All Filler – No Killer?

CrunchyTacoWhat was that tag line we used to see on posters promoting Rasta bands at the Catalyst in the old days?   All Killer – No Filler?

Wouldn’t it be nice if we could channel more of that sentiment (and mojo) into the real estate inventory right now?  Seems like no matter how many times a day you and I (and I ) go onto the MLS to check for new listings or download our search engine results…nothing much new “of value” comes on. Just the same old same old.

Tired inventory.  Picked-over inventory.  Stale-inventory.  A warmed-over re-hash of stuff that didn’t sell last year.  A strange menagerie of distress properties.  Dubious short sales you can never be sure of.  A smattering of REOs the banks are still pinching out of their systems…starting with the worst first.

The sum total?  An uninspiring catalogue of choices.  Most of which aren’t qualified enough to move anyone anywhere.  As in: Move buyers in. And move sellers out.

I guess we could say it’s mostly Filler…Very Little Killer in real estate right now.  Not many killer views, killer yards, killer locations.  Lowering our expectations even more… there aren’t even many plain old, modest, middle of the road, houses packaged in nice presentations at reasonable price points.  Specially right in the sweet spot zone between $600k and $800k.

I don’t know about you…but it’s killin’ me.

Most Agents out there understand.  They’ve got clients calling. Buyers ready to buy.  Buyers becoming increasingly frustrated with a market that doesn’t seem to offer anything that fits their needs or price range.

And by extension, Buyers frustrated with their own Agents, who become more and more suspect each week they fail to uncover that special hidden gem that’s waiting out there. Somewhere.

It isn’t a Perfect Buyers Market anymore.  But it still could be a good one.  Interest rates are still remarkably low.  And prices are still well below the peak (remember – the Median Price almost hit $800k back in the boom days).  The median is in the low $600,000s now.

What’s missing?   Great places that people actually want to buy.  I think some people call it supply.  Or maybe “effective” supply would be a better term.

I keep having the same deja-vu experience.  Clients who’ve been looking forever, pouring over on-line pictures of homes for sale, who keep calling and asking to see places they forgot they already saw a year ago.

Houses that didn’t work then and aren’t going to work after another 365 days on market and a minimal price reduction.   I call this  “Deja Viewing”. Stare at the MLS long enough and homes start repeating themselves over and over.

So when’s this slow tortuous drip of new properties coming on going to end?  When do the floodgates open? I feel like a kid staring at the classroom clock.  Waiting for recess from a hard lesson. The minute hand isn’t moving. The fabric of time is frozen.

Groundhog Day comes tomorrow – February 2nd.  Will another shadow appear?  Will we have another six weeks of wintry inventory?   Will there be a foreshadowing of a huge shadow inventory we’ll see relatively soon?  Or will there be the shadowy logic of would-be sellers still planning to hold back putting their places on the market, for as long as they can?

Either way, looks like the winter of our buyers’ discontent (vis-à-vis the market’s lack of content)  might run through to the spring.  Hopefully not the summer and fall too – like it did for all of 2013.

Hopefully the shadow will be banished for good by February 2015.  We can’t keep kicking the groundhog down the road forever.


Replaying the Game Film

ReelsLast week we continued rewinding the tape on 2013. Going back over the action to see if we could discern any patterns to help us design a better game plan for 2014.

You never know when you might have to call an audible in the heat of the moment. Specially when the market looks like it’s lining up for another blitz. Things move so fast on the field that it helps to review them in slo mo from a comfortable perch in the skybox.

Here’s a quick summary:

January -  February 2013: Very little inventory.  Rising optimism in the market and real estate’s recovery. Pent up demand. Exceptionally  low interest rates.

March – April 2013:  Rapid escalation into an all-out, over the top, multiple-offer, frenzy.  Think 2005-2006 in terms of rabid intensity.

May to June 2013:  Energy begins to dissipate. Fewer multiple offers. More days on market. Bid-ups aren’t pushing prices quite so high.

