Why What the Market is Doing Doesn’t Matter



It’s a constant, never-ending conversation: how’s the market doing? As an agent, it’s the thing I get asked the most. Nearly every day, I have a conversation about it or at the very least, get asked about it. Don’t get me wrong, it’s a topic that I love discussing so ask away. I did not get into this industry by chance, I chose it.

Understandably, the real estate market is a topic that many are curious about. Owning real estate has long been thought of as a terrific investment and also an accomplishment. Growing up, getting a job and buying a house, it’s the dream right? Many consider the house they live in to be the pinnacle of their success. That said, does owning a home have anything to do with the market conditions when you bought it? Home owners like to know how much their home has appreciated in value since they bought it and aspiring home owners like to know how much it will cost. The common thought is that the house you bought years ago “must” be double the value that you paid for it by now. At the same time, often the thought for aspiring homeowners is that values eventually “must” come down, so they’ll wait until prices drop to buy. Either case is nothing more than an assumption or a wish. Reality, on the other hand, is that market fluctuations have nothing to do with your assumptions or wishes. 


“Reality, on the other hand, is that market fluctuations have nothing to do with your assumptions or wishes.”


To put it bluntly, you cannot control the market, so why make decisions based on it? If market values are rising, it does not mean that it is a good time for you to sell, even though you could make a nice profit. If market values have taken a significant drop, that does not mean that it’s a good time for you to buy. In both cases, it might be the right time, but not because of the market. Prices will always rise and fall whether you choose to base decisions on it or not. 


“Prices will always rise and fall whether you choose to base decisions on it or not.” 


Sellers often get greedy when they see a headline that says that prices are shooting up. They figure that they can sell their house for way more than they bought it and then buy a bigger, nicer house. What they don’t consider is that the bigger, nicer house also has a bigger price tag on it now. Your house is not unique amongst the thousands of others in the same market, values shift across the board. If your income has not risen with the value of homes, does it really make sense that you will now magically be able to afford a much larger house? Larger house equals larger payment.

Speaking of payments, the down payment is one that is a big hurdle for many first time buyers. Unlike the time when sellers get greedy, first time buyers get greedy when they see a headline that says home prices are likely to drop. They figure that if prices drop, then maybe they can afford to buy a bigger, nicer house. They then begin to plan on this, counting on the values dropping by $50,000 (a number based on an assumption, not on evidence). Time will pass, and the values will either drop or they won’t. If prices drop, then Bob’s your uncle and it won’t be until the next time that you get burned. If prices don’t drop, you’ve wasted months waiting for something that never came. This is bringing me closer to the point that I’m really trying to make.


“The trick is to create a plan that will work in any market.”


Everyone is okay with making future predictions as long as it serves their needs. People have a way of reasoning with themselves that what they want to have happen is actually the most likely occurrence. This is nothing more than speculation, but life plans are made based upon it. Speculators are the ones constantly trying to keep up with life as it changes rather then being prepared for any change as it comes. Things are bound to change, but to predict how they will change and banking on your prediction being correct is not exactly a sustainable concept.

Let’s go back to the greedy sellers and buyers and change their attitudes. If the seller wants to sell because they want a bigger house, why not focus on earning more so that no matter what the market does, they can afford it? If the first time buyer wants to be able to afford a nicer house, instead of holding off until the market drops $50,000, why not focus on earning that $50,000 and being ahead of the game in any situation. I’ve heard of many examples of people holding off buying a house because they heard the market was going to drop, only to wait and watch prices rise. If you’re willing to wait months to save money, why are you not willing to work hard for those same months and guarantee it? Is it too foreign a concept to expect to have to do more and sacrifice more to get more?


“The market will be what it will be despite anything that I do, and anything that I do I will do despite what the market does.” 


Nothing changes if nothing changes. If all you do is wait and base plans on speculation, the type of home you live in and the situation you’re in will not change. A situation will not magically change in a year if you do nothing to change it during that year. My favourite question I get asked is how the real estate market is treating me. I usually just smile and say “it’s treating me just fine, thanks for asking”. The real answer is it’s not treating me at all. The market will be what it will be despite anything that I do, and anything that I do I will do despite what the market does. 

It is good to know what the market is doing if you’re thinking about making a move. It will dictate pricing strategies, timing and some of the more intricate details of how your purchase and sale will go. That said, don’t get caught up in it and change your plan based on any headlines. The trick is to create a plan that will work in any market, because by the time it comes to execute the plan, the market might be different.

- Cody