Royal Flush or Royal Flushed?

From an early age, most of us are taught that gambling is inherently risky and, more often than not, leads to financial loss. Yet despite this awareness, many people continue to gamble, drawn by the powerful allure of winning big—especially the elusive “jackpot.” This attraction, fueled by the promise of life-changing rewards, can easily lead to addiction. Central to gambling is the concept of odds: a numerical measure that defines the probability of various outcomes, whether losing, breaking even, winning modestly, or striking it rich. To put this into perspective, the odds of winning the Powerball jackpot are a staggering 1 in 292,201,338.

Gamblers often experience cycles of fortune—periods of consecutive wins followed inevitably by losses when the odds shift against them. Unfortunately, the thrill of success can encourage continued play, even when logic and probability suggest it’s time to stop. Kenny Rogers captured this reality perfectly in his song “The Gambler”: “You’ve got to know when to hold ’em, know when to fold ’em, know when to walk away…”

Interestingly, a strong parallel exists between gambling and real estate. Like gambling, real estate markets move in cycles driven by economic conditions and buyer sentiment. Markets fluctuate between rising prices (a seller’s market), stable values (a flat market), and declining prices (a buyer’s market). These shifts are shaped by broader economic forces as well as the emotional mindset of buyers and sellers.

Reflecting on my 22-year real estate career, I’ve witnessed these cycles firsthand. During the booming years from 2000 to 2005, we encouraged sellers to take advantage of favorable conditions, though some chose to wait, hoping for even greater gains. That optimism was soon followed by the market crash of 2006 to 2011, a period marked by unprecedented challenges. From approximately 2012 through March 2020, the market steadily recovered, driven largely by non-investor buyers, ultimately pushing prices beyond their 2006 peaks.

Then came the unforeseen and catastrophic COVID-19 pandemic. As the world abruptly shut down, fears mounted that the real estate industry would suffer another devastating collapse. Instead, just months later, the opposite occurred. Buyers returned in droves, sparking intense bidding wars and driving prices far above asking levels, as if each property were the last safe haven available. At the same time, the pandemic triggered a sharp rise in the global cost of living, nearly doubling in many areas.

Fast forward to August 2023, and the real estate market is once again shifting. Signs of a slowdown are evident, particularly in declining sales volume. While real estate professionals continue to advise sellers to capitalize on existing equity, some still choose to gamble—waiting in the belief that current conditions are temporary and that prices will soon resume their climb. Buyers, on the other hand, are showing increased hesitation. When they do make offers, they are often well below asking price, aiming to negotiate terms that reflect the changing market.

As the market enters a period of flattening, a critical decision emerges: will you continue to roll the dice, or will you act strategically? As with gambling, success in real estate depends on knowing the odds and making informed decisions grounded in experience, timing, and market insight.