Monthly Archives: August 2010

Murphy’s Law of Real Estate

I held an open house this week. It reminded me once again, in no uncertain terms, with a decisive whack upside the head and swift kick in the pants – no matter how hard I try, control is just an illusion.

There are immutable laws that govern the Real Estate Universe and Murphy’s Law is one of them. In fact, it might just be the prime directive.

Realtors out there will recognize the phenomena. They’ve all experienced it  before.  I’ll recite a few examples culled from the karmic repertoire.

Remember holding that open house at the beautiful, idyllic country setting so immersed in the soothing sounds of silence? Like clockwork, the 1pm witching hour struck and some self-styled Paul Bunyan within easy earshot, decided to rev up his chainsaw and massacre any semblance of tranquility you hoped to promote.

How about that expansive, manicured mini-estate in the middle of town you invited people to visit? Right on cue the neighbor’s leaf blower launched into decibels of overdrive. You couldn’t hear yourself think let alone mouth all those glowing descriptions about how peaceful and quiet the ambiance was.

Barking dogs? Droning generators? Impromptu road repairs?  Unanticipated septic failures? Newly junked cars? Yep. They are all in play –  just waiting for you to go to work.  The big party at the frat house down the street? Somehow the open keg always runs out of control completely in sync with your open house.

And those open houses you were envisioning for that ridgetop home you just listed? The one with the incredible ocean views? Might as well hire yourself out to the City Water Department now. The drought is over. Rain clouds are lining up across the Pacific. Loch Lomond will soon be full.

When Realtors prepare to showcase a great home they strive for perfection. Lights on. Fresh flowers in the vase. Soft music floating in the air.  But somehow, the very act of making best laid plans is an open invitation for the fickle gods of fate to step in and wreak havoc without bothering to take off their shoes. Why? Obviously, some of those tricksters residing on Mt Olympus get a huge kick out of punking us real estate mortals on a regular basis.  Imagine Ashton Kutcher in the role of Zeus.

Suffice to say. Real estate fortunes can change as quickly as the weather does. Literally and figuratively.

So there I was. Planning a little soiree at one of the most unique properties I’ve ever seen.  Two decades in the biz and nothing even remotely like it.  A half-acre peninsula stretching 270 feet out into the water. A private bluff top providing front row seats for riveting primetime views of every significant feature there is, along the entire curve of the Bay.

In my mind’s eye, all those Brokers with all those discerning beach-buyers were going to answer my call to convene for the Wednesday night sailboat regatta. They would stroll leisurely out to the end of this special point of land. Feeling the breeze while shooting the breeze. Wine glasses in hand, they would watch in awe as billowing sails glided past. So close they could almost touch them. Each sail a harbinger of the big sale to come.

What could have been a better augury than the record 101 degree heat we had on Tuesday? Wednesday morning we woke up again to bright sunshine. All was right in the heavens. Until the 11th hour of course – which is roughly 5pm – regatta time.

Suddenly out of the blue, there was a wash of grey and a confederacy of disaster.  An eerie fogbank blew in from nowhere, blanketing our erstwhile banana belt in a soup so thick you could barely see 20 feet ahead. The few boats that actually made it out past the harbor jetty were fleeting shadows.  Mary Celestes  moving in and out of the mist like ghostly apparitions

So now that real estate is no longer the great pulsing economic engine driving the entire world’s economy, I think I’ve discovered a way to still make myself useful  – thinking globally while encouraging people to buy locally.

I’m going to hold this one of a kind, once in a lifetime, rarest of properties, open for as many sailboat regattas as I can. By doing so, I’m going to help halt the progress of Global Warming. Take that – you capricious, unruly gods of real estate. There’s only one way you can stop me from doing too much good.  You better make sure this property sells fast!


The Never Ending Story

Help! I can’t hear myself think! They are tearing the roof off my neighbor’s house. My inner sanctum is invaded by chaos. Overrun by the cacophony of discordant strains smashing and crashing through my windows as the construction crew tries to put another story on.

But it’s not the sound of all that ripping away next door that is wrenching the roof off my brain.  True, I can’t believe what my ears are hearing. But what I really can’t believe is what my eyes are seeing in the news. That’s the real chalk squealing on my optic nerves. The creepy feeling making me shudder and jump out of my skin.

The story that contractors of spin are trying to put on top of the real estate market is driving me stark raving mad.

What story?  The one that starts with…According to the Chronicle, home sales in the Bay Area slumped 23 per cent in July. That’s a belated “told you so” that I take no pleasure in.   It seems the news is finally catching up with the truth that all of us in real estate have known in our guts these past months.

We are reminded, for the upteenth bazillionth time, that what most people think they know about real estate is woefully out of touch with the real thing. Numbers and prices quoted in the middle of August, regarding sales recorded in July,  have almost nothing to do with where the market really was in July or even June for that matter. Let alone where it is at right now.

