NEW YORK—David Michonski was named one of the Top Ten Realtors in the United States by Today’s Realtor Magazine. He is the chief executive officer of Coldwell Banker Commercial and has analyzed the real estate market since 1984. The Epoch Times had the pleasure of speaking with Michonski about the current real estate market.
With every eye glued to falling real estate prices, many home buyers are wondering if now is a good time to buy or a good time to sell. According to Michonski, this speculative mentality is among the reasons why so many are suffering in today’s market.
“I think the markets are obsessed today with this market timing. I think it’s tragic because this market timing just really doesn’t work,” Michonski said. “You don’t buy it just because it’s on sale. You buy it because you need it. That’s where, today, the housing market needs to be.”
“Market timing is something nobody is ever good at. People are venturing here into a losing proposition because of where they’re coming from,” he said. “Don’t speculate and don’t turn it into an investment product.”
A Home is a Home, not an Investment
The market needs to return to one that’s need-based, explained Michonski. Both buyers and sellers need to stop and take a clear look at the reasoning behind their decision. If home buyers are only planning to stay for a year or two, then they shouldn't buy. If you plan on staying for more than a few years and need a home, then buy one, as chances are the market will change in a few years.
According to Michonski, buying a home shouldn’t be a decision made with the sole idea of making a profit. For those wondering what the value of a home is day by day, it doesn’t matter, as numerous factors such as the value of a property and natural resources used in building a home will inevitably increase. He said that looking for a home needs to be seen as looking for a place for your family, not an investment venture.
“Are you raising a family there, are your kids happy, are you and your wife happy, are you enjoying life? That’s what matters. That’s what’s driven the real estate market for the last hundred years. It’s only in the last 15 that we look back and we say, ‘wow, a home was everybody’s best investment so now let’s turn it into an investment,’ and we had this speculative frenzy,” Michonski said.
“I’m happy to see the speculative frenzy go away,” he said.
Around 2005, the real estate market hit a boom and prices were driven sky high. Now, according to long term price point charts from the National Association of Realtors, the market is returning to a more normal level. “We’re just coming back to the norm,” said Michonski. “We may go on the other side of the norm, but the fact is we were way above the norm and now we’re at the norm.”
But the market's health depends on how much speculation is taking place. “We’re not going to see the market recover until the very speculative mindset I’ve been talking about is gone.”
A Welcome Change
"Although times are now difficult for many, there’s also a bright side to things. We have lived since the Reagan era, for the last thirty years now, with ‘a more is better’ mentality. Real estate is an example of that,” he said.
“I think one of the great positives about this is the inward reflection that has caused so many people to say, 'Do I really want to be on that treadmill? Are these really my values? Am I what my house looks like with the four pillars out front or is there not something more to me?' If we can get to that point then this is probably something worthwhile.”
“It’s a value readjustment and that’s a good thing. I think we’ve been going in the wrong direction for a while.”
Michonski feels the state of the market today is helping people remember again what’s most important in life. He used his own community as an example.
“I live in Greenwich, Connecticut; I think the first or second wealthiest community in the United States. I had to live there because I was managing a Coldwell Banker office and Coldwell Banker required me to live in the town. But I found it to be a perfectly miserable place to live for 15 years, that I was somewhat trapped there,” he said.
“Today, it’s a far more humane place. Bernie Madoff and Nowell and all these people’s net worth have been cut in half, or ninety percent, and it’s become a much more human place to live, as opposed to a showy place to live. We’ve somewhat gone from Broadway theatrics to the reality of human life. That’s a good thing.”