Where are the Young Real Estate Agents?

We spent a good deal of the morning brainstorming about recruiting.  Nationally, and for us, the average real estate agent is in his/her late 50s.  Since the market is now being driven by first-time homebuyers, and since they are mostly in their 20s and 30s, there is a disconnect between professionals and  clients.  Most of the agents are digital immigrants, and might have kids the same age as the buyers, so it would certainly be good to develop a pool of younger agents.  Younger buyers, and sellers, have vastly different expectations about technology, about time, about how to shop for anything, and about risk.

When we thought about recruiting agents to match this profile, we realized that there are many aspects of a real estate career that would appeal to Gen Xers and Millenials.  Unlike the Greatest Generation, they aren't expecting one steady career for a lifetime, so the ups and downs of a commission-based agent wouldn't necessarily trouble them.  Unlike older workers, they aren't tied to an office or a standard work day--they could start at noon if they were serving sellers and buyers who shared their hours!  They wouldn't be limited to two weeks of vacation every year, and their dress code would be flexible.  In all those ways, it's a perfect career for a younger person.  And, if their parents have to support them in this job market, as they graduate and look for work, why not enter a field where hiring--and potential--are unlimited?

Are Prices Starting to Rise?

As with many things, prices are local--very local. In addition, price indices are rarely apples-to-apples comparisons.  They usually take prices on one date and compare them to prices as a whole on another date.  For example, the Case-Shiller Index actually takes the total sales of all the property in a city and compares it to the total value of the property sold in that city in an earlier period, to calculate the rise or fall of real estate values over a period of time.  That means that it's hard to know what would happen to one specific property when it got sold or resold.

In the current market, sales are being driven by first-time homebuyers and are strongest at the low end of the price spectrum.  Overall, prices are flat or still falling slightly, although this does lag in time, due to reporting delays.  However, we are beginning to see appraisal problems again, which had not been occurring in recent months.  That indicates that prices are rising, thereby pushing up sales prices above levels of past reported sales, which are used by appraisers to calculate value.

What's the bottom line?  Prices at the lower end are being squeezed by supply and demand factors, and are probably heading up.  Higher-end sales are still waiting for that phenomenon to take place.

Should We Let the Market Fall? Part 2

In my entry yesterday, I blogged about the NYT article talking about what's happening in the current market (very little) and what could or should be done about it. The first issue I discussed was the possibility of a double dip, and whether that would happen. Today I have a suggestion about the type of governmental intervention that might prevent further declines.

All of the efforts to date ($23 billion in tax credits) have been focused on homebuyers, particularly first-time homebuyers. As I have opined before, first-time buyers are the most likely to buy no matter what market conditions might exist at the time they are ready to purchase. Since interest rates are low, and prices have come down somewhat, and since they have nothing to compare those prices to, they should be motivated already. The problem is that there is little well-priced product out there for them to buy, low sales notwithstanding. The inventory lacks homes which are not even being marketed due to current conditions, and many that have been on the market too long and for too much.

Why shouldn't the Federal government consider a one-time tax credit for sellers, maybe as a percentage of the loss in value that they have incurred, or maybe as a credit when they both sell and then buy? Many people would not even qualify, just as many buyers made too much money or bought houses too expensive for the homebuyer credit. Some have lived in their homes for so long that they would never lose money when selling, and some will sell but not purchase again. However, it would be a strong signal from the government that sellers need to lower prices before the market can move again. If that could be accomplished for the same price tag as we incurred giving an incentive to buyers, it might free up the whole sales chain. Buyers who can't buy because they already own a home they can't sell would then trade up or move, and people who just can't stomach not getting what they would have gotten a few years ago might feel that the tax credit made up for that, at least in part. There are many details to be worked out, but something needs to happen, and I don't think that even job creation will change the perception about the current state of real estate without some sort of outside help. Waiting around is costing us all time, money, and sound sleep.

Signs of Life

Although the temperature still says winter, it seems to be spring in Connecticut at last! The phones are ringing, people are listing their homes for sale, and buyers are out in force. It's still very hard to keep transactions together, particularly through the inspection and financing stages, but at least we are seeing contracts being written. It's more likely to see them coming in on properties that have recently come onto the market, however, and less likely to see them on properties that have been listed for months or years. Yes, it's still a buyer's market for the most part, even though there are a few neighborhoods where the supply is limited.

We are seeing mortgage requirements steadily rising. It now takes a FICO score of 720 to get a jumbo mortgage, for example, and PMI is sometimes not available unless the buyer is putting down at least 10%. These factors make me think that buyers should feel a little more urgency; after all, it's the financing costs that drive most purchase limits.

This post will be brief, because even my phone is ringing much more, and I have lots to do!