All real estate brokers working today have thrived in an environment in which the price of a house increased on a regular basis for fifty years. Fifty years. Of course, it’s not just home sellers, it’s us, too. Consumers have built their financial lives around this shared belief.
I’ve spent the last few years fretting about what just happened: Your home as a piggy bank? Not anymore.
The shared belief about real estate might be in danger. The facts changed this month for the first time. The question that those that market real estate have to answer is this: will people treat a bounce in real estate the way that they think about a drop in the stock market (a chance to profit) or will it lead to a long-term reevaluation of what it means to own a house?
It’s interesting to note that insurance on a Ferrari isn’t as expensive as you think. That’s because fixing a million dollar Ferrari doesn’t cost nearly a million dollars. It’s the serial number that you’re buying–the right to sell that car later for a profit.
If the "serial number profit motive" disappears from residential real estate, what happens? I think it could be bigger (and worse) than most people imagine. If the marketers in the real estate world understand the challenge they face, they may very well be able to market their (our) way out of it. They’re out of practice, though.