The hardest thing to predict is the future during black swan events like the coronavirus. The key to positioning your business in the future during these world-altering events, potentially like the coronavirus outbreak, is based on your ability to sort through the facts and the reporting of the facts by the media. Media, in my broad definition of the word, is TV, newspaper, internet blogs, talk radio, and any news digitally transmitted through email & text alike. As you are having the feeling of being blasted with opinions from hundreds and thousands of so-called experts looking for their 15 minutes of fame or sometimes extend their place in the public eye, your real estate business relies on you determining which set of facts will prevail and the crucial steps that will guide you when economic impacts & recessions impact the World. The hard part is we search the web and look for clues, we watch TV for clues but most commonly these outlets are taking advantage of you through the sensationalism of real numbers in fear of you taking the impact too lightly!
It is no secret that bad news gets 10 times the number of clicks and views than good news. Let me give you an example from one of my favorite partners in real estate Zillow. Their goal is to stay atop of Google Search and feed buyers, sellers and realtors enough headline-grabbing bad news or more appropriately put headlines that serve what the consumer searchers are Googling while it shrieks fear through the crowds. Let’s the look back end of the last recession, what Zillow was predicting. I took a few screen captures back then knowing one day we would look back. Here is what they were saying in 2011 though 2012:
This piece was in their Phoenix Market Report section of the website during 2011:
ABC News following Zillow’s rhetoric guiding the world on the future display this news below:
I like to title this one as a popular phrases “The Masses are the Assess”. It’s hard as this is spoon-fed to our consumers, and because if you listened to the national media you, the entrepreneur, chose to hold off investing for another year or two. Here is what actually happened and why I want to share what I see now looking at the data, The same types of critical factual data helped my wife and I decide to invest $30K into a website in 2010 – 1 year before these reports were even published – a website that has dominated the Phoenix/Scottsdale Market catapulting our business 1700% over the past decade! Yes, I had two years on spending and investing in a recovering market while others waited due to this noise!
The recovery was well on its way in 2010, while people continue to search for the negative news and believe what was being printed.
Home prices soared in 2012 and 2013. Buyers were buying like crazy if you were buying leads in 2010, 2011 & 2012 knowing where we were headed. Google PPC was delivering thousands of buyer to my new website. My business grew by 300% during this time.
So we may be in the next possible recession, it looks likely for sure, but the question is what will the impact be on the real estate market. First, let’s look at what the national media is filling up the internet and TV with to catch every Google or news searcher in America.
Let’s be honest President Trump cutting off travel to US and encouraging self quarantining made the right move, certainly he has used the limelight to ensure his next election, but what is the source of the data on the web behind this crisis?
The media clearly uses big numbers to create shock and awe, so you continue to tune in!
There are many ways to report numbers, yet just because they are reporting doesn’t mean we don’t need to check their sources, let me show you what I mean:
Are you kidding me, this is the most BIAS, negatively looking chart you can find and yet we are all being suckered in. This chart only points up! When we measure the total without perspective, it always points up. But when you source the data reported you discover the source are validated only by the news station and reports. The national media is reporting 33% more deaths than the CDC because they are not being verified!
Check out the CDC:
Let’s look at the Chinese Comparison chart from the CDC to give us perspective:
As long as we self quarantine this will be over soon, so utilize this time right, and be sure to check your sources, worldometer has theirs:
Could it be true that a news outlet who is starving for attention, as TV falls out of fashion, is using this website’s information as its source? Let’s look for the real source – the CDC. The CDC waits until a certain time of range each day to post where the other updated more frequently as media distributes. I pulled these both at the same point in time:
Please don’t take this as anything more then I believe where quarantines were kept best, we are close to the end of the crisis.
I have a few suggestion:
Self quarantine – especially if you are sick or have medical conditions, stay home and staff safe
Social distancing when in public
Wash hands and no touching
As for the Real Estate business. Yes, there will be some impact in the the majority of markets but likely only a few percent, unless you live in Las Vegas, Washington or New York or have buyers or sellers that work in travel related industries. Most impacts are due to the stock market dump affecting some buyers, more of a bump in the road then a correction similar to the last one.
It is clear there will be a more significant impact from lost jobs, stock market losses and revenue that will be felt more on the luxury market starting around the $800K price point in our market place, that is about 2.5x’s the average price point and only represents just over 5% of the transactions, yet nearly 20% of the volume. The key point is the effect on the appreciation yearly appreciation numbers as this is likely to keep growth in appreciation reported closer to 5 or 6% versus the torrid pace that we started the year making it looking like we were headed for double digit growth.
I will conclude with this, the biggest effect on the market remains to be the shortage of supply and the likelihood now for the Super Cycle predicted in my last post is now more likely, not less!