. As soon as conditions turn even a little more favorable you better believe many of those buyers will come back. 

So while there will likely be a continued settling, we still expect a normal level of appreciation over the next five years which is in line with many expert opinions. Yes we anticipate we will see a near term dip, but likely a small one over the short term. We remain confident as we look over the near term because even if we do see a steeper decline than we think, we know we will continue to take the steps we take to help our clients through a market correction. We both lived through one of the most serious real estate market crashes on record in 2008, Bill as a realtor and me as mid-level management at one of the biggest retail bank failures of all time. They called it a merger of equals at the time to make us all feel better but PNC totally bailed out National City and everyone knew it. Bill's income was minimal for one really tough first year. Meanwhile I literally got paid to do absolutely nothing for 6 months while my team was absorbed into other teams and they tried to figure out what to do with this girl who had a good work ethic and attitude but no real job anymore.

We could have been scared but we weren't because we knew basic economic principles. While we were wise to save our money and make good financial decisions which bought us some time and confidence, we still maintained an abundance mindset. Bill doubled down on his business and picked up market share as other realtors called it quits. I went out and bought a whole new wardrobe of PNC orange and blue career wear, ditching the National City green and white and looked for every opportunity I could find  to make myself invaluable to my new company to secure an even better position once the dust settled than before.

It all worked out. It will continue to work out because we carry those lessons into how we run our business, care for our team, and support our clients. We will not develop "commission breath" if times get tough and push our clients into deals which aren't good for them. We will not be overly aggressive with other realtors and business partners because we are stressed and dependent on the next closing. We will continue to negotiate with integrity on behalf of our clients and not be afraid to take appropriate, measured risk in order to provide the best possible service and outcome for everyone involved. We will not stop investing in marketing our properties at a time when marketing and promotion will be most important to our clients. And we will not stop investing in our local communities.

Whether the market remains strong and this whole blog is much ado about nothing, or we are headed for some challenging months ahead, we trust the plans for us and what the future will bring to Winslow Group Real Estate. As your own future unfolds we would be honored to help you through the changes you experience either as the result of the economy or just the seasons life brings. Together as a team we have the experience, resources and commitment to partner with you to bring the best possible outcome for your situation. Please give us a call or shoot us a message if you would like to discuss what this means for you.