IMPORTANT NOTE:  Sold Stats are trailing indicators. When closed sales are published for May and June – it reflects real market activity 30 to 90 days prior. Sales peaked in May, June and July of 2013 – indicating how strong the market was from March to May.

The Median Price jumped from $449,000 to $641,000 in amonth’s time, between March and May -  representing the entire price gain for the year. Alot was happening. Very quickly.

July and August 2013: Vocal enthusiasm still reverberates from early spring but the market begins to level out. Compared to March it feels like a disappointing drop off.  The number of sales dips and the median settles into the low to mid $600s.

On the ground, it seems like the market has run into an invisible barrier. Despite continuing optimism, even the Feds, pull back on their plan to end Quantitative Easing. Economists keep using the phrase “headwinds in the recovery”.

QUESTION:  Are Housing and Real Estate growth supposed to lead the economy out of this recession –like they’ve always done? Or are they waiting for significant increases in jobs, earnings and consumer confidence to lead them out of the downturn this time around? Which is the chicken? Which the egg?

September to October 2013:  Significantly fewer new listings come on. Sellers try to push price points higher while Buyers begin to push back.  Buyers are becoming more particular and discerning about what they buy and what they are willing to spend.  Or can spend.  The number of active listings drops further. The inventory of desirable “quality” listings falls even further than that.  Buyers dig in, trying to muster patience.  Wait for more, better choices to come on.

November to December 2013:  Buyer fatigue is in full force. Many are taking self-imposed timeouts. Fewer transactions.  Sales prices stay steady due to exceedingly low inventory.  Fewer Sellers list during the holidays in traditional fashion.

And we are back to where we started last year. Here are the Important Patterns that have emerged:

- The market is bifurcated.  Homes listed between $500 – $800k continue to experience strong demand.  Homes listed above that are accruing more days on market.  Homes listed above $1mill are accounting for an increasingly large percentage of the unsold inventory.

- The missing piece in a self-sustaining real estate market is Move-up Buyers.  Their healthy participation would allow both supply and demand to increase.  When more transactions flow easier, more people enter the market and pricescan rise.

- Move-up buyers are absent because: a) Sweeping mortgage reforms inhibit flexible loan options, b) Lack of inventory discourages contingent offers that would allow more Sellers to become Buyers and more Buyers to become Sellers.  Lower inventory is self-perpetuating. c) Risk aversion remains strong from the memory of 2008. People are buying beneath their means.

For Arm-Chair Realtors…

chairsWhere were we?  Oh yeah. That was the year that was.   We were reviewing broad brushstrokes of the market’s trajectory in 2013.  With the lofty assumption that having a good feel for our recent past might help us get a better handle on what’s coming in 2014.

On a side note – it always amazes me how many arm-chair Realtors there are out there. One’s who rely on national news stories to tell them what’s happening in their own backyards.

They read quotes from the Case Schiller Index,  articles about consumer confidence and headlines regarding median prices in major metropolitan areas and try to graft the bold font directly onto our own little market in Santa Cruz County. Whether it’s a good fit or not.

Too much big data (including Zillow Zestimates) can lead to a host of small mistakes, bad choices and messy outcomes for individual Buyers and Sellers.  We’re the 2nd smallest county in California and it’s hard to compare the market dynamic on the Westside to Watsonville’s. Or Aptos Hills’ to Scotts Valley’s.   The numbers are all over the map!

Lesson? All real estate, like all politics, is local.  Hyper-local and personal.  Know your sources.  Think global all you want – you still have to act local.

To recap the first six months of 2013… January started with a low inventory of homes. As most Januaries do. The collective sense was that the market had improved and would continue to improve. Interest rates were low.  Spirits were high.

Near the end of February as a little inventory began to filter onto the MLS,  pent-up demand rushed out of the gate. The market exploded.  Multiple offers became the de rigueur m.o. du jour.  Agents, Buyers and those who made the decision to Sell were certain that 2005 had resurrected itself from the grave.

