“Predictions are Tough — Especially About the Future”
As I’ve blogged previously, home Sellers should pick Realtors based on how well they price, market, negotiate, communicate, etc.; Buyers, all those things, plus the Realtor’s market knowledge and frankly, willingness to hustle for them.
Predicting future home prices isn’t one of the criteria.
For one thing, that’s not possible to do — for anyone.
For another, to the extent that Realtors opine about the direction of prices, they’re invariably too optimistic.
The Saga of Stockton, CA
What caught my eye in a long piece on The Huffington Post about Stockton, CA — dubbed “Foreclosureville, USA” — was this quote from a Stockton Realtor, Rudy Willey, with 27 years experience selling homes locally:
Having seen his share of boom and bust cycles, Willey knew the times were too good to last. A wave of selling in Elk Grove, a town half an hour away that had been the fastest growing in the country in 2007, became a sign. “When I saw the ‘For Sale’ signs, I thought: ‘Something’s happening,'” Willey said. “I thought we were due for a correction — maybe a 15 percent drop.
–Evelyn Nieves, “Stockton is Foreclosureville, USA“; The Huffington Post (1/10/2010)
So, how far have Stockton prices actually fallen?
Clearly, Willey had lots of company missing the magnitude of the decline.
And virtually no one anticipated the breadth and scale of the housing downturn, the biggest since The Great Depression (excepting, of course, Goldman Sachs and a few hedge funds, that made tens of billions betting on it).
But that’s the point.
As Yogi Berra famously said, “it’s tough to make predictions — especially about the future.”
Your Realtor can and should know prevailing prices better than anyone.
But predicting the future is beyond our job description.
P.S.: As my clients know, my stock answer when asked about the direction of home prices is, “if you tell me what interest rates, unemployment, and GDP are going to be . . . I’ll give you a reasonably reliable housing forecast.”