Sacramento Real Estate Blog

There’s been a lot of ink spilled lately over the real estate market. Some of it has been real ink, such as the many articles that have appeared in the Sacramento Bee over the last eighteen months while prices have been coming down and sales have been dropping. A lot of it has been metaphorical ink — really bits living on a hard drive somewhere — and I’ve been responsible for much of that in the Sacramento area, as have many other blogs with more or less differing takes on it and different readerships. SacramentoLanding comes to mind.

What’s really interesting to me as a professional in this business is to watch how “the market” and the individual transactions in it interact. On the one hand, there is no “real estate market”, at least not in the same sense as there is a grocery market where you can walk in and chat with the grocer. When we talk about “the market”, we’re not talking about a place where you go to buy things, we’re talking about a collection of data about individual real estate transactions. The real estate market is a set of numbers, a bunch of statistics that some boring bean counter (often me!) sees fit to format in the form of some sort of article, or heaven forbid, some sort of TV show.

I hope it doesn’t make it to TV. I honestly do. I prefer The Daily Show.

So these individual transactions that you can sum up and pop into a spreadsheet aren’t any kind of place, they’re “just an idea”, one might say. (You know, like marriage. Or money. Or religion. “Just an idea”. Nothing to get excited about. Move along, folks…). Yet it’s interesting to see how the idea is both made up of individual sales and feeds back on itself. When buyers and sellers think the market is going up, that’s how they tend to behave. Buyers are more apt to yield to price pressures from sellers, and sellers love the idea of looking at comparable sales (”the comps”), and tacking $25,000 to $50,000 onto the price for their homes special and unique features — often something pretty stunning like storage under the stairs or stainless steel finish nails.

No wonder buyers like me best. Perhaps that was a little glib.

When the market’s going up, sellers wake to the heady smelling salt of money in the air, and are delighted to hop on board and raise prices. And when it’s going down, buyers look at recent price reductions. Sometimes they’ll pick out a home that’s priced below market value and cry, “what have you done for me lately?”, knocking another $25,000 to $50,000 off the price.

Actually I’ve never had a buyer really say “What have you done for me lately?” out loud. That was a dramatic embellishment. I just wanted to show the sellers who might be reading this that I am, horror of horrors, fair and balanced.

So the market’s not a place, it’s just an idea, and it’s not happening now, it happened in the past insofar as some data got published, and it happens in the future insofar as buyers and sellers are always wanting tomorrow’s price today. Well, more to the point in this market, I suppose, sellers are wishing for yesterday’s price. Colleagues, have you heard, “But I had it appraised six months ago for $ xyz bazillion dollars”. Meantime buyers are picking out their homes and trying to apply the price as it will be six months from now.

Think of it as a Star Trek episode (circa “Next Generation”). You have these two entities — humans, let’s say — and someone has sprinkled them with chroniton particles (yes, I do watch the show), so they’re out of “temporal phase”. The sellers are living in 2004, let’s say, and the buyers are tooling around somewhere in February of 2008. Meantime here comes old Johnnie Lockwood on January 24th, 2007 (for example). I try to remove enough of these chronitons to get these people into phase and meet somewhere near the present day. If I can do that, I can get paid. So I do my Realtor® magic, which sometimes works, and sometimes fails.

Sorry, I can’t go into technical details as to how I work this, but basically it involves using the ship’s deflector dish and a neutrino beam.

No, I’m just kidding. Actually it’s nothing so glamorous. I’m really more like Lieutenant Uhura, chatting with my Klingon counterpart, Lieutenant Gorp (for example). So I write up some paperwork and transmit it to Lieutenant Gorp, telling him that Captain Kirk is prequalified for $480,000 and that’s what he’s offering. Then Lieutenant Gorp sends back that his Captain will take nothing less than $522,350. And I’m thinking to myself, “Dang, don’t these Klingons know how to use round numbers?”

Well, anyway, you get the general idea.

1-2-3-4 !
Sha-la-la-la-la-la, live for today
Sha-la-la-la-la-la, live for today
And don’t worry ’bout tomorrow, hey, hey, hey
Sha-la-la-la-la-la, live for today