Hey Jim – you’ve been around. Tell us stories about previous downturns!

You don’t see them coming because they usually arrive without notice, and they tend to sneak up on you! After a few weeks of nothing, everyone starts to realize that the buyers have dried up.

But let’s be careful about the discussion.

Are we in a downturn now?

Let’s look at the definition:

YELLOWS – Yes, these are factors today, in varying degrees.

ORANGES – They might be factors, and we’ll see. The initial tariffs were a shock, but receding now.

Two key facts: Sales are holding up, and sellers have considerable equity.

1. The NSDCC sales this month are running at the same pace as last May. We can have excess supply, but as long as sales are holding up, we’re not in a downturn.
2. Home sellers have never had this much equity. It’s scary that homeowners have so much equity that it could enable any of them to dump 10% or 15% on price to just to get out if needed! We’ve never been in this position before where a whole neighborhood could lose 10% to 20% in value in just a few short months – and freeze up the market for the remaining homeowners (who would justify waiting by declaring that it’s not a good time to sell).

Downturn isn’t the right word to describe the current market conditions.

Instead, I’ll call it The Big Wait.

Here’s an example:

We listed this home on Birdie on April 16th.

The tariff chaos was underway, so we lowered the price early – just 12 days into the listing.

The next day, a buyer called me directly. He said he had seen many price reductions in the marketplace lately, so he was just waiting to pounce on a good listing once they did their first price drop.

We opened escrow the next day, but his dreams of building an ADU dwindled quickly and he cancelled after five days of investigation. Boom – we’re back on the market on May 5th.

This home had been a rental for the last 17 years, and it was rough when we came on board. The seller spent $130,000 to get it back in selling shape, and it stood out among the active inventory.

By Monday, we had received two more offers. We countered for highest-and-best.

I’m in charge of sales, and all inquiries come to me. Even when we have multiple counter-offers out, I’m keeping the door open. Our deadline was 5pm yesterday, so there was still time for other offers.

Here are the three people who checked in yesterday:

A lady had sent a text on Friday night about seeing the house, so I invited her to attend the Saturday open house, and she came. She had already sold a rental property, and is doing a 1031 exchange which means she needs to re-invest into another rental. She calls back yesterday with interest, so I send her the disclosures – but then she ghosts me. I guess she is going to wait for another one? But her 45-day clock is ticking.

A broker from Orange County looked at it yesterday for himself. I love when buyers come from behind the orange curtain because everything here looks cheap. He says he wasn’t surprised to hear we have two offers, but he doesn’t answer my question about whether he wants to buy it. Another wait-and seer.

A local buyer-agent who showed the house to her buyers on the first weekend wants an update. She has been stalking the property since she first saw it – saying her buyers really like it – but no offers are made. More buyers waiting for something.

Buyers are comfortable with waiting – because it is comfortable on the fence. You’ve probably noticed that the sellers are comfortable with their pricing, and the vast majority of them are waiting too.

It’s The Big Wait.

It’s not a standoff, because that would imply interaction. It’s a cordial, friendly waiting that looks more like loitering because you know people want to do something but just not now. Waiting is more comfortable.

I don’t think they know exactly what they are waiting for, but it is ‘something’.

We will probably see spurts of sales occasionally as ‘something’ comes along. Maybe even a surge of sales at the end of summer as time runs out?

Let’s hope the Big Wait doesn’t turn into a lengthy disease!