A Unique Approach to 2023

“For we know in part, and we prophesy in part…we see through a glass, darkly.” One of my favorite Epistle’s and one of the most human. Paul was an amazing Apostle, according to the record, if too dogmatic for me. But the one thing I can agree with him about is the above; predicting the future is dark business indeed…by which I mean cloudy and uncertain. The one thing Paul didn’t mention is that most contemporary prophets get it wrong. Did most people proclaiming a prophesy get it wrong back a couple thousand years ago? While it is probable they erred, no-one bothered to keep a record of the failures of past future predictors! So, maybe not much has changed since, for believers, it does not really matter whether the soothsayer is right or wrong. People forgive their prophets if the vision they are selling includes a little piece of heaven. Tell me I will be rich if I chant this mantra or say that prayer and if it doesn’t come true the soothsayer can blame me for faulty execution.  

However, to give a little support to prognosticators, forecasting the future with any hope of accuracy is an art, not a science. Can you predict what you will eat tomorrow or what clothes you will wear the day after? When our own actions are largely based on whim, how can we expect to predict the future with any actual certainty? Of course, one can make an argument that humans are not so different from other objects in the universe and that our behavior is predictable given a large enough sample size. But how large a sample do we need, and does that prediction account for significant but unexpected events?  

If you examine an individual atom of water, for example, predicting exactly where it will be at any moment in the future is impossible, its motions are too chaotic. In fact, the smaller the system the more uncertainty we have (doesn’t that seem counter-intuitive?) The German physicist Werner Heisenberg is the guy who first formulated the uncertainty principle. That states we cannot know both the position and speed of a particle, such as a photon or electron, with perfect accuracy; the more we know about the particle’s position, the less we know about its speed, and the reverse is true as well. Predicting what people will do is similar, we can know something but not everything.  

Okay, but what about large systems? If you look at an entire river, you might know it will plunge over a waterfall on its way to the sea. Yet, even knowing all about that large system (the whole river) one cannot not account for a significant disruptor of the system…for example: a volcano erupting, damming up the river, and sending millions of gallons of water into the atmosphere through its heat. Mostly change is steady, slow, and predictable, but occasionally, in every system we know about, change can be chaotic, unpredictable, and abrupt. 

So, what does this have to do with our systems…with real estate? We are in a period in the real estate market which may be impossible to predict. Why? Because there are way too many significant disruptors happening right now…large-scale events. Any one of which might cause a major shift, and not just the Fed and interest rates, or the re-emergence of COVID, an escalation in the war over in Ukraine, the effect of inflation on buyer purchasing power or even a presidential election which could throw the country into chaos over one or another court case! We now have an industry which may be poised for radical change from its own internal issues. Some MLS’s are abandoning the requirement of a co-op, some large brokers have said they will change their business practices of requiring sellers to offer to pay buyer agents, others have said they are abandoning REALTOR® Associations where possible.  Add to this the disaffection over the NAR sex scandals, all in an industry which has seen an unprecedented rise in values and a market where a sign in the yard was enough for an agent to make a sale. That has mostly passed, but not entirely! Short inventory has seen to the persistence of new values. 

And yet, now, there is a bit of a cold wind blowing through the tepid landscape and, while some are shouting “Winter is coming,” it is still possible we will experience a sort of Indian Summer where the chill never quite overcomes the pent-up demand of sellers who are sitting on their properties…death, divorce, relocation and children…sooner or later people must sell and buy. 

Well, I am not Elijah predicting we will all be eaten by dogs, but I do think the careful agent will take stock, remain balanced and know that whatever happens to the MLS’s, to the Associations, to interest rates, the presidential election and the lot, people will continue to sell and buy houses. So, for the agents who will last? List when you can and don’t spend all the money you made. 

John Mijac, Managing Broker
Long Realty Foothills Office
4051 E Sunrise Drive Ste 101
Tucson AZ, 85718