It’s not even noon yet and my synapses are already misfiring on all cylinders. The steady stream of data coming in feels like a bunch of square pegs trying to shove themselves into a dart board full of small, round, empty holes. My right and left hemispheres might as well be ships passing in the night of day because my deepest gut instincts are in direct disconnect with the spin of information orbiting a world that’s already wobbling woozily around on its own axis in full tilt boogie.
There’s an image of Adam Smith’s invisible hand of the marketplace, looming large on a video screen inside my head. It keeps cracking eggs open into a sizzling frying pan while the voice-over in my inner ear keeps saying …”This is your brain on real estate…Any questions?”
Well…yeah. I’ve got some questions. A lot of questions. That’s probably all I do have at the moment. Thank you very much.
Like…what happens when the bottom of the market is going up and the top of the market is coming down at the same time? What do we call that? And how do we explain that to our clients? Do more and more people and places just get stuffed into a never-ending zone of price and property compression somewhere north of low and south of high?
How dense can it get in that space before the gravity of the situation gives – in one direction or the other? Can the stirrings at the bottom of the market push the top back up? Or will the weight of all those pie’s hovering in the sky eventually get so heavy, they’ll force a carefully crafted façade of positive perception to fall to earth?
Is there a second dip coming to top off the cone of silence surrounding the shadow inventory of bank-owned properties getting held off the market? Not to mention the shadowier inventory of loan modifications not getting done, notices of default not getting foreclosed on, delinquent payments not getting issued notices of default and the next cycle of 5/1 Arm’s getting set (and reset) to appear right around the corner?
Why has the Mortgage Application Index (google it) fallen so abruptly at the same time interest rates have dropped so remarkably low? Money at 4.5%?!! Weren’t they just warning us that rates were going to go up when the Fed Mortgage Purchase Program ended?
Shouldn’t the ranks of eager purchasers lining up to get their pre-approval letters be growing by leaps and bounds? Aren’t more buyers out there chomping at the bit as summer inventory begins to expand right in middle of their very own buyer’s market?
And while we are asking the questions…even though it is probably true that the market is seasonal and the sellin’ is easiest in the summer when the catfish are jumpin’ and the cotton is high…isn’t it also true that more homes (as in a larger percentage of properties that are actually listed) don’t sell in the summer too? So which is it? Do more homes sell in the summer? Or do more homes not sell in the summer? Or both?
Is this just all about the end of the tax credit for first time buyers that expired on April 30th? Would first time buyers really have waited until the second or third week in April to get their loan applications in? Wouldn’t most of them have started their processes sooner? Did we just move the time horizon up on purchases that would have otherwise happened later? Like a cash for clunker homes program? Was this just another version of all of us collectively kicking the can down the road to see if something else might happen in the meantime to pull our asses out of the fire?
Will the real, real estate market ever stand on it’s own again without huge transfusions coming from the Feds? Or without interest rates being propped artificially down? Will the private sector be able to make its own rain again? Without a house of cards built on liars loans and credit default swaps.? Can it pick up the loose reins of laissez -faire even if it feels very laissez-unfair in the short term?
Is there some secret escape route on the horizon the helps us get out of the Pavlovian Paradigm where we can’t help robbing Peter to pay Paul with yet one more hail Mary pass that leaves the answers blowing in the wind for future generations to figure out?
Time will tell. But not any time soon. In the meantime, I’ve signed up to have my brain frozen at the cryogenics lab. Wake me up when we get there.