This Is Not A Housing Crisis

I’ve been in real estate for over 25 years, and this will be my fifth recession and rodeo, says Sissy Lappin, a self-acknowledged outlier whose acumen and forthright, boldness has resulted in $M of real estate transactions.?

This is not a housing crisis. Rather nothing more than a slowing period.??It should not be called a?bubble. It’s a return to a normal market after an unprecented real estate boom fueled by the pandemic, low interest rates, low inventory, transparency in real estate transactions, a new shared economy and technology that has shattered the playing field.

Why is this a market normalizing versus a housing bubble? Because in the past we had obstacles and hurdles that made recovering from a slowdown much more difficult.??All of that has changed as technology, new mindsets and a younger buying pool has disrupted an archaic real estate industry.

What we are seeing now is how the market is supposed to act.??We have gone through a housing boomzilla. Now, we are returning to a short period of housing normalcy.??

Until the past few years the real estate industry operated like a closed cartel that closely guards both real estate information as well as the interactions between sellers and buyers. Comparable sales were guarded just as Coca-Cola zealously protects their top-secret formula. Today, Zillow is the #1 search tool for home buyers and sellers. All the information they need is only a few clicks away.?Buyers are tagging homes on Zillow and when there is a price reduction, an alert is sent. It is instant fix for the buyer who’s trolling sites for a deal.

Transparency was not a factor in all other housing bubbles, and we have Zillow to thank for that.?Years ago, Zillow wasn’t as big and powerful as they are today, which means that the Multiple Listing Service (MLS) served as an agent’s ace in the hole and only agents had access to that coveted information. Now the consumer is not only in the driver’s seat, but they also hold all the cards.

Why is this housing?bubble?different?

Let me tell you how this all plays out.??We are going to have 6 months of a normal market.??And still going to have home sales because Zillow is going to trigger that buyer who’s sitting on the sidelines and pushes?play?- when the house hits a price that they feel comfortable buying. There’s not going to be a lot of inventory because people are not going to walk away from their low interest rates.??Think about it;?90 percent or 9 out of 10 mortgages, have an interest rate below 5 percent.??Which means that instead of jettisoning that mortgage, they are going to stay put. Again, less inventory.

And at the end of that 6 months and because low inventory and housing startups having been cut significantly because of supply chain issues and skyrocketing cost of materials, you’re going to see the market pick up.??

Higher interest rates can be compared to a new pair of new leather shoes.??They are tight in the beginning, but you break them in, and they get comfortable.??When you now pay 5 ? percent interest rate when a few months ago you could have done 4 ? percent, it makes it a little hard to swallow. But like any “pain point,” we adjust and loving our new home life becomes the overriding sentiment.

Last thought, the headlines about Compass and other real estate firms laying off employees and closing offices is nothing to worry about.??They are laying off because they have bad business models.??If you make a dollar and spend $8.00, you have a bad business model. And with the stock market going down, companies have been exposed and can no longer hide behind the motto of “OH, it’s an acquisition cost for new customers.”??The flash of these companies was again a shiny object whose Emperor had no clothes.?

With the stock market correcting companies must stand on their balance sheet.??These layoffs and closures have absolutely nothing to do with what is going on in the real estate market. They have to do with a business model that does not make money.?