Real Estate salespeople are usually optimists. They want to believe that things are getting better, and with the low mortgage rates, buyer demand, and arrival of the normal spring market time, there was some indication that the market is getting better. But I don’t know if it really is.
There’s an old joke about the boss who came into his employee’s office, and found them hitting their head against the wall. Stunned by the vision, the Boss asked why he was doing that. “It feels so good when I stop” was the reply. There’s a piece of me that thinks that our perception of the current market is marked by the same kind of comparison.
And yet the past several weeks have seen a number of articles from different sources which indicate that the real estate market may be reflecting the end of the recession we have all been struggling through. These articles seem o be popping up in scattered places, rather than just being repetitions of the sme meeting or survey, and remind me of the early articles in 2006 about the coming recession.
Like the first tentative birds of spring, it seems to me that these might be indicators of an actual change in the economy rather than just random coincidence. But I’m unsure if that’s just my optimism reasserting itself.Knowing as I do that we have led the way into and out of every economic trend during my real estate career, I want to think we may be seeing the start of what couldbe a long slow recovery for the economy. And remembering as I do that every time we started to recover, we were too busy and too tired from struggling with our day to day business to recognize the recovery until it was actually a fact, I wonder if that’s what we’re seeing now.
So without drawing any conclusions on my own, I ask you, the readers of Agent Genius – What do you think is happening? Is there a possibility that we’re seeing the start of a new recovery? Or is it a false spring?
iphone spring/ Primavera iphone by JC i Núria
August 26, 2009 at 10:01 am
I’ve always been an optimist, it is my nature to see the good in every person regardless of how I’m treated, my nature is one of turn the other cheek and take a big step backwards- my feeling on this economy is much the same.
I’ve spoken often of my weekly tradition of mall watching where I spend two hours twice a week at various retail outlets to get a birds eye view of consumer confidence, and what I’m seeing and hearing when speaking to shoppers is this: If this is a bad economy, this isn’t so bad, we have to live. In other words the storm seems to have skipped one home only to decimate the entire neighborhood around them. This to me demonstrates the lack of volume in the market place, and without real volume, there is no recovery.
Folks will continue to live practically and give into some spring fever regardless of the rain, but for the most part, I think consumers, including myself are still cooking warm comfort foods and opting to stay in. Job threats, hour cuts, furloughs, and rising prices still seem to be dictating spending, and until some confidence in the business sector is shored up, I believe these trends that lead to low volume will continue.
From our perch at Ag we watch 1000s of agents at any given time and hear of multiple offer situations and the like all around the country, but it goes back to Danilos post just a month or so ago speaking to banks holding back volumes of homes from market in order to increase demand- the harsh reality is that there is still a huge glut. This is creating a false sense of security in many cases leading to some stabilization in home values in the short run, but in the long run I’ve yet to see any real volume of home sales to eat up these inventories.
I remain concerned that we’re merely resting on the edge of the cliff only to take another tumble or two through 2011 unless the $8000 tax credit is expanded to have real teeth- I’ve recently argued that that plan would only lead to a new bubble, although tiny, but at this point, I see no other option- we need a kitchen sink approach on multiple fronts to get any real volume and I’m not so sure we have a kitchen sink left.
I’m where you are Bill, but it doesn’t feel like spring, it feels more like fishing for the light switch in the quiet calm darkness.
August 26, 2009 at 12:36 pm
Thanks for writing this article, Bill. I am ready to publish to my blog my thoughts about our local market and my view is very contrary to what we’re seeing in national press. I was almost afraid to post it until I read your article.
I have read the reports and have looked at the hopeful faces of my colleagues as they link to the NAR press releases on their facebook pages.
I am looking at the numbers from the MLS for my little corner of Pennsylvania and I gotta tell ya, I just ain’t seeing it. I have no explanation why the national market is outperforming our little county but I suspect it has to do with anomolies in the recently red hot but severely undervalued and distressed areas of the country.
I think in times like these, it is important to have realistic expectations. One needs to know the facts and not be victim to wishful thinking.
I have no doubt the market will turn. But it’ll take more than a month’s worth of good news to convince me that we are seeing a trend.
Thanks again for expressing a contrarian view.
August 26, 2009 at 3:19 pm
Benn & Joe both kind of beat me to the punch on my own opinions.
I strongly agree with Ben about extending/modifying the tax credit. In June, Jay Thompson spoke eloquently about the five separate bills before Congress seeking to expand or extend the credit. None (thanks to the health care sideshow) have yet to pass committee.
Our own area – known to locals as the Central Savannah River Area (CSRA) – may be at rock-bottom. June and July numbers for the two main counties in the Augusta area where flat or showed moderate increases over 2008 numbers. If August tallies are similar, I may join the optimists or at least be rejoicing that it “sucks less.” Again – no tax credit extension = very cold winter.
