A Real Estate Discussion Blog


The Psychology of Down

After approximately 13 years of positive growth and appreciation in real estate, we are now in our 40th month of a negative growth national trend.  When the recover starts (or it may have already started in your area), the psyche will not be same as it was in the early 2000’s for years to come.

It is also predicted that more general market share and position will change hands in the next 18 months, then what has occurred over the last 18 years, again weighing on the average American’s psyche.

The psychological impact of what we are going through is bound to stick around beyond the rebounding years, and is something that the real estate community will feel as they deal with the public. For example, it is interesting to look at how long it took for people to start buying cars again, even after the Depression was long behind them. And the people that went through the Depression, even today, still have a much different outlook on how resources should be spent than that of a Gen Yer.

The Psychology of Down will be interesting to watch and understand as markets start to come back. Do you think people will now be more conscious of what they can actually afford?  Or do you think this will be a short lived lesson?  Or do you think people will be less likely to learn lessons from this situation thinking that government is there to throw a golden parachute if necessary?  Interesting times... 




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Comment balloon 20 commentsSara Bonert • October 06 2008 10:00PM


I think the lenders are going to force some restrictions that are going to be a painful wake-up to many in the market to sell or buy a home as well as those that work in the industry.

Other than that I do believe like everything else that these will be short lived lessons that will be revisited in the future.

Posted by Garren Grup, REALTOR, ABR, CNE,CDPE, GRI, Naples & Bonita Springs, FL (John R. Wood REALTORS) over 11 years ago

I am thinking that a lot of people will change there habits. There are a lot of people that got over extended.

Posted by Chuck Carstensen, Minnesota Real Estate Expert (RE/MAX Results) over 11 years ago

Its funny Sara that way back in the great depression they fought a war to helped US economy get out of it and their market bounced back. We just fought a war which helped put us into a recession. Diffferent financial times I guess.

Gen Yer? whatever happened to Gen Xer? forgotten I guess?

As cheech and chong once said "Depression, Recession its all the same thing man, Its a Drag!"

Posted by Stephen D White, E-Pro, ABR Cape Cod Real Estate (SDW Realty of Cape Cod) over 11 years ago

Thanks for the comments.  I find it so interesting on how everyone has such personal and unique thoughts on the topic.  Time will tell I guess. 

Gen Xer- I am right here!!  Aging and underwater with the rest of us.. :)  haha

Posted by Sara Bonert, Real Estate Internet Marketing (Zillow) over 11 years ago

It definitely will be interesting to how it turns out, we believe the real estate market will not return to like it was when there was plenty of buyers.

Posted by Angela Lawrence, Broker/Owner (Noble Merit Real Estate Services) over 11 years ago

Well, I for one have had the s--- scared out of me and will change the way I do things for sure.  My kids who are in their early to late 20's seem oblivious to what's going on, but people my age, 40+, they all seem to be taking it VERY seriously.  I guess the closer you are to retirement...

Posted by Fran Gatti, Managing Principal Broker - RE/MAX Integrity (RE/MAX Integrity) over 11 years ago

We all have needs and housing is one of them. You know, food, shelter, water........... Do not despair!! You will always be filling a need. That is what to keep in perspective. This doom and gloom is for the birds! It creates laziness and unrealized needs being filled.

We are a part of the cycle... Real estate will always be a huge part of the American Dream. There are great deals to be had today and many people willing to have them. Don't lose sight of your mission to help others appreciate and attain homeownership. Thanks for your blog..

Posted by Julie Hite (Guaranteed Home Mortgage Company, Inc.) over 11 years ago

I believe this is a wake-up call to our excesses. I hope we learn a lesson from this.  Your comparison to the Depression is interesting but I believe this will be a short lived recession of less than one year.  Those who lived through the many years of the Depression do have a different viewpoint than those of us since then.  If this is less severe and shorter, without as much pain then I predict we will not have as much of a long-lasting psycholical change.

Posted by Steve Hewson, Denver Metro Comnulll Real Estate (KW Commercial Real Estate, LLC - Denver) over 11 years ago

The market will not return to a point in the past....it will continue to evolve and we must to survive.

Posted by Jean Groesbeck, Broker, CRS, e-PRO, ABR, ASP, CNE, IMS (Compass) over 11 years ago

It's hard to say if people will make changes or not, I agree only time will tell.  People who went through the Depression most definitely do things differently.  They don't throw away anything!

