Recovery Doesn't Have To Be Perfect

While people seem to feel lately that we have avoided a "double dip" problem, there are various conflicting statistics and opinions about the actual health of the economy.  From our point of view, we can see that the real estate sales units and average prices in our region haven't gone up very much in some cases, and that prices have gone down in many areas. 

This doesn't necessarily mean that the price of a house is still declining.  Very few of the sales are repeat sales of the exact same house, so it's very hard to tell what is happening on a micro level.  Since the current market includes so many first-time homebuyers, the average and median prices are bound to be lower, as they are skewed to the lower end.  Also, there have been so few high-end sales in some towns that it's hard to have a meaningful average. 

What is true is what we're hearing.  We aren't hearing as many people say that they are waiting to see whether prices go down further.  We aren't hearing as many people say that they are renting because they can't sell the home they left behind when they relocated.  We aren't hearing as many people talking about another major decline.

While it is true that buyers still expect good "deals", often on homes that have already been priced to sell quickly, and while it is true that they want every detail of the home to be perfect, the conversation has shifted slightly.  The supply of houses on the market is declining around the country, and is notable in certain price ranges, at least for new listings.

The characterization I would use to describe the shift in mood and outlook is that we have switched from a "glass half empty" mode to a "glass half full" one.  That means that, while prices haven't risen, and while the market is a long way from roaring hot, people seem more balanced about the future of the economy, and their own futures.  Not exactly sanguine, but calmer.  Maybe it's the "new normal", or maybe it reflects a generation that barely remembers a skyrocketing real estate climate.  No matter the cause, we're glad to see it, and we're glad to be in a more positive selling environment at last.

On the Campaign Trail

I was invited this noontime to a lunch for women business owners with Linda McMahon, the U.S. Senate candidate.  We had a very nice meal at Cave a Vin, a new wine bar on State Street in New Haven.  Ms. McMahon is doing a listening tour of the state to hear what problems women businesses are having in the current economic climate.  Several things emerged as themes:  the cost of governmental regulation compliance; taxes; health care costs; and, most of all, the sad state of the economy.  The last item comes down to jobs, of course, and is most evident in what sector?  You guessed it--real estate.  It was surprising how much effect real estate has on the business fortunes of firms in other lines of work.  Real estate matters to everyone. 

It was also clear that many of the businesses represented were not making money at the present time.  Some owners were not paying themselves (this was more common than I would ever have guessed).  Others were retooling their firms, and their skills, to find new and different ways to attract revenues.  Those in retail spoke often about the lack of disposable income among their patrons. 

We didn't expect any immediate or easy answers, and we didn't get them.  To her credit, Ms. McMahon made no campaign promises, took no pot shots at incumbents, and seemed really to be there to listen and learn.  We all learned, and the enduring message we took away was that women needed to be cooperative and help each other succeed.  That is something that men should be able to buy into as well!

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.