The bulls were off and running.  All kinds of apocryphal real estate stories made their way over the hill from Silicon Valley hot spots –  adding fuel to the fire.

The year before – the much- anticipated Facebook IPO had done a face-plant.  The speculative excitement and fervor that had begun to inflate the market in the early spring failed to materialize.

Come to think of it…we also had little mini-runs in March  2010 and March 2011. But each time they quickly played themselves out.  Couldn’t quite find solid footing. Or momentum to sustain themselves.

But last year, it felt like the market was truly back.  Ready to launch into another long boom cycle.  We prepped for the tsunami of sales that was sure to follow.

But sometime in July, things began to wane.  Almost imperceptively.  Little things.  Like instead of taking a week to receive offers, it might take two or three. Instead 5 or 10 offers maybe we’d only see 3 or 4.  Or even just one.  And that one wasn’t always at full price. Buyers were pushing back. Getting pickier.

Prices remained oblivious to the nuanced shift. Continuing to run on the exhaust fumes everyone was still inhaling.  Seemed like each new listing raised the bar $25k over the last sale in the neighborhood.

But something else was happening too.  Fewer new sellers were coming on board.  The median price was going up, but the number of actual sales was going down. And it wasn’t because buyers didn’t want to buy.

Plenty of people wanted to buy. They just couldn’t figure out how to do it. Financing guidelines had changed.  Those easy equity lines and no qual loans weren’t available anymore.  And fat chance any Seller was going to take a contingency offer from a buyer needing to sell their own house.

Next week: How “Inventory, Inventory, Inventory” became the three most important words in real estate in 2013.


Polishing the Rear View

RearviewIt’s  January already? You mean, magically, mysteriously, somehow, some way we’ve managed to make it through another year in real estate together? Congratulations! Let’s give ourselves a big thumbs up and get it ready and poised to press the reset button for 2014 in the next few weeks.

I guess time flies when you’re having…having….well… er…. whatever it is that real estate has been having this past year?

Not exactly fun.  That’s not the word that immediately comes to mind for 2013.  Some excitement? Yes. Intensity at times? Yes.  A quickening of the pulse? A rising sense of promise? Isolated incidents of some serious shake and bake? Yes. Yes. And more yes.

Here’s a quick snapshot.  Last January, we started with a median price of $485,000 in Santa Cruz County.  The Average Price was $548k.  Interest rates were 3.6%.  And there was a noticeably low inventory of homes available for buyers to choose from – just 460 single family listings including those already in contract but not closed.

By  November,  the median price had ballooned to  $659,000.  The average sales price was $716,000.  Interest rates were at  4.37%. And the inventory of homes was at its lowest level starting any November in the last 16 years.

A 30-35% increase in the median and the average.  On par with any of our previous bull/boom markets.  A huge change. But did it qualify as unmitigated fun?  Nah.

Sometime in late February the market took an unanticipated shift into radical high-gear.  For a brief shining moment, lasting a few months (until around May) it  almost felt like it was 2005 all over again.  (sans all the subprime loans)

A familiar sense of déjà vu washed over the market. Pervading the air. Rousing some of those irrational exuberance centers nestled dormant in our brains that had fallen into a deep trance back in 2008.

The adrenalin was suddenly pumping.  Multiple offers were jumping.  Prices started leapfrogging up as buyers jockeyed for acceptance from sellers who were suddenly strutting their stuff  – happy to feel powerful and in charge again

In a sure sign  Agents were getting more confident and cock-ier,  the majority of new listings coming on to the MLS prefaced their remarks with the standard phrasing:  “No showings until Brokers Open on Thursday. All offers to be reviewed next Tuesday at 5pm.”

Which roughly translates as:  “This listing is coming on today.  You can’t see it until brokers open on Thursday.  Don’t bug us until then. We’ll have Open Houses on Saturday and Sunday.  If you are interested you’ll have one additional day to get your act together.  Then we’re going to review and respond to all offers we’ve received on the next day.  That’s the cut-off . Don’t be a day late or a dollar short.”