Posted by Patricia Beck, Colorado Springs Realty (RE/MAX Properties, Inc., GRI, CDPE) over 11 years ago

Well good question.  Do the Gen Y'r s remember things long term and learn from them or have the attitude "live for today"? 

These are our kids and they have not had much adversity in their lifetime to relate to.  I suspect they are smart and will learn from this and be a bit more conservative in their future and that will really help them in their later years.  I am an optomist and know these are our children and they are smart enough to "get it".

Posted by Terrylynn Fisher, HAFA Certified, EcoBroker, CRS, CSP Realtor, Etc. (Dudum Real Estate Group - BuyStageSell.com) over 11 years ago

Sarah, I will definately remember, but who knows I think kids that aren't working are clueless. Now, the other day when we were waiting on the bail out vote, my younger one came in and asked me, "mom are we Ok?"

So I know they are listening but not sure they will remember. However, I think the values of Gen Y are different than the Baby Boomers, (Me) anyway.

Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 11 years ago

Interesting theory. I hope this will be a short lived lesson but history tells me that it will not.

Posted by Team Honeycutt (Allen Tate) over 11 years ago

Sara, The major change (I hope) will be that we don't speculate on our homes. Home should be secure. Invest in real estate, but speculate on something other than your house.

BTW, since I was MIA I may have missed what happened to your Florida house. How about an update?

Bill Roberts

Posted by Bill Roberts, "Baby Boomer" Retirement Planner (Brooks and Dunphy Real Estate) over 11 years ago

Sara don't you think we (Americans) are spoiled and think we can live on the edge forever?

Posted by John Walters, Licensed in Louisiana (Frank Rubi Real Estate) over 11 years ago

I think/hope the lenders have learned their lesson and they'llhave more restrictions on who they can lend to and what documents/proof are needed to extend a loan.  I am not sure the general public has learned anything, mainly because the generation coming into the buying sphere are young and feel entitled and at that age we all feel invincible.  They didn't personally experience their retirement evaporating. 

It's a great post to create some thoughts!


Posted by Cindy Marchant, "Cindy in Indy" , Realtor, Fishers Real Estate (Keller Williams Indy NE 317-290-7775 www.marchantteam.com) over 11 years ago

Sara, I'm predicting that a return to healthy market conditions will take seven years or slightly more, depending on the direction of ad valorem considerations for city and county property tax assessment throughout America. Hybrid arms are just starting to reset. I'm seeing the market tumble 30% to 40% in Memphis. The new legislation must be placed in a position for it to work with commerce and banking and will take years to implement. The recovery measures also have a distinctive element of time as a contingency. If the elements of time run out then the measures would probably seek either extension or termination of the reform. I think the window is two years. Hardly enough time to refinance billions of dollars worth of bad loans.

Posted by David Saks ((retired)) over 11 years ago

"Do you think people will now be more conscious of what they can actually afford? Or do you think this will be a short lived lesson"  Sara, I think there will be some of both and it will depend upon how much you suffered financially.  While I know many people who are hurting immensely, including past clients, I also meet people every day who have "normal" salaried jobs in a thriving business and have been virtually untouched.

At the end of the day it is only people who have overspent or have mismanaged their credit that are being impacted - at least for the most part.  There is a smaller groupl of people who are stuck because a job is forcing them to relocate and they can't sell their home for what they owe.

"Or do you think people will be less likely to learn lessons from this situation thinking that government is there to throw a golden parachute if necessary"  I don't think too many people will be saved by any sort of golden parachute.  So far all the government action has been more words than reality.  Have you spoken to anyone trying to get their lender to negotiate a short-sale?

I'd like to think we've all learned a lesson we can live by.

Posted by Michael Mullin, NMLS 11911 - Branch Manager, FHA, VA, USDA, Conv (Caliber Home Loans NMLS 15622, Originating loans in CA, OR and WA. ) over 11 years ago


You mention "national trend" and that is exactly what the NYT, WSJ, and other media want us to ficus on - real estate is local. :)


Posted by Steve Hoffacker, Certified Aging In Place Specialist-Instructor (Steve Hoffacker LLC) over 11 years ago

Hello Sara,

The financial industry will keep making loans tougher to get, but that will be good because hopefully it will make foreclosures less likely. There will always be buyers and sellers, and they will be more educated because of all this mess. Their psyche will be affected, and they will be more timid, it will be up to us to give them good advice. We need to know our markets even better!

All the Best,


Posted by Caren Wallace, Portland Caren Real Estate (Premier Property Group LLC) over 11 years ago