By Rusty Blix, Founder
Alderman Oaks Retirement Center
When the Covid-19 Virus first hit, housing sales stagnated. It appeared that there was a real chance that the housing market would freeze as it did in the great recession of 2008-2010. Now, at least for a short time, the housing market nationally (and in Sarasota) has opened up and become a seller’s market (a shortage of homes on the market while the demand is high).
Having been a home builder and developer for 30 years before founding and then operating Alderman Oaks Retirement Center (23 years ago), I have watched housing markets closely for more than 50 years. The housing market is known for being very cyclical, energetic highs and then very depressed lows. During the great recession, the market was very depressed for longer than I have ever seen. When the Covid-19 hit earlier this year, the market slowed very quickly, but surprisingly has surged back to life. Right now, the market is very strong, but there is a great deal of uncertainty in the larger economy due to both the Covid-19 Virus and the November third elections.
If I were looking to sell a house soon, I would do it right now while the market is hot! Since housing is very cyclical and there has been a very long positive time frame for markets, I believe it is prudent to think that we may be near the top of the market and for sure, not near the bottom. Right now abnormally low interest rates seem to be, at least temporarily, supporting housing prices, but these rates are unsustainable in the long run.
Remember timing is everything and trying to catch the top of markets very often ends in disaster. Often people are forced to sell when it is only possible to sell with major discounting. A friend of mine, very experienced in real estate, just listed a second home in another market area and it sold in one day. This friend was very happy and knows not to be greedy.
During the great recession, I saw first-hand how devastating a situation can be when a senior who really shouldn’t be in a house by themselves has no choice because they require the funds from the sale of their home to support their next stage of life. I very regularly observed the situation when seniors had to sell their home, but no longer could get what they needed from the sale of their home. Often, the equity that they thought they had, totally disappeared because of the falling prices in the real estate market.
This blog combines thoughts about the economy, the housing market, and the specialized senior housing market for a very important reason. Essentially all economic advisors tell their older clients to take as little risk as they can. It is almost reckless to gamble with what is often a senior’s largest asset at a time close to when they might need to rely on that asset. The days of thinking that house values only go up should have been forever dispelled with the great recession.