Generic, Sensationalist Real Estate News Headline - By, The Guy Who Got a 81.1% in ECON 101

There has been a lot of rhetoric out there surrounding interest rates, housing inventory and what will happen in the next 6, 12 & 24 + months.

For the full breakdown: A Market in Transition (What's actually normal)

The short answer: nobody that says they have it all figured out, actually has it figured out and can predict the future. Also, anyone that attributes any big shift to only one variable does not understand the complexity of national economics. I may have gotten a 81.1% in Econ 101, dropped out of college and be too ADD to sit still, but I have also lived through multiple market shifts since getting my license almost 10 years ago. I think my Econ professor (who didn't know who I was) would agree with me that we are experiencing the beginning of a real estate market shift.

No, this does not mean:

• The "bubble" is going to burst
• Home prices in the Pacific NW, Whatcom County, Bellingham and other municipalities are going to go down
• It is a bad time to sell a home or buy a home

If you are a "the sky is falling" person, real estate is not the investment for you. If you are a "get rich quick" person, you may have made a couple quick sheckles over the last 2 years but the new market will normalize that. If you look at the last 5, 10, 15 and 20 year trends in the Pacific NW, the trend has continued upwards (even during the great recession). Yes, the market has temporarily gone down or plateaued but then continues on to grow.

Here are the variables that you should be watching and ignoring the sensationalist news (which is trying to do 1 thing, pump viewership numbers):

1. Housing Inventory in Your Local Market (Supply) - is it dangerously low? Is that a seasonal occurrence? an economic response to a global pandemic? Since the "Great Recession" we have been in a seller's market. When March 2020 hit (COVID 19), inventory dove to a new low. Seller's were gun shy to list their home and the ripple grew to a wave that washed us into housing inventory crisis for 2 years.

For reference, a balanced market is 6 months of inventory, a buyer's market is over 6 months and a seller's market is under 6 months. Whatcom County was at 2 WEEKS of inventory...

1. Buyer Pool (Demand) - Who is moving in and out of your area and why? What industry is drawing potential buyers and/or what is causing people to leave? Whatcom County is a very interesting combination of industries. Some of the industries that make up Whatcom County:

• College town - (WWU alone attracts nearly 15,000 seasonal and temporary residents, mostly rentals)
• Farm/Dairy - Nearly 100,000 acres of productive farmland in Whatcom County equating to over $350 million in agriculture production (Whatcom Conservation District )
• Work From Homers - Big city salary, ability to live and work remotely. We saw a huge boom of this demographic during COVID.
• Small Business Owners

1. Interest Rates (Buying Power) - Are they high compared to last year or low historically? What is the actual monetary effect on your monthly payment? There has been a TON of hype around interest rates lately. No, I am not saying that rates going up 1%, 2% or 3% does not matter. The question is how much do they matter to YOU? The recent interest rate hikes were strategic moves to hedge against inflation (check out: Inflation, Mortgage Rates and the Federal Reserve | Housing Market Update with Dylan Langei )
2. Time/Opportunity Cost (Cost of waiting vs. benefit of waiting) - Have you ever heard the saying "it's better to buy real estate and wait than wait and buy real estate"? Yes, it's cliche and yes it is a truism. Yes, it is important to understand the variables on a granular level but they must be combined to create a long term, big picture that aligns with what YOU want to do. Most people that have been successful investing in real estate sacrificed early on, continued to be aggressive with saving to reinvest into more real estate. They did the boring, un-sexy real estate investing that, wait for it.... takes TIME. My first interest rate was nearly 5%, my current interest rate is below 3%. To have everything you want right off the bat, is unrealistic. There is never a "perfect" time, just the most right time for you.

Look, I know the last few years have been crazy/wild/hard but this just means that it is more important than ever to:

• Think for ourselves and question everything that is told to us. What is the intention of the teller? What facts support their message? Does that align with my reality?
• Base our decisions that effect our economic well being on fact, not emotion.
• Focus on the factors we can control like: how we choose to look at our circumstances (mindset), how we treat others, who we surround ourselves with, how we spend our money, who we take advice from, boundaries that we set and the list goes on.
• Get multiple information sources that give you the full perspective, not just what you want to hear.
• Focus on building wealth slow vs trying to find the quickest avenue to get rich.

As always, I would love to hear your feedback, opinions, mindset.

By, The College Dropout