After I received 19 offers on a Westside listing in early March,  I wrote an 8 week series on Multiple Offers. How to position yourself. How to write them. And how to negotiate the process effectively after you submit them. Because multiple offers were all anyone wanted to talk about.

Remember the young couple that the Santa Cruz Sentinel wrote about that had written more than 20 offers on 20 different places and didn’t get a single acceptance on anything?  As  I recall,  they gave up and headed south towards San Luis Obispo hoping they’d find a coastal housing market that was less intense than this one.

Things began to settle down and settle out by mid to late June and although the rest of the summer wasn’t quite a swoon, it wasnoticeably less frenzied.

Next week we’ll pick it up and continue to retrace our steps through the rest of the year that was.


Throwing Darts at the Future

DartsThere I was driving home on Highway 1 the other night, ruminating about the future of real estate, when I came to a grinding halt in bumper-to-bumper traffic. As I sat there unmoving, I glanced up at the Caltans billboard near 41st Avenue and noticed a string of strange flashing lights and random words running across the electronic screen.
Suddenly my cell phone rang and an eerie mechanical voice on the other end said: “Pay attention and write.” I was so shocked I grabbed my laptop and for the next three hours a series of messages channeled through the traffic board as I feverishly tried to keep up with my meager typing skills.
What follows is only a small part of all I was shown and told. Predictions for the future courtesy of some Century 23 Agent traveling back in time? Who knows? Fact or fantasy? You be the judge. I’m just the instrument of some higher power with a heck of a cell phone bill.
•    A study by the National Association of Realtors will conclude that making more Pocket Calls does not result in a larger inventory of Pocket Listings.
•    A missing Escrow Officer will be found alive under a massive avalanche of paper after surviving 6 days without food, water or a sanity check.
•    Home Ownership will officially be declared an alienable right of the American Dream.
•    An entire Cabrillo College class in Abnormal Psychology will apprentice at a local Real Estate Company for a year of in-depth fieldstudy.
* As more Americans adjust to simpler lifestyles in the post-recession era, a dramatic increase in the number of Near-Life Experiences will be reported.

*  Sweeping new consumer-legislation designed to protect homeowners will require builders to install Air Bags inevery new home.

* Realtors will expand their efforts to reach Millennial Buyers with cutting edge marketing/ branding techniques like company tattoos and vanity piercings.

* A large pharmaceutical firm will begin clinical trials for a mourning after pill designed to relieve symptoms of Buyers Remorse.

- When Baby Boomers universally declare that old age doesn’t start until 75, defiant 20 somethings will proclaim that official adulthood doesn’t begin until the age of 40.

- Agents holding Open Houses will begin handing out insulated booties to encourage more buyers with cold feet.

- When neuro-scientists discover consumer brains respond more directly to smells rather than sights and sounds,  more Aromatherapists will become Home Stagers and make “Sell the Smell” a common catchphrase.

- More frustrated homebuyers will turn to online Virtual Dream Homes in thecoming year, where their Avatars can easily move into custom comfort. California will also begin exploring a Virtual Property Tax.

- EXTREME MORTGAGE: HOME EDITION will make its debut on Reality TV. First time buyers will compete for loan approval while a panel of celebrity underwriters comes up with a new set of performance anxieties each week.

- Remote Viewing will be just one of the innovative new forms of Psychic Marketing that begins to replace old fashioned, web-based, virtual tours.

- A prestigious group of spin-doctors will accuse the National Association of Realtors of implanting false market memories in the minds of vulnerable buyers and sellers.

- Conversation Pits will begin making a comeback in American homes.  They’ll be located in lead-lined safe rooms, where no electromagnetic wifi or cell phone frequencies can penetrate.

- A class-action lawsuit against Zillow will reveal that the company’s online real estate values are actually derived from white collar sweatshop employees in India throwing darts, rather than a series of secret mathematical algorithms.