On drhousingbubble.com – there is constant and somewhat convincing evidence that not only will we face another wave of foreclosures, but the Alt-A and other toxic products yet to recast nationwide will keep things quite sucky for some time. I’d love to say I’m glad I don’t live in California, but crap, Georgia’s up there on the list too.
I’ve used my optimistic nature – which despite my comments above I do profess to have – to adjust our business approach and lead with revenue. The tactics we’ve implemented in this shift have led to new and profitable venues contrary to my past efforts in the lower end of the luxury market. Working harder to sell more homes, albeit at a lower price point. Those of us that remain in the trade will reap the market share reward when we do start heading north from rock bottom – and I can’t wait….
Navy Chief, Navy Pride
August 26, 2009 at 11:50 pm
Fortunately, here in Houston and specifically The Woodlands, while units sales are less than last year, prices have remained stable.
We definitely observe and experience a higher level of confidence in the future, but I’d have to say, the optomisim is tempered with a lingering fear that the unexpected negative is always a possibility.
I think the speed and violence of this last meltdown has shaken the usually resilient spirits of the optimist. Sorta like smiling but not outright laughing.
Having said that, which ever way you think, negative or positive, one thing for sure, to thrive you have to outwit, outlast, out commit, out smart, out create, out entertain, out deliver, out conversate, out connect, out educate, out share, out work, out attract, out impress and out deliver.
Change is now a way of life.
August 27, 2009 at 12:07 am
As we all remember, real estate is local so i’ll try to give a short synopsis of my local market as a perspective:
The AVERAGE sales price of a home in the county I live in went up $9000 in just one month.
Out of 1318 Active listings, only 60 are below $100k with an adition 44 between 100-125. This creates demand for those wanting a home on a budget.
Currently, homes are receiving multiple offers within hours of hitting the MLS with some selling for 10-20%+ above list.
Investors who bought homes out of foreclosure earlier this year have been able to relist and sell the property after doing minimal repairs for 150-200+% of the original acquisition price.
I could go on and on but my point is that many markets have had the initial push this year to start the ball rolling on consumers having confidnece in housing. If more foeclosures come inot the marketplace thir purpose would be to help fill the void of a severe lack of inventory that exists in many markets.
As for the Tax credit extension, I have a feeling that it won’t happen. The government showed us with the end of cash4clunkers that they intend to end a stimulus program once it has shown success and the stats I gave above show that this has happened in some markets. My view maybe skewed by the fact that most of my clientel do not qualify for the housing tax credit but I also know that the housing makret cannot be propped up with a tax credit forever.
August 27, 2009 at 4:09 am
In the Phoenix area we have several different markets happening at the same time. The bottom end – pretty much anything under 250k is a red-hot seller’s market with a severe shortage of inventory. From around 250k to 400k the market is almost perfectly balanced and from 400k on up it is a buyer’s market. The higher the price the greater the supply – demand is in the buyer’s favor. But because the huge bulk of the sales is in the lower range all of the major indicators would point to a bottom that came and went last April for our area.
There is a lot of talk about the huge “shadow inventory” that the banks have. I can not speak to the national scene but can for this area – it is entirely hot air. Setting aside that the banks do not operate in even their own self-interest, let alone work in concert with each other – the actual foreclosures lenders have taken back can pretty much all be accounted for in MLS sold houses or in the pending category.
This does not speak to the big Alt A reset issue that is supposed to ruin everything but I am very clear on the point that this is a national “news story” that has taken on a life of its own and isn’t based in actual analysis of the numbers.
Is all the bleeding done? No, but I do believe we are on the way back up as an economy.
August 27, 2009 at 3:19 pm
I do a lot of analysis for the graphs I prepare for my blog. What that data in my little corner of the world indicates is that sales are occurring in the under $200K market. Since many of those are short sales or REO’s, the move-up market doesn’t benefit because there aren’t “real” sellers (they’re lenders). Our $200-$400 segment is slow, but moving slightly. There’s quite a bit of inventory in that segment as well. The almost dead market is $400K and up.
I think job insecurity is more of an issue. People seem to be holding back on spending for all non-essentials. There are discussions that we might be in for a cold winter (lack of sunspots) which will increase heating bills. Both the state and some local cities and counties are wanting to increase taxes to cover their shortfalls. So it “feels” like people are just being conservative not knowing what’s ahead.
I also heard a local TV station interview some people regarding the cash-for-clunkers program. Many of those old cars were paid for and insurance was low. The insurance agents interviewed said that people didn’t check to see how much their insurance would increase when they bought the new cars and were startled when they learned the new rate. A lender said he thought there would be some problems when people find they are unable to afford the new car they just bought. (Sound familiar?)
I’d like to see something be done for the $400 and up group. When these homes start moving, I’ll feel better. I also think the stimulus money would do more good if it were given directly to the taxpayers rather than for bogus projects. That’s just my 2-cents worth.