Gasp, there is less and less real estate news.
The more I read real estate news, the more it feels like rehashed news, same faces, different wording. The choice now is clear, a few hopeful point to a bright sky under the storm and a lot point to the mess. Ultimately, the market still is where it should be, in the middle of the reshape.
Prices have come down a little, and that is a good thing. We are still far from the affordability versus real estate price ratio but it will have to get there. There are less buyers and lenders are scrambling to rethink themselves. That’s a good thing. Sellers have been forced to witness that little buyers can afford these prices that were possible a few years ago. It’s the lull of the storm. It’s the aftermath.
It will take some time before it returns to normal, whatever normal is. We have had a few things compounding this scenario. The disparity between classes and wealth in our country has never been so acute. Buying on credit almost created a society of mortgage paying citizen, that backfired. Banks shockingly admit they never thought people would walk away from a home they couldn’t pay. Oh my, you can say that and still get paid for what you do?
When the economy re-bounces again, hopefully this time around people will have learned that “having it all” also means paying for it all, that it doesn’t necessarily mean happiness. Especially when it comes time to pay.
Don’t hook, hub! S’cuze me?
How many of you don’t like these people who come to you directly at networking events, or any event for that matter of fact and without even knowing who you are start selling their products? We all do. It’s a shame because the true meaning of networking is building connections. True networking is about hubbing. Hum, I’m marketing that word. I’m hubbing. But I digress…. People who try to hook you directly are missing the point and just plain old, turn off anyone. It might be this dubious logic that pitch to a hundred so that even if one reacts positively it’s a win, just doesn’t work anymore.
I’ve always felt like a hub of relationships and possibilities. When I walk into a room or a networking event, my thoughts are about who can be useful for who? I love to get to know people and my thoughts automatically gear into how can this person benefit from someone else I met or myself and my services. I love connecting people. I love the endless possibilities that ultimately form the giant mosaic we are, Life.
The March numbers are out according to DataQuick and they were predictable, half as less as February.
“The seasonal boost in sales between February and March was less than half its normal level and a record low. The weak start to the home buying season also saw another record dive in the median sales price, the result of depreciation, slow sales for higher-priced abodes and growing sales for discounted homes fresh out of foreclosure.”
The house I was going to help sell last year but eventually went a Realtor who told the owner he could get a million for it finally went off market after a year of unsuccessful tries and a few Realtors. Funny thing is that had the owner listened to me, he would have made more money than he can get in this current market. Now he is stuck with two homes…
“A total of 12,808 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in March. That was up 18.8 percent from 10,777 the previous month but down 41.4 percent from 21,856 in March 2007, according to DataQuick Information Systems.”
That’s a pretty steep number in one year, almost half as less. And to think we still hear the same cheerleaders talking about the bottom of the wave. What world are they living in? The market is readjusting and will readjust until prices catch up with consumer’s buying power which is very weak considering our current economy. It doesn’t take a rocket scientist to understand that. In the meantime, hold on tight!
I’m closing my Washington Mutual account soon.
I’ve never had much sympathy for big banks but with the latest turmoils at Wamu, see here, I decided to give my money to a local Credit Union. And why not?
After 4 decades of banks telling the government to not interfere, the latest Wamu problems has pushed them to ask for help after lending money to dubious people. How can I trust a bank that does that? When I worked in real estate I saw how wrong it was pushing loans into most people’s hands when clearly they didn’t have much to show for. If at my little level I can see that, I would expect my bank to be wiser.
I opened an account with a local credit union with a checking account that earns money with the minimum on it being $50. After all, it is my way of saying enough is enough. It is also my way of investing directly into my community.
Our banking system is out of control and after being part of the mess we are in, they don’t need my money. If they are being bailed out because of their mistakes then this will be done without my help. Surely, no one would give me that break if I was in that situation. My, how empowering!
A great post on California Housing Forecast.
Quoting mostly Hersh Shefrin, a professor of behavioral finance at Santa Clara University, as saying: “Sellers typically ask 12% over a reasonable sales price, but in a down market they will ask for 33% more. The reason: ego, and “aversion to assured loss”. Psychological pain, which is difficult to accept, is thus deferred.”
It’s pretty incredible how in normal times sellers are less greedy and in hard times, the other way around. It’s completely backwards. Of course, I remember those who sold in down times were those who actually listened to us and sold at a competitive price, regardless of their points of views on the market.
This last part actually nails it on the head: “Most buyers will come up against sellers who won’t negotiate, and this lowers sales activity. In down markets, inventory rises, but turnover drops. The lower sales activity is due to stubborn sellers, not lack of buyers. “
A great post and my, how true.
Calculated Risk did a little snooping in time to see how our financial fearless leaders dealt with reality. The results were as puzzling as we might expect. Those experts either cannot tell the truth for fear of fear or they are so far off removed from reality, they cannot grasp it anymore. You chose:
“For the recession that started in April 1960:
“By and large, however, the economy seems quite solid.”
Federal Open Market Committee, May 1960
“[Chairman Martin] was by no means convinced that the situation was serious.”