Home for the Holidays

HomeHolidaysA Meditation on Home-Ness for The Rebele Family Shelter

Life is endlessly rich and full of irony. Things don’t always turn out exactly as we plan or hope. Sometimes outcomes are the opposite of what we expect. There are twists andturns along the way. Juxtapositions that mysteriously occur.

Never underestimate irony. Embrace it. Irony is one of our greatest teachers. It always reminds us that everything has the seed of something else inside of it.

Given a few chapters in my own history, I could say I’ve looked at home from both sides now and queue up a Joni Mitchell record. But that would be too corny and too simple.

We are all just people on the continuum. Maybe we are and maybe we
aren’t homeless. Maybe we have a roof over our heads right now. Maybe we don’t.

What I can tell you, both from being without a home and then from working as a Realtor and dancing so closely with so many people going through incredible life transitions isthis:

Home isn’t just an either/or thing. Home isn’t just an all-or-nothing thing.
It’s not just home-less issues we are struggling with.

We’ve got lots of “issues” as they say. The entire country is locked in a steel-cage wrestling match with its own demons.  The homeless issue is just one expression sitting at the end of the much larger spectrum of home-ness issues we face.

Home-ness is about learning to appreciate our own unique relationship with heart and home. Even as the culture all around us is busy becoming more discombobulated. More out of touch.  More out of whack with what home really ought to be.

That’s the challenge. The extra assignment of home-work we all need to
keep doing.  If we think of homeless people as somehow being outside the mainstream, existing in some other strange dimension apart from everyone else, then they become the OTHERS. They become less than – HOME LESS THAN the rest of us.

My contention is that there just isn’t that much that separates any of us journeying around the great wheel of life. There’s almost no degree of separation.

Just a bunch of tiny threads. Small choices. Snap decisions. Brief moments in time.  Getting pulled and tugged in different directions while things remain in constant motion and the story keeps turning all around us.

Born in 2005 at the (maybe not uncoincidentally)  of the craziest real estate market the world has ever known,

The Rebele Family Shelter has done its home-work. Tirelessly helping to bring more than 450 families back to home. Helping them find places of re-entry into the world.

But an ironic thing happened on the way to all those families finding their way back. The world itself was spinning out of control.

Between and 2008- 2012 Millions of people were losing their homes in the bursting bubble of the late, great real estate boom. People losing their homes became a national pastime. A
sad truth reflected in the stats on the front page of the paper.

The world has been drifting out of orbit, further and further away from home and heart all this time.

There was leverage and low interest rates. Equity lines and negative amortization. Subprime loans and credit default swaps. People began viewing their homes as cash cows andmilked them for all they were worth. There were ego homes and monster homes and homes that were getting flipped and re-flipped on Reality TV.   Everyone drank the kool-ade.

And ….now…. we’re here on the ultimate flip side of all that flipping. And not
surprisingly…we’re flipped out. We’ve got ghostly subdivisions and sprawling tracts of homes sitting empty in the fields of the Central Valley. And ringing the outskirts of Las Vegas, where the betting capital of the planet lost the bet. We’ve got bailouts and a credit crunch. We’ve got late payments and notices of default. Foreclosures and short sales. Declining values and shrinking nest eggs.

And meanwhile… Rents are rising as fewer and fewer people can afford to be
homeowners. And even more people are living paycheck to paycheck. And more people are struggling to make ends meet – one small disaster away from a much bigger disaster.

Is there anyone that doesn’t know someone who is underwater? Late on their payments? In default? Or in foreclosure? Or in the middle of a short sale?
Or worried about some or all of the above? Anyone?

So there you have it. Home isn’t something that happens while we are busy making other plans. It is right here. Right at the center of everything we do and everything we are.

While all this is happening, someone, somewhere has to stay home and keep the
home-fire burning. The hearth warm. Keep the porch light on. Continue to leave a trail of breadcrumbs for others to follow.

