| Risk: The possibility of suffering harm or loss.
Tolerance: Leeway for variation from a standard.
Chaos: A condition or place of great disorder or confusion.
(See the end for a tale of real-life risk tolerance.)
We live in a time of chaos which affects your risk/tolerance level. That’s not changing anytime in the near future. Should you go on vacation? Buy a newer car? Where are interest rates headed? Should you buy a home? Rent? Put money under your mattress?
Chaos brings uncertainty. Uncertainty leads to doubt. Doubt affects confidence. You may be thinking, “I’m not going to do anything” while the National’s lyric from Bloodbuzz Ohio, “I still owe money on the money I owe” is playing in your head.
 I review our finances annually and my life annually. As part of a life review it’s important to visit that place in your head known as risk tolerance. Don’t visit risk tolerance just for real estate, visit it as part of a life review. Why? Because your level of tolerance can change over time.
Life changes – job, marriage, children, income, health – impact your level of risk tolerance. Life isn’t linear, nor is risk tolerance.
I’m reminded of a quote from a book I recently finished, Meditations for Mortals. “Going was dying and staying was dying. When we get to junctures like that, we’d better choose the dying that enlarges rather than the one that keeps us stuck.” Ironically, “dying” is a metaphor for life.
And so it may be with the homebuying process. Renting may be dying and buying may be dying. What is your risk tolerance and which decision enlarges and which keeps you stuck?
 Because of risk, a client recently asked Seamus his opinion about selling their home, buying another and the likelihood of a recession. Seamus’ response was schooled in Homebuyer Associates’ approach to real estate as he addressed 3 components of risk tolerance:
A. The ability to assume risk based on your time horizon.
B. A willingness to assume risk based on your emotional response to chaos.
C. The level of risk you must take to meet your goals.
Seamus’ response:
1. We can’t speak to a possible recession because we can’t control the economic and geopolitical factors that may create/cause one.
2. If interest rates spike that will sideline some buyers, but the housing inventory remains out of line with demand, so there will still be competition for homes. This helps you as a seller but not so much as a buyer.
3. If tariffs increase costs to build then buyers who want a home may have to turn to buying an existing home. This will put upward pressure on existing homes of which there are too few already. That benefits you on the sell side.
4. In the end you can’t time the market. The best you can do is gather information and make an informed choice for selling and buying. But you have to gather the information.
 Wisdom from a guy who I’ve worked with for 20+ years (along with Mike Dupar, equally wise). And…he plays acoustic guitar (Seamus, not Mike).
One measurement of risk gives insight into how the economy is perceived: the Consumer Confidence Index (CCI). At this writing the CCI registers at 66 which is far below the long-term average of 95. This means consumers are feeling pessimistic about the economy.
If your risk tolerance allows, it may be the right time to sell and buy or just buy because your competition’s confidence may be low. In this market we look for every edge.
My risk tolerance began when I was 12 years old. I’d stand on a bridge over the Milwaukee river as a train crossed over. Ronald Ricketts and me. Whoever jumped last won.
 Ronald had more risk tolerance for trains than me so he won most often, but I won at housing because in my late twenties I had enough risk tolerance to buy real estate.
I understand buying real estate is more difficult today which is another reason to get answers to your questions as you manage your risk tolerance and review your life.
Feel free to contact us to discuss your real estate options. We may give you answers you don’t want to hear but we will give you our truth.
Know that we won’t be trying to sell you anything…rather we will help you become an educated buyer. To quote Agnes Martin,
“That which seems like a false step is just the next step.”
Please forward this newsletter to at least one person who needs it.
Selling? We don’t list homes for sale so contact us for an objective, independent opinion on price and the process of selling in today’s market.
We’ll give you the inside scoop on the good and bad practices in real estate.
Having helped over 1,800 homebuyers you learn a lot about the selling side. The goal: Make educated and informed decisions.
Thanks for reading,
Michael D. Holloway
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