It is all trailing information folks.  Days late. Dollars short. July sales tell us what the market was doing 60 or 75 days prior. Way back in April and May, when those willing sellers were (or weren’t) coming to terms and making deals with those willing buyers.  And the market wasn’t going all that well then, apparently, despite persistent rumors to the contrary.

We’re almost five months behind the curve now.  Turns out we’ve been running on fumes. The market hasn’t been that busy since mid spring. But the Industry itself and the Feds have been very busy constructing a different story built on lag time.

Yes, we had palpable energy coursing through our veins back in March.  And all those applauding pundits of positivism (perception always creates reality until the house of cards falls and it doesn’t anymore) didn’t let the opportunity pass. They jumped right on it.

They’ve been busy pumping up the volume on real estate ever since.  Trying to leverage the hearts and minds of the marketplace into believing that everything was back  to normal.

So here’s the part that really drives me crazy.  They are still at it. Foisting more missed and dissed information on those who just wanna/gotta believe.

Now that we know sales have been down, what’s the story being used to explain that story?

The Brokers of Illusion have the perfect excuse and aren’t embarrassed to use it. Their answer is simple.  There’s nothing wrong with the market itself.  The end of the Housing Tax Credit in April is the real culprit. The expiration of real estate’s very own cash for clunkers program has somehow sapped the will of those who would otherwise be lining up to buy.

The notion that the loss of  an $8,000 tax credit has much to do with a marketplace like ours is dumb. Dumber than dumb.

Maybe, just maybe, the notion of a one-time rebate of $8,000 could be construed as compelling in a market like Iowa where the price of a decent home is $120,000. But why would any buyer of sound mind and judgment be sold on buying a home, in a place where the median price is $500,000,  just so they could get a check back for that relatively measly amount.  Doesn’t compute.

The average price and median price in Santa Cruz have both fallen 4 or 5 times that number since April.  Interest rates have set record new lows for 9 straight weeks now. Seems like both of those very true facts are way more reason for buyers to step up and buy than the end of the credit would be a reason for local buyers not to buy.

Yes, I know there seems to be a correlation in the time line –  end of tax credit and loss of steam in the market. But could it possibly be that the perfect storm of lack of jobs, an incredibly tough loan environment, all the powerful fears that buyers still harbor and an overall economy seesawing on the cusp of a double-dip recession has more to do with the new numbers we are finally seeing?


Buy Buy Baby

Stay with me on this one folks. It sounds a little crazy  – but what else is new when it comes to my own or anyone else’s real estate of mind. It’s all stranger than fiction.

Buying a home can feel remarkably similar to being pregnant.

There I said it.  I can hear those pregnant pauses now. Groans welling up from today’s studio audience.  As a gender-related note of apology, I promise to pass a large kidney stone in the future just to make amends.

First, there’s the obvious. The timing is right. The stars are aligned.  The seed of an idea issues forth out of a gleam in the eye and suddenly something inside you takes hold.  Out of the blue you are on the cusp of one of those great journeys in life.  A transition that is both exhilarating and a little scary.  Part of you tries to grasp the whole notion of what it means to leap into this particular variation of the unknown.  There’s an inkling that things are going to change in ways you can’t even imagine yet but it’s all a bit abstract at first. Am I talking about buying a home or having a baby?

The inception of the idea is followed by a long gestation period, as that initial spark of desire begins to grow and take shape.   No one conceives of buying a house one day and then simply runs out to make it happen the next.  Real estate isn’t designed to work that way.  And even if it could, most people need time to adjust to the whole notion of buying a house. What will it look like? Will it be a boy? Girl? Ranch style?  Victorian? Buyers, just like future parents, imagine a million different scenarios in their heads before what actually comes to pass, comes to pass.  There are early, formative stages of development along the way that everyone has to go through.

The obvious aside, here’s the way that buying a house is most like being pregnant…  Expectant mothers as well as expectant buyers will all recognize this particular phenomenon.  Moms, do you remember how, when you were most obviously pregnant, total strangers seemed to think nothing about coming up to you in the middle of a public place, completely ignoring whatever sense of boundaries or personal space you might have,  in order to reach their hands out and feel your belly?

In addition to the physical intrusion, most of these same people were incredibly eager to launch into their own detailed accounts describing the good, the bad and the more than you ever really wanted to know, of their birth experiences.

It happens all the time. Well-meaning people just can’t help it. There’s some deep archetypal connection they feel that makes them blurt things out without considering the appropriateness of what they are saying.  Does an expectant mother really want to hear about 36 hours of grueling labor and all the things that the delivery doctor should or should not have done?

Now step into the metaphorical maternity shoes of a buyer going through the growing pains of  looking for the right home, making an offer,  being in escrow, having inspections, wrangling with the lender  – ” the full catastrophe” as Zorba the Greek might have put it .
See if you don’t recognize the distinct variation on a theme.