Somebody has to stay in the trenches and keep it all simple. Helppeople with food…shelter….warmth…clothing,…. showers….safety…a place of refuge…
That’s the work of the Shelter. To maintain balance and hold the center in the face of the maelstrom. Hold the center.

So We’re all here in one way or another to pay homage to home. Not to any particular story abouthome…but to all the stories about home.

This is a celebration of some of the beautiful ways that the people of Santa Cruz have found to share home with each other… My past and present have given me a deep appreciation for all the things that home is for people. A deep reverence for its meanings.

The trick is to remain mindful of it all. To be able to hold it all in your heart. The good, the bad and the sometimes ugly. The strange, the touching, the sad and the glorious. All of it. All of it at the same time. Because all of it is what fills our hearts up.

I’m convinced that in order to do this work day in and day out, we each
have to keep reminding ourselves where home resides inside of us. We have to keep going there and renewing that place.This brief meditation was a small metaphor for what the Rebele Family Shelter does every single day. It slows things down so folks have time to think and perhaps even more important, time to feel. Time to breathe . Time to accept and acknowledge the help of others. And time to remember and appreciate those simple things about home that can mean the whole world to someone in need.


Just the Tip of the Iceberg

IcebergContinuing to wax philosophically about the nature of real estate as we head into the home stretch of 2013…  If you want to catch up or just adjust the font size to make Real Estate of Mind more legible for your aging eyes, go to

Buying or selling a home is never just about buying or selling a home.  There’s always a more interesting and meaningful story afoot. Weaving it’s way in, around, over, under sideways, through the more mundane aspects of the “real estate process.”

The house, the offer, the negotiation, the loan, the escrow – all these things we like to think real estate is about are just stage props and window dressing/house addressing along the way.

They are tips of much larger icebergs that lie beneath the surface of every situation. Varying in size, shape and fathomable depth.  But always there.

Ask any Agent. They’ll tell you. Each home sale could be written as a novel or Greekplay.  Every transaction is full of fate and destiny. Pathos. Catharsis. Tragic heroes. Hubris.  Change of fortune. Revelation.

Each could easily be a dramatic mini-series.  Or an entire season of compelling Reality Realty TV.  Because every home sale contains a unique story about the human beings involved.

People going through major life transitions (birth of twins, marriage, divorce, death, aging, health crisis, job loss etc. et al.)  Ones that involve the largest asset they’ll ever own as well as the core thing that embodies their deepest feelings about safety, comfort and refuge (a.k.a Home).

If only it were as simple as those young yayhoos on Million Dollar Listing make it out to be.  The true cost of living index is much more complicated than that.

So here’s the thing:  The real pay-off for me as a Realtor is that I get to witness intimate stories about change that happen every day.  And after 25 years, I’ve amassed an amazing library of true stories.

Narratives full of life’s richness. Heroic feats.  Stupid human tricks. People slaying their dragons.  Snatching defeat from the jaws of victory. (And the other way around too!)

Hundreds of first-hand stories about choices and decisions people made as they came to the crossroads or navigated the forking paths of their lives on the planet.

I feel both blessed and cursed at times.  Bearing witness to the good, bad and ugly of human nature daily provides a powerful vantage point but also a precarious perch in the eye of the storm.

What comes out of all these individual stories is a strong feeling for the pulse of the culture that surrounds us.  The culture we don’t always notice we are part of while we are busy participating in it. Sorta like fish swimming in water.

What also emerges is a glimpse of the secret dreaming that is going on all around us. Beneath all the exterior trappings people cloak their lives with. People think a lot ofstuff.  And people say a lot of stuff.   But real estate is where the rubber hits the road.  In order to do real estate, people actually have to do stuff. Home and its accompanying life transitions are where the nexus of change resides.

It’s a fascinating irony that we live in a world that’s linked much closer than ever before – at the same so many people feel more alone and isolated than they’ve ever felt before.

Next week we’ll explore how people’s desire for more real connection in the world is being reflected in the real homes and real quality of life they are choosing through real estate change.