After I had a couple of nerve-smoothing conversations with buyers yesterday, I realized that I am beginning to see a new, but familiar, stress component that has a significant affect on buyers: Peer pressure.
Regardless of where the market is at any one time, we are a society that has historically placed a high value on home ownership.
We are brought up to believe that success includes owning your own home.
This is a mindset that serves our overall economic and family interest well. And, while one can successfully debate the advantages and disadvantages of home ownership, that is not the purpose of this post.
Rather, the purpose is to acknowledge the significant part this social
mindset plays in the housing market cycle in the form of peer pressure.
In a buyer’s market (above six months of inventory), buyers seem to receive
little peer pressure during their home search. This is because the
perception of the general population is that there are plenty of inventories and that prices are falling, so take your time. After all, it is one of the biggest decisions of your life.
In a seller’s market (below six months of inventory), buyers begin to
experience significant peer pressure during their home search. In this case
the general public perceives that there is shrinking inventory and that
prices are rising. Buyers often receive pressure from well-meaning family,
co-workers and friends, to move quickly, before you lose the chance to make one of the biggest decisions of your life.
For the last few years, peer pressure in the housing market has been
minimal. Now, however, with reports of less foreclosed properties for sale,
10% – 12% median price increases, and interest rate increases in the near
future, peer pressure is on the rise.
To the casual follower of the real estate market (which normally includes
those who are not in the market for a home), these headline reports are good reason to counsel those they care about to speed up their search.
For many buyers and potential buyers, adding peer pressure to the pressures of working against multiple offers, and the pressures of trying to obtain satisfactory financing becomes too much. Often these buyers end up with a home that they don’t really want or they give up entirely.
In life we can not avoid peer pressure, good or bad, but we can temper how
we react to it with knowledge. Knowledge is power. The power to mold well
intentioned peer pressure into your cheering section, and the power to
deflect and minimize negative peer pressure.
All reported real estate statistics and opinions are interpretive, many from a local perspective, and need to be considered in context. Also, many
statistics are garnered from data that is 2 to 3 months old. Your real
estate professional should be able to help you interpret this information
from a perspective derived of your goals, what type of home and price range
you are looking for, and what areas and even neighborhoods you are
considering.
Buyers counseled to maintain their sense of urgency in the Orange County
Housing market are receiving sage advice. It is also sage advice for buyers
to combine their sense of urgency with the guidance of a real estate
professional that can help them to interpret the data needed to make an
informed decision.
Buyers must not let their sense of urgency become a sense of panic, no
matter how large their “cheering section” may be.
In price ranges below $1 million, be fully and confidently informed and put
your best foot forward from the start. In price ranges above $1 million,
keep your sense of urgency, and genuinely work with the seller to reach a
win-win agreement.
It is interesting to note that often in life it is best to have a heightened sense of urgency when no one else does, so you can avoid being part of the frenzy when everyone else must.
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