Friday, October 21, 2011

In Need Of An Attitude Adjustment?

I'm sure many of you have heard the expression, attitude is everything. Attitude might not be everything but it is definitely important, especially right now. Now it is simply your attitude and mentality that will give you the edge over others who are trying to prosper in this highly volatile market. Most people are intelligent enough to know that this statement is true. Some people reading this may argue that a positive attitude doesn't always work. Maybe not always but I know one thing for sure, negative thoughts and attitudes seldom work to your advantage!

Once I was told, “An optimist is someone who tells you to cheer up when things are going his way”. If you are reading this article, times may be difficult and you want serious answers to important questions such as, how can I profit in this market? There are many answers to this question, but first I need to impart to you some relative perspective.

A History Lesson on Real Estate Cycles:

About every twelve years on average, real estate values tend to spike in most major metropolitan areas. For example, in the 1920’s, homes sold for just under $2,500 in Long Island, New York. Since then, real estate prices have doubled almost 8 times over the last 80 years. That averages out to a 100% increase approximately every ten years. An interesting note to this is that about every twelve years, real estate values correct before they enter their next upward cycle.

It’s Not a Matter of If, It’s a Matter of When.

The real estate evolutionary process has been three steps forward and one step back. The last market cycle of the 1980’s was one in which real estate values doubled, followed by a correction of the early 1990’s, which equated to a 20-30% decrease over a five year period. This cycle was then followed by the post-millennium cycle boom of 100% from the last high point of the previous cycle. We are now in the naturally occurring phase of a correction in the cycle. This essential and beneficial adjustment gives the market pause to re-gather momentum and strength for the next cycle. This has occurred time and time again because the long term demand for housing is growing an exponential rate based on population growth to almost double in the United States by 2050.

Since we now know based on history that nearly all real estate prices will spike again, it’s not a matter of if, it’s a matter of when. I'm sharing these facts to help put you in the right frame of mind to buy now versus next year if you're planning on staying in the home more than five years. If you are apprehensive about it being the right time to buy, ask yourself if you would like to purchase your parents home for the price they paid for it when you were born? The answer will be obviously yes.

Maintain a Positive Attitude Assuming a Negative Result

In other words be prepared for the worst case scenario while at the same time moving forward to get the best possible result. This will take the mental pressure off and allow you to focus on getting the job done. This approach, I believe, allows you to be positive and realistic in your mental assessment.

If it Bleeds, it Leads

There’s an old expression in the media business, “If it bleeds, it leads.” The media loves to cover negative news more than positive because it sells better. When the real estate market is in turmoil the media loves to run these negative headlines to keep reminding people how bad things are. When buyers hear the bad news, it affects demand because the negative news drives fear which makes buyers worry about whether the time is right to buy a home.

Is the media simply reporting the news or does the media actually affect the news in this regard? The answer is obviously both. The media reporting negative news alone can’t shape a real estate market. However, since perception is often reality, when buyers are spooked, they may shy away from buying. This affects lenders, builders, real estate agents and other professionals who rely on the real estate business for their income. It becomes almost a self fulfilling prophecy because things get worse and the media again reminds us how bad things are.

But are things really as bad as the media reports? When you hear that foreclosures have doubled or even tripled in a particular area, this may sound catastrophic at first until you realize that the vast majority of homes (90% or more, depending on the local market) are NOT in foreclosure. Despite the doom and gloom there’s always a buyer for a well-kept home offered at the right price. In short, don’t read the paper if you want to keep a positive attitude and sell your homes fast!


Many people reading this are prone to inaction because of fear. Remember, it’s not a matter of doing it perfectly, but putting forth your best effort. As discussed earlier, a lot of effort at a “C” level beats doing less things at an “A” level. Don't let today's fear rob you of tomorrows great opportunity!

All The Best,

Herb Johnson
859-372-8019 Direct Line Email Website

Buyers and Sellers wanted. Referrals Appreciated!

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