Federal Open Market Committee, July 1960
“The Chairman reiterated his views … There was a declining picture, … but the economy was not going over a precipice by any means.”
Federal Open Market Committee, October 1960
For the recession that began in July 1990:
“In the very near term there’s little evidence that I can see to suggest the economy is tilting over [into recession].”
Chairman Greenspan, July 1990
“…those who argue that we are already in a recession I think are reasonably certain to be wrong.”
Greenspan, August 1990
“… the economy has not yet slipped into recession.”
Greenspan, October 1990″
And you have probably seen how much Greenspan is defending himself lately…
Well, at last one good news.
As you might know, the real estate news is divided between all negative and those who look for the positive in it. Over at Seeking Alpha, Mark J. Perry posted about the affordability has climbed to a 4 year high. According to the National Association of Realtors’ Housing Affordability Index [HAI] from 2005 to Feburary 2008 (annual averages for 2005 and 2006, monthly in 2007 and 2008), based on the national median-priced home, median family income, and the 30-year fixed mortgage rate, the affordability ration climbed up.
I know a few will snicker at the thought of using NAR numbers but it’s one step in the right direction and as long as we don’t listen to NAR overused, overheard, under-performing predictions, why not?
But do they?
Barry Ritholtz, over at Seeking Alpha is at it again and rightfully so, calling NAR a fraudulent, misleading trade group. I agree. Why can’t NAR put on an honest face, as other trade groups do and tell the truth as it is, is beyond my comprehension.
You remember NAR’s disingenuous spin in the title of its February’s statistics saying sales had gone up while the actual article told otherwise? Even the venerable, yet sometimes also overly manipulative Wall Street Journal ate the story without any proper research with this piece. We seriously need to have journalists again and not media digesters.
“In a front page, 3rd paragraph snafu, the Journal writes: “On Monday, new data suggested that pressures like these are starting to drive prices low enough to attract some buyers back into the market. Sales of previously occupied homes jumped 2.9% in February from the month before, the National Association of Realtors said, the first increase since July.” Wrong!
Barry continues to write: “As we noted Monday, that was not what the data stated at all: “Changes from January to February are measuring seasonal differences, not actual improvements in house sales.” Can you imagine what it would be like if we reported retail sales from December to January this way? Headlines would misleadingly state: “Retail sales plummet 65%!” That is why with highly seasonal data series, the preferred methodology is to report year-over-year data — not month-to-month variations. “. And to prove the point, NAR was voted the worse forecaster from Slate.com, a title they fully deserve.
It really is a shame the real estate profession has such a negative image and groups such as NAR only add to it. NAR does a great disservice to the profession, predicts numbers that never happen, and twists statistical interpretation while failing to rally up the spirits. NAR, just quit it! It is embarrassing . Let’s hope this year’s new leader will steer NAR to become competent and a point of reference instead of experts’ favorite laugh. Ah, to be number one in the fish bowl. You can do whatever you want. But it is self-defeating…
I am the proud helper of yet another lost soul, another Realtor has come back to a sensible computer environment, she bought a few Apples.
After helping my friend Pam setup her iMac and getting Parallels working on it so that she could still access the lamentable Tempo MLS (only works or Windows!), I welcomed another friend (name withheld) to Apple.
It was interesting to see another Realtor fed up with Window’ security issues, constant reboots, crashes, freezes and expensive upgrade path, she finally gave up and bought a MacBook and a beautiful iMac. Setting them up on the wireless network was a cinch. As soon as I knew the Verizon wireless router password, both laptop and iMac picked up the wireless. After that, I thought I would have a hard time getting them to recognize the HP all in one printer connected to the router, but Bonjour worked as brilliantly as its supposed to. It picked up the printer on both machines and installed it without any fuss. No looking for drivers, no Windows nonsense, just the way a computer should work.
No wonder I rarely worked with Apple back in my IT consulting days. It works just so darn well there is little to do. I was blessed to have Windows inherent instabilities, Dell’s wonderful quirks. Just those two alone was the bulk of my business.
So welcome Realtors who are tired and fed up with that system that has been crammed down your throat. Treat yourself to a system that works in an elegant way.
Maybe I should become an Apple spokes person…
The New York Times posted an article written by Robert Shiller on why no one “saw” the housing bubble happen.
It is a perfect example on how so called experts are not that good after all, and also why governments are quick to turn situations around to make themselves look better.
Shiller argues that even the all-mighty Alan Greenspan, “a very serious student of the markets, didn’t see it, and, moreover, he didn’t see the stock market bubble of the 1990s, either. In his 2007 autobiography, “The Age of Turbulence: Adventures in a New World,” he talks at some length about his suspicions in the 1990s that there was irrational exuberance in the stock market. But in the end, he says, he just couldn’t figure it out: “I’d come to realize that we’d never be able to identify irrational exuberance with certainty, much less act on it, until after the fact.””
The question in the blame game is the following, do over a million people lack education or does lawmakers (less than one million) lack proper understanding of human nature? I’ll let you that one to answer, but it is pretty clear in my eyes.
It’s well worth the read.
Hat tip Calculated Risk.