Interest Rates. Employment. Consumer Confidence. Those are three of the macro-economic factors that affect the real estate industry. Economists and arm-chair prognosticators alike enjoy identifying one as more important than the other when pontificating on how to “save” the housing sector. And, it is frustrating because we don’t have much control over interest rates, employment and consumer confidence.
But, the key to the housing market is you. And him. And her. It is our lives and the phases of our lives that drive the housing market. In over one hundred transactions, I have never once spoken to someone who was buying a house because interest rates were low, or because the unemployment rate dipped or because their consumer confidence runneth over. I’m not saying those things don’t matter, but the top motivating factors are much, much more personal.
People buy and sell homes because they are getting married, or because they are having a first child, or because they are now up to three kids and need more room. People buy and sell homes when the kids are grown and have homes of their own. People buy and sell homes when they relocate for work, and when they retire. If they are fortunate, they buy or sell a second home in a favorite vacation locale. For some people, property helps fuel a passion (like living near the ocean or putting together a recording studio). And, if they believe in real estate as a strong long-term investment, they buy investment properties they can rent out. I’ve worked with people in all of those situations, and not a single one was primarily motivated by interest rates and other macro-economic factors.
Sure, interest rates and the others support those personal housing goals, but, don’t be fooled that they are the only driving forces of the real estate market. Like almost everything else in life, it all comes down to love and birth, adventure and passion, death and taxes. What was your reason for buying a home?