Announce to the world that you are buying a house and suddenly friends, relatives, cube-mates, acquaintances and a boatload of imperfect strangers are popping  up everywhere, coming out of the woodwork to insist on offering you their own unsolicited reams of advice about this, that and every other thing that they may have experienced themselves while buying their home. No detail is too small. No fear is too big.  No odd, weird or completely crazy story is too odd, weird or crazy. Jeckyll and Hyde tales abound – ad infinitum ad nauseum.

People who have been down the road to home ownership before seem to view themselves as kindred souls.  Defacto experts with a deep, misguided sense of  shared experience that gives them unspoken permission to recite the Home Buyers Bible –  chapter and verse.

Dig in Buyers. There’s going to be a deluge of unsought opinion, un-sage advice, out of context comment and rampant recommendations coming your way.  It’s going to make your head spin until you think you are on the verge of doing a Linda Blair.

If you let it happen that is.

What’s the best advice for buyers trying to birth a new home? Don’t tattoo it on your forehead.  Keep it to yourself as much as you can. If it gets out, turn down the sound. Tune out the armchair quarterbacks.  Just say no to all those that want to relive their buy-gone days through you.  In the end, if you really want to own your own home you have to start by owning your own process.  Become your own mindful midwife. It’s going to be your baby,  not anyone else’s.


The Harmonic Convergence of Dissonance

Sometimes Real Estate of Mind is like a reflection of the unlikely residential neighborhoods I wander through on a daily basis while  “doing” real estate. Or…when real estate is “getting done” to me.

Odd juxtapositions of eclectic streets, pockets of ambiance, micro-climates of weather and demographics are stitched together in a diverse fabric that flows with abandon  through the Reservation we all know as Santa Cruz.  Here, the good, the bad and the funky co-exist in a harmonic convergence of dissonance.  Or as I recently heard one disgruntled couple call it when they were looking at “cheap,” half million dollar, fixer-uppers – “Shanty Cruz.”

>From beach blanket bungalows to stucco boxes to mock English cottages  to ego monsters to redeeming eco homes it’s easy to jump from thing to thing to thing when traveling through the outer and inner landscapes of real estate.   So, step up to the tapas bar folks.  Put your bibs on for a few bytes.  We’re just driving down the smorgasborg of  the real life that feeds my head.

The good news? There’s a pulse!  There are actual living, breathing, qualified buyers fogging a few mirrors out there. Logging a few sales.  Which is to say, it suddenly feels a whole lot better than it did just a few short weeks ago when we were still suffering a hangover from the June Swoon. This is one of those welcome release points where, for reasons we could probably speculate about forever, a number of wanna-be buyers have decided to get their collective behinds off the fence and jump into the flux with their bucks.

Well, not completely with their own bucks. There’s usually a lender involved. Is it getting any better in terms of the credit crunch – which is just a fancy term for banks looking for any excuse not to lend anyone any money? Nah.  It’s one of those perfect paradoxes. A parable for our times that continues to leave everyone scratching their brains and wanting to scratch their own eyes out when they see the list of absurd loan conditions lunatic underwriters keep coming up with. We’ve got incredible interest rates as long as borrowers are willing to submit to a mild form of water-boarding to access them.

And speaking of odd and interesting paradoxes and strange pickles wrapped in riddles inside of enigmas…isn’t this the exact right juncture for “organic” sellers to get their properties on the market asap?  Here’s my fractured logic: Enough bargain-hunting (some say bottom-feeding) buyers have experienced the down side of short sales by now. They’ve figured out that short sales aren’t really sales at all unless they actually happen. A reasonable percentage of them must realize that properties that can actually be counted on to close on time with some contractual assurance – i.e. – those owned by real “organic” people – have extra value.

Right Buyers? Bird in the hand? What do you want to do? Wait for another six months while the first lender beats the crap out of the second lender and tries to force a short sale? Or even longer because they are all busy scouring the planet to figure out who actually holds the paper in the first place?  Or…would you rather end your holdover in the emotional purgatory of a never-ending escrow, take  advantage of the rates and be one of those buyers moving forward in their lives? Your choice. I’m just asking.

Yes, I know HAFA  is going to reform the short sale process one of these years and a tsunami of successful loan modifications are right around the corner and banks are going to release their shadow inventory momentarily but I’m not ready to believe that the checks and balances are actually in the mail yet or that the process is really ready to respect me in the morning.

And … what are the Feds going to do as we approach the new September 30th deadline for Buyer Tax Credits and they realize that a ton of those transactions which didn’t close by June 30th  still aren’t going to close three months later? Are we looking at another extension of the extension that was already extended?

And…in a County where the median price is over $500k, can we really blame the expiration of Tax Credits for the dip in sales figures we saw in June? Maybe $8,000 means a whole lot in Iowa where homes are selling for $100k. But when savvy Buyers sat back and saw prices fall in chunks of $25k over the last nine months, why would they scramble to get in under an arbitrary deadline to save so much less?

That’s it for this Saturday folks. Just a few random thoughts for a seemingly  random real estate market.  If you have a few thoughts of your own, don’t hesitate to share…