It Wasn't a Very Good Year

By Diane Saatchi

Buying and selling real estate isn’t like buying clothes or furniture or dinner out: It’s expensive, complicated, and emotionally draining.

In 2019, it was most of those things, for most people.

That’s not to say the real estate market was universally disappointing. Some buyers have much to celebrate. They made amazing deals, with double-digit percentage points off the original listing prices. And some sellers, even at discounted sales prices, were happy to sell. For those sellers who may have taken a hit, those with balanced portfolios more than likely made up for unfortunate sale prices with gains in equities. And those who went on to purchase other properties may be celebrating their own amazing deal.

But the market has been sluggish for several years, causing both a buildup in inventory and a reduction in prices. Based on the Community Preservation Fund’s (CPF) revenue, an accurate, unbiased and unspun measure of year over year sales, through October, year-to-date comparison of CPF revenues fell 21.2% in the Town of Southampton and 29.3% in the Town of East Hampton. You might recall that 2018 was not a good year, meaning those figures are even more, well ... disappointing? If the full-year CPF income is as projected, 2019 will be at its lowest annual total since 2012.

A real estate agent’s job includes managing expectations, but this year we also communicated disappointing news — to the seller, to the buyer, and even to one another.

Here are some of the most common disappointments we saw this year. I’m sharing them not to depress, but to reassure: You are not alone. Real estate-wise, 2019 has been a tough year for many.

Sellers

Your agent hosted an open houses and no one came.

You’re selling your house. Congratulations! You list your house for sale and of course you expect someone will buy it. The broker takes pretty pictures, they write up an irresistible blurb about the view from the bedroom windows, they schedule an open house … and nobody comes to your party.

If it’s November, you can kind of understand it. The weather is bad, then it’s ski season, then everyone is in Florida, but it happened in June and July and still no one came. What gives?

The broker is just as disappointed as you are. It’s a fine line between offering encouragement and managing expectations for such a big decision. We’re always calling with bad news, trying not to hurt feelings, but hurting them anyway with the news that no one came to the open house or that the rare and much-prepared-for showing did not turn out to be a love match.

It was Labor Day, and your house was still on the market.

In many parts of the US, particularly primary markets, people who have to sell keep lowering the price until it sells. It’s not that uncommon to do it on a schedule — every six weeks the price drops by a predetermined percentage until it sells.

But in the Hamptons, not all times of the year are the same. If there are only weeks left in the summer, we encourage people who do not want to hold on through the winter to lower the price. People who are quite motivated to sell will, but those who can afford to hold onto the house and those who are set on selling for a given price might wait until next summer, then try again and/or list for rent.

The offer was lower than you expect.

As I’ve said before, sellers wish, brokers guess, but the market determines the price. Brokers do their best to predict what someone will pay for a house, but it’s an imperfect science. Your home is only worth what someone will pay for it, and oftentimes that’s less than you think they should.

Buyers

Your eyes are bigger than your budget.

It doesn’t matter if your budget is $900,000 or $90 million. Even in a buyers’ market, whatever the budget, we tend to think it can buy more than what is available — near the water, with a view, brand new, walking distance from the village. The reality tends to be a disappointment.

Shopping for a home isn’t as glamorous as you’d thought.

The reality of buying a house is never as fun and romantic as you might think. You might envision lazy days strolling through hidden gems tucked away on village side streets, delighting in the historic architecture and shiplap kitchens, squeezing your partner’s hand when you find “the one,” and declaring to your broker: We’ll take it.

In reality, when people start looking, usually first online and then on-site, I try to soften expectations. Most often, the pictures and videos of the homes show the properties at their best. More often than not, when we finish a day of home shopping, I will hear these words: “If anything else comes on the market, let me know?” (And then I’m disappointed.) 

Real Estate Agents

Sellers don’t have to sell, and buyers don’t have to buy.

I don’t know why this is so common, but except for developers, nearly the first words we hear from would-be sellers is that they are not in a hurry and don’t need to sell. Even when I present sometimes chilling information about the market and suggest that this is not the time to list if they’re not in a hurry, many sellers start the process believing their property will defy conditions. Some actually soldier on, list too high, and are invariably disappointed with the outcome.

Buyers present different challenges. The press is quick to report on hugely discounted sales and web programs send seemingly endless alerts about new listings and price reductions. The information overload leads buyers to keep looking, thinking and hoping there will be more and better choices tomorrow. So, they wait.

Why is this happening and when will it end?

I was often asked this year to opine on why this is happening when we have a healthy economy, low interest rates and record-high stock markets. I can cite many causes, but I think the one overriding reason is uncertainty. No matter which way one leans, the geopolitical news coming at us 24/7 is unsettling. To quote Frederick Peters, CEO of Warburg Realty, “Buying real estate is a statement about the future. If you’re not feeling good about it, you’re not going to buy.”

We’ve a long way to go to absorb the current inventory and are facing another — probably contentious — election cycle, but there is hope. Full data is not in and won’t be reported until mid-February, but so far Q4 is looking better. Maybe not for everyone and not in all markets, but we should all be comforted knowing that there has been a palpable increase in deals recently. Market changes start out spotty, but what is happening now foretells an increase in volume. I am guessing the sum of reduced prices has finally hit a nerve. It could be we hit the bottom.

© 2019 Diane Saatchi