“When you stop asking” is James Grant’s short answer to the New York Times Op-Ed question of “When exactly will the misery end?” From a local real estate perspective the part of his complete answer that jumped out at me was this: Hope sustains life, but misplaced hope prolongs recessions. At the root of this paradox is the notion that booms don’t just precede booms, they cause them. Modern-day booms are the products of low interest rates and easy credit. People overborrow, overpay and overindulge. They love the things that borrowed money buys, but the debts become insupportable. Then the assets, or some of them, must go. A little selling — of houses, cars, companies, stocks — becomes a lot, and the next thing you know we’re talking about nationalizing Citigroup. Wishing that this weren’t happening to them, hopeful business people and homeowners resist making necessary adjustments. Some refuse to sell the house they can’t afford. Others won’t think of selling the stocks for which they paid what seemed a reasonable price only last year but which are one-half of that reasonable price today. In short, the end occurs when people give up the unreasonable hope that the bad times are going to go away and, instead, deal with the new values of the market. This is a difficult concept for community-based residential real estate agents to deal with. We care deeply about our clients and desperately want to defend their home’s value (which is ours as well). But, in doing this we may be prolonging the crisis and hurting our clients even more. We are dragging out the end by not allowing the market to reach the point where the recovery can begin. As Mr. Grant concludes: Today’s low prices, painful though they may be, are the market’s own shovel-ready stimulus. Before you know it, the stock market, and the residential real-estate market, too, will be on their way back up again — just don’t ask when. The sooner we as real estate agents accept (and find) the new values in our market, the sooner we can reach the point at which recovery starts again. This recovery will not be immediate. In our last real estate crash, the dot-com decline of 2000-2003, it was an additional three to four years after the bottom before prices returned to previous levels. In some areas and price-points it recovered but never reached those lofty 2000 peaks. We are fortunate that we live and sell in an area where demand continues to exist and supply is limited. But we, as agents and brokers, have to acknowledge that the scope and ability of that demand has been drastically reduced, and will be for some time. The sooner we acknowledge what is going on and communicate that message to our clients, the sooner we start on the path of recovery. If we refuse to deliver the hard news, then we are enabling the “unreasonable hope” of our clients. We are also allowing inventory to accumulate, possibly making the eventual moment of capitulation worse than it has to be. See the other ten experts’ answers at When Will the Recession Be Over – New York Times