The New York Times yesterday had the most positive article on real estate activity that I've seen there in many, many months. My interpretation was that the dreaded "W" or "L" recoveries may be replaced by a more robust resurgence. The "capital letter" recoveries suppose that the recent upticks in real estate and the stock market will be followed by either a second downturn (as happened in the Great Depression) or a period characterized by bumping along the bottom of the economic cycle.
Those who are now more optimistic seem to think that all the stimuli provided by the government will boost real estate sales to levels that are more than were expected. It may be that the stimuli are even too great, or incorrectly aimed, but they may do their job anyway. As most experts will admit, the effect of psychological factors in economics is far greater than its mathematical bases would predict. We have all known for a long time now that there is a crisis of confidence in our country, and that something would have to happen to get us off the fence, and spending again.
I still submit that it's the weather. It's a good an explanation as anything else.
Thursday, August 27, 2009
Friday, August 21, 2009
Hazy is the Word
Well, the weather is hazy, hot, and humid every day now, and the outlook for prices in real estate is hazy as well. I just got a report from a real estate owner friend in Wisconsin, showing that activity there is way up, but that median prices are falling as sales rise. That seems to be true pretty much everywhere, and everyone seems to know it except sellers. They are still thinking that recovery means the stratospheric gains of a few years ago.
It's not really clear why they continue to think so. After all, the rapid rise of the stock market in the past few months has not brought stock prices up to where they were when they started to fall, so why would real estate be different? Lower-priced homes are moving because there are tax incentives and new buyers entering the market, but the incentives don't apply to those with higher incomes, so the government isn't going to prop up prices in those brackets artificially. The only things that will get those buyers off the fence are massive, sustained improvements in the economic climate, or perceived bargains. The latter is the only one within the control of sellers. Also, since prices have fallen for all kinds of items, sellers can buy more with the money they get for their homes at lower sales points, even if they are not reinvesting in real estate at the same lower levels.
Although this all makes sense, the psyches of sellers and buyers have never been terribly swayed by logic. Let's hope that this time is different, and that some of them will get real before the weather turns cold.
It's not really clear why they continue to think so. After all, the rapid rise of the stock market in the past few months has not brought stock prices up to where they were when they started to fall, so why would real estate be different? Lower-priced homes are moving because there are tax incentives and new buyers entering the market, but the incentives don't apply to those with higher incomes, so the government isn't going to prop up prices in those brackets artificially. The only things that will get those buyers off the fence are massive, sustained improvements in the economic climate, or perceived bargains. The latter is the only one within the control of sellers. Also, since prices have fallen for all kinds of items, sellers can buy more with the money they get for their homes at lower sales points, even if they are not reinvesting in real estate at the same lower levels.
Although this all makes sense, the psyches of sellers and buyers have never been terribly swayed by logic. Let's hope that this time is different, and that some of them will get real before the weather turns cold.
Saturday, August 15, 2009
Vacation!
Wow, it's been a long time since I've posted. I've been on vacation, which has coincided both with the only hot weather of the summer and our new puppy's arrival. That's kept me busy, but I did just finish reading Free by Chris Anderson, which is a book about all the things that we now get for free (mostly on the internet), and how that has changed business. Our industry, of course, is a great example.
When I started in real estate, all the information about all of the properties offered came in a printed book that was published every two weeks by our local Board of Realtors. Customers couldn't take it out of the office, so they had to come in to look at what was for sale. We controlled all the information, and thought that that was our salvation.
Fast forward to today: Our website gives away everything that we know about a property, and it does it without requiring payment or loyalty or even identification. We now map properties, so that you know where they are located, we tell you approximately what your own home is worth, and we post all the things we can think of that you might want to know.
What happened? Our role as Realtors has changed. We are now consultants, negotiating between buyers and sellers. We no longer work only for the seller, and we no longer rely on information as power. And what we've found is that people who use us, which they are no longer almost forced to do, get more for their homes, or pay less as buyers, than those who go it alone. Also, we save time, hassle, and costly mistakes. Are we worth it? You bet! Most people who buy or sell without a real estate agent say that they wouldn't do it again. There certainly is value in experience, expertise, and local knowledge. And we can still put all the facts on the Web. So take advantage of that, and log on anytime!
When I started in real estate, all the information about all of the properties offered came in a printed book that was published every two weeks by our local Board of Realtors. Customers couldn't take it out of the office, so they had to come in to look at what was for sale. We controlled all the information, and thought that that was our salvation.
Fast forward to today: Our website gives away everything that we know about a property, and it does it without requiring payment or loyalty or even identification. We now map properties, so that you know where they are located, we tell you approximately what your own home is worth, and we post all the things we can think of that you might want to know.
What happened? Our role as Realtors has changed. We are now consultants, negotiating between buyers and sellers. We no longer work only for the seller, and we no longer rely on information as power. And what we've found is that people who use us, which they are no longer almost forced to do, get more for their homes, or pay less as buyers, than those who go it alone. Also, we save time, hassle, and costly mistakes. Are we worth it? You bet! Most people who buy or sell without a real estate agent say that they wouldn't do it again. There certainly is value in experience, expertise, and local knowledge. And we can still put all the facts on the Web. So take advantage of that, and log on anytime!
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