Here's Hoping that Shiller is Right

I saw Bob Shiller in his driveway the other morning, and I asked if we were over the hump. He gave me what I took to be a positive indication, and then I saw the fuller explanation in last weekend's New York Times. It's a version of Franklin Roosevelt's first inaugural speech: The only thing we have to fear is fear itself.

Basically, he was saying that the recession will end if people decide that it's time for it to end, and begin acting as though it has. He cautioned that there are many ways to derail such a phenomenon, and warned that we, or the government, could do that. However, if we all move forward, spending and expanding, we might be able to pull it off.

There are many sticky wickets to navigate in that strategy. For one thing, the banks are certainly not acting--or lending--as though we have returned to normal. The appraisals are low, the terms are high, and the process takes a long time. They also are modifying loans for those who can't pay, but most of those modifications go bad within a year. While we need to think positively, we can't fool ourselves into thinking that we are OK when we are not. My advice to those who have gotten a change in the terms of a loan: Take the deal, then list and sell as soon as you can.

The other big obstacle for a recovery is employment. As long as job creation is low, and layoffs keep going up, we won't have a permanent recovery. It's hard to fool yourself into thinking that the economy is on the upswing if you don't have a job. Whether or not we can fix the jobs conundrum remains to be seen.

Government spending on the national, state, and local level is also a huge block to long term stability. We can't keep spending what we don't have, and it is beginning to look as though our debt could cripple us in the not-so-distant future.

Having said all that, though, we can pull together and pull out of the trench. It takes some faith, some guts, and some hoarded cash. The stakes are big, and each individual action is small, so a lot of us will have to act in order to make a difference on a macro level. But let's hope that we do, so that we can all prosper together.

More Confirmation on Pricing

The lead article in yesterday's New York Times Real Estate section confirmed yet again what real estate practitioners know, but are often unable to convey persuasively to others. It gave examples of sellers who priced their units aggressively in today's market, and kept lowering the prices without success. It contrasted that with sellers who priced so as to seem to be a "good deal", and told about the bidding wars that have been taking place in such cases.

Underlying this phenomenon is a change in the marketplace from the past: Now buyers, who get more information through the Internet and by looking at more places before buying, are more educated about prices than they used to be. They can tell when something is priced to sell, and they know that they have to move quickly. They also know that, often, there will be multiple offers; therefore, if they want to get the property, they may have to bid over the asking price.

This has happened to us so many times that we can all attest to its effectiveness. We cannot, however, seem to convince sellers that they will actually receive higher offers by pricing the property lower. It's not unlike the psychology of pricing store items at sale prices, to stimulate demand and encourage prompt purchases. Of course, the seller can always reject an offer, if it does not meet his or her specifications. The point is to get offers, particularly to get enough offers to assure that fair market value is established.

Separating oneself from the pack is key in this market. Unfortunately for our business, pricing aggressively does that!

A Warmer Winter?

To us, a warm winter is one with a lot of real estate sales! The recent extension and expansion of the homebuyers' tax credit gives us hope for the traditionally slower months. Because of the timing on the new bill, sellers and buyers should realize that they can't wait until the spring market. Buyers who have no home to sell (usually the first-time buyers) can probably put off finalizing a sale, since the contract must be signed by April 30,2010 and must close within 60 days, by June 30, 2010.

Many of the houses listed in the so-called "spring market" are still coming on the market even into May, so it won't be possible to wait until all the possible choices are available for viewing. Of course, if a buyer also has a house to sell, he or she should get started right away, since that could take up the intervening months. In addition, people should factor in extra time for mortgage approval, as we have been finding that the appraisal process in particular is taking far longer than it did before.

All of that leads to the conclusion that buyers who wish to take advantage of the tax credit cannot risk waiting until the spring rolls around. Since sellers certainly need to start soon, that argues for a busier winter than we're used to having. Don't forget that, although the holidays are busy and it's difficult to schedule showings, many homes look their best when decorated. In addition, the snowiest and iciest months are later in the winter, so now is better from that angle. It's also good to remember that it can pay to list when there isn't much around to compete. Once others realize that time is of the essence, you can already be negotiating your sale and moving on to a new purchase.

Busy Time in Relocation

As many people may know by now, we have grown so much in our relocation services business that we spun it off and renamed it Pearce Plus, primarily because we use real estate companies other than our own in areas we don't serve (and, in some special circumstances, in our own area as well). We are serving as advisors and administrators for human resource departments about policies and procedures involved in relocating employees from around the world to New Haven, and, increasingly, from one place to another when New Haven isn't either the destination or the point of origination. For example, we may help a company here do a group move from California to Florida. We are also representing many senior living facilities in moving seniors through our Senior Services division, now also under the Pearce Plus banner. These activities are specialized and deserve to be separated out.

Other companies who do what we do are usually independent entities, although often they are under the umbrella of a real estate company (Cartus, for example) and use their own agencies wherever possible. Although our relocation employees operated indepedently, we thought that renaming our services would make the point more clearly to clients and to the public. We chose this point in time because it's so busy now. After a lull, when corporations were all putting their hiring on hold, we are seeing a spurt of new employees coming into the region. Seniors, of course, are often driven to sell by factors other than market timing, so that market is strong as well.

And, we must admit, it's nice to have something positive to report in these gloomy times!