Shift Happens!!! What Causes a Shift? And KARTARTISMOS!

Did you know that the real estate market contributes 28% of our total economy? Did you know that no matter what market or cycle we are in, the economy and the housing market are always directly related?

The first state to experience a shift from the fast housing market was Florida. This happened in 2004. After many hurricanes hit Florida, insurance rates increased significantly. A $300,000.00 home could cost $7,000.00 per year in rates. More properties came on the market and the inventory of homes increased.

Looking at the slide to the right, the three points, Inventory, Price and Sides have a direct effect on the market. The process normally starts off with inventory and this process circles twice and then just carries on.

Lets look at 2004 and 2005. Inventory levels were low. The lower the inventory the higher the price. When prices rise and keep rising, then the amount of sides (transactions) decrease. When sides decrease, then inventory begins to increase. When inventory increases the prices begin to decrease. When prices begin to decrease, then sides increase. When sides begin to increase then inventory begins to decrease and so this process continues. Basically the law of Supply and Demand.

We are to continue educating ourselves and no where we are. Also, this education needs to help us identify the signs where we are in the market. My next blog, I will look at the 4 phases of the Market Cycle and go into more depth and looking at Inventory, Price and Sides and how they begin to shift and are signs of a change in the market. Before understanding the 4 phases we need to understand the elementary principles of Inventory, Price and Sides.

The Greek word "Kartartismos" which literally means equip, or mend or train. We need to keep on equipping ourselves. The Greek people used this word for fishermen to mend their nets. If we do not mend our nets there will be holes in our nets then the fish will swim through and the other fishing boats will catch that fish. Why should another boat catch that fish? Why should the agent down the road get that listing instead of you.

A big problem in the real estate industry is that we think that we know something and we do not have to keep learning or going through that same topic. Imagine if Capt Sully who landed US Airways flight 1549 on the Hudson river had never kept on going to training? Do you know that Capt Sully keeps on going on the same TRAINING YEAR AFTER YEAR AFTER YEAR? So did his flight crew.....

So what makes us so special in this industry that we do not have to do this?

We need to mend our nets because the market is changing so fast. Technology is changing at a rapid rate and so are consumer demands and expectations.

So my next blog next week will look at the 4 phases of the market cycle.

Can you do me a favor? Can you have the greatest week of your life?

Thanks to Alxe Perriello the President and Ceo of Realogy who has recently impacted so many of the managers of Century 21 Award and Superstars.