Evening Open Houses?

I have an idea on which I'm interested in input from the public. We have traditionally done almost all open houses on Sunday afternoons. That isn't true everywhere in the country, since I have noticed that, in Arizona, Saturday seems to be just as common as Sunday. There is an historical logic to the current pattern, since people were usually less busy on Sunday afternoons. The idea of going to open houses seemed to fit in with the practice of taking Sunday drives.

Today's world is different. Children's sports, in particular, take no holidays. Sunday afternoons may be as jam-packed as any other day. In addition, weather is a huge factor. All real estate agents know that there is a bell curve for attendance--if the weather is too bad, no one comes, and, if the weather is too good, no one comes. For busy people, a great day may just be too precious to pass up.

So why not vary the routine? If you are like I am, you may prefer to squeeze in all you can into the work week, leaving bigger blocks of weekend time for other things, especially outdoor activities. In this season of extra light, we could hold open houses late in the day, and interested parties could stop on their way home from work or picking up kids. Even for commercial properties, this idea has appeal. Many owners and managers are too busy to take time out to look at space during the work day. We could serve wine and cheese, and let people take their time after the end of the work day to explore real estate options. Even agents would benefit, as it would leave weekend time to work with buyers.

We have tried this a few times, at least in residential, but it hasn't caught on. I'm curious as to why it has not. What do you think?

Back From Boise

I just returned from Idaho, where the national group of independent real estate companies to which I belong was meeting, and I can report that it's scary out there. We have all cut costs, and are continuing to cut costs, finding new businesses and new ways of doing business, and changing our organizations to adapt to a changing world. No one thinks that it's going to get easier in the next couple of years.

We are probably not that different from owners in many industries. When you look at the stock market, it may seem as though times are better, since many are reporting higher earnings. However, when you examine things more closely, most of the improvement comes from cutting costs and laying off employees, not from raising revenues. Especially when you get to smaller companies, that strategy has its limitations. As one member of our group reminded us, you cannot save your way to prosperity.

While the whole country is affected, it's a good time to be in the Midwest. Those in that area say that it's because what doesn't go way up doesn't come way down, and that may be so. Everyone agreed, though, that some ways in which we traditionally made our profits--traditional brokerage, relocation, and commercial sales--are all suffering, and people are increasingly looking to new sources of income--mortgage, property management, and insurance (which, ironically, was fairly recently thought not to be much of a moneymaker for real estate). Short sales continue to affect all parts of the country, with the Midwest again being better than Nevada and other hard-hit markets.

We talked about the trends, the harsh realities, and the future of our industry. Afterward, we adjourned to do the only thing we could then think to do--drink!

Market Statistics

I just gave an interview to a reporter about last year's numbers for the state of Connecticut. The Commercial Record showed that sales were about even with 2008, while prices were down about 10% from 2008 to 2009. She wanted to know whether that surprised me. It did not.

The above results are typical for markets that are in moderate recovery. When they decline, they decline first in units and then in prices. On the way back up, we see units increasing before we see prices returning. This is also because, when the economy is not strong, it's people at the lower end of the price spectrum who are most likely to buy or sell property, either because they are first-time homebuyers, or because they are forced to sell. These reasons account for the decline caused by a change in the mix of units changing hands.

The other piece of the decline is caused by the value of the same house going down in this market. Most houses, especially when they are competing with foreclosure sales, are selling for less than they would have a year ago. That's the part of the decline I would call same-sale price loss.

If you add those two explanations together, you can see that the 1% a month loss in value that I've been blogging about is not going to go away any time soon. On the other hand, we should see unit sales beginning to rise faster than they did in 2009, particularly as long as the government continues to give incentives to homebuyers. And that's good news.

The Phones are Ringing!

A new year and a new decade have started, and I've never heard so many people say that they were happy to put the old year behind them. We can tell that they've moved on, because our phones, even in Commercial, have taken a big leap from December. It will be a few weeks before we see the results, but, in the meantime, we're busy.

What does that mean for sellers and buyers? It means that people are coming off the sidelines. They've put their lives on hold for long enough. Even in commercial real estate, where there are dire predictions for the next couple of years, business goes on. The leases may be shorter and smaller, but space needs will prevail at some point.

Therefore, there will be competition for well-priced listings. Well-priced is the key here. There are still plenty of listings getting no play, but others go right away. The latter ones are perceived to be good deals. There are also a lot of short sales in the market; i.e., houses where there the proceeds will not cover the debt. Banks are required to get within a certain percentage of fair market value, so don't look for big bargains in that department.

If you're a serious buyer, buy now. You need to leave time to get through the whole sales process, and you don't want to miss out on the tax credits available. And please, don't assume that you can take 10 or 20% off the listed price (see paragraph above!).

If you're a serious seller, be realistic about the price. And list now, to get a jump on the competition.

New Careers

The backbone of the real estate industry has always been people who are entering a second career, and this current economic crisis will surely produce folks who are looking for them. There are several factors that make mid-life entrants successful in real estate: maturity; life experience, including often significant personal real estate and relocation experience; savings, pensions, or other financial cushions; contacts; and transferable sales skills. Our history has shown that people who enter real estate in a down period tend to do better over time, probably because they are forced to learn skills and strategies that those entering in boom times don't always acquire. Also, those starting in the profession now will be training and getting licenses now, and will be ready to take advantage of the recovery just down the road.

It may also be possible for those retooling from other jobs to receive economic stimulus money for the interim period. I am looking into this with local job center officials. Both residential and commercial fields are always eager for new blood and new backgrounds, but it takes time to get up and running, and will probably take longer in this economy for new agents to earn a living selling real estate (In case there are readers who do not know this, real estate agents are 1099 independent contractors, who are paid entirely on commission). However, there are many wonderful things about being an independent contractor, and we like to point out that it is one of the original "equal pay for equal work" industries. You eat what you kill, as we also say. Good agents do well in every kind of market, and this one is no exception.

So, if you are reading this during your job search, you might want to consider real estate, where your relationships and prior skills can help you launch a new career today!

Connecticut Commercial Real Estate Now

We had an interesting Commercial Department meeting this morning. One of the agents said that the selection of good commercial properties in our area is the best that it's been in a long time. Well-located, well-priced buildings are now on the market, for buyers who can come up with the financing. Based on what else we are hearing, that may mean that they have to have cash! Even that is not a total bar, as there are many investors around who do have access to cash or capital from others. While some may suggest that it's best to wait until prices fall further, I'm not sure that we know enough about the stimulus plan to know when that will be (or even if it's now!).

Well, it's snowing AGAIN. Since no one buys real estate in the snow, my only question for the rest of the day is whether yoga will be held. Yoga is one of the arrows in a real estate broker's quiver these days--whatever calms you down is good.