Monthly Archives: December 2010

Reading the Headlines

Are we there yet?  Settled in?  Hunkered down?  Resigned and signed on for the “new normal ” of real estate?  The same old that continues to look more and more like the same old as more time goes by?

Our regular ration of news about the state of the market is due out any day now.  A smattering of real estate-related stories will start popping up in the public domain presently.  It’s the little flurry of activity that always accompanies the release of the previous month’s sales data.

Don’t blink, because the half-life of these stories only quickens the pulse and fogs the mirror for a day or two.  And don’t hold your breath either, thinking that the UPI guy is going to be delivering any big gift-wrapped packages to your front door.  As we wander further ahead into the Ho Ho-Ho season we are going to find ourselves sinking further into the Ho-Hum season as far as real estate is concerned.

Status quo seems to be the current quid pro quo. Stories sounding more like non-stories will be rearing their nondescript headlines in the daily press.   Dressed in bold font. Spun this way or that to foster an air of enlightened importance.   But in the end, there won’t be a whole lot of new news fit to print.  Certainly not much news to use in any meaningful way for anyone trying to determine their own individual path forward through life.

Maybe there’s some brilliant phrenologist out there with the ability to get a good “reading” from those upcoming headlines when they appear.  Tickle some kind of intuitive sense or future perfect tense out of them.  As for the rest of us?  I’m guessing most Agents and Buyers and Sellers are going to remain hovering in the dark for quite awhile longer.

Yep, the jury is still out even as the results are trickling in.  Just as inconclusive as they’ve been. And had been before that. The median price is still lodged in soft tissues of the marketplace – between $500k and $550k.  The number of sales has ratcheted down a little but not by a significant amount considering the small local sample  – 140 to 119 year over year.  The average price is still residing in the familiar confines of the same ballpark  -$572k – one that simply isn’t allowing many home runs.  The ubiquitous Unsold Inventory Index is holding steady in the 6-8 month range, the suggestion being that prices, for the moment, remain “stable”  –  if not completely and utterly uninspiring  to principals on both ends of the average real estate transaction.

Is the lack of news the real news?

Here we are. Sitting on the edge of our musical chairs. Primed with anticipation after a whole year of kicking the can down the road. Wondering whether the other shoe is going to drop from the high wire balancing act of the economy.  Or alternately wondering what miraculous confluence of factors is going to step up to give us a swift kick in the pants. Boot and reboot us forward.

With Thanksgiving and Christmas on tap, we’ve got the perfect excuse to explain why people and properties aren’t moving faster.  Faster better. Or faster worse.   For another month or so, we can simply say that we aren’t really holding our breaths., we are all just taking a breather.  Buyers are on temporary hiatus.  Sellers are on sabbatical.  Agents are on vacation.   The market has given itself a voluntary furlough.

There’s no way around it so we might as well use this time wisely.  Take a few extra weeks to drop back twenty yards and survey the horizon ahead. Ponder the landscape before we decide whether we have to punt or not in the new year.

We’ve thrown a lot of life preservers to real estate this past year just  to keep it floating in the same place.  Incredible interest rates. Tax credits. Buyer incentives of all shapes and sizes.

What’s going to determine whether we sink, swim or continue to tread water this year?  That’s easy.  The big three:  1) Jobs.  2)  The continuing machinations of the credit crunch. And…3) The disposition of the ominous shadow inventory that has grown to archetypal proportions in the realm of the collective unconscious.

 

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Greed or Fear Up the Yin Yang?

Another mad rush of a week in real estate.  The hits just keep on coming don’t they? Here in the thickness of the open space we occupy.  Where the silence is often deafening. Where so many things seem caught up in the fastness of their own slowness. Sometimes it’s hard to tell.  Do we have too much to do and too little time? Or is it more like Willy Wonka said: “so much time and so little to do”?

I go back and forth. Hour by hour. Day by day. The internal debate rages on – riding a wavering frequency modulated by the interplay between my own fluctuating biorhythms and those of the global village as a whole.  Getting better? Not getting better? Glass half full?  Eighty percent empty? The market loves me? The market loves me not?

But I think perhaps the California Association of Realtors is finally on to something.

I’m talking about their new Home Protection Payment Program.  In simple terms,  the HPPP allows a Seller to fund an insurance policy that covers up to  $1,500 of a Buyer’s monthly mortgage payment if that unfortunate soul loses their job in the first year after close of escrow.  This service has been available for about a month now but CAR is going to roll it out big time right after the first of the year.

Another gimmick?  Sure. Anything designed to sell people something qualifies as a gimmick. What’s important is that this is a whole new breed of gimmick.

Think about it.  Here we are in the middle of what ought to be the most robust Buyers Market in history.  Buyers have had every conceivable advantage going for them for quite a while. Precipitous price drops. Interest rates not seen since the 50’s.  Sellers capitulating right and left. Rebates and incentives up the yin yang. Tax credits. Extensions of tax credits.  Extensions of extensions of tax credits.

But why are so many Buyers missing in action? Specially when everyone keeps chanting the mantra of mo’ – mo’ opportunity, mo’ return,  mo’ juicy money.  Apparently very few are feeling messaged by the message. This whole recovery thing has been plagued by screw ups. One long series of failed attempts to get Buyers back into the game.

Why?  Because we’ve been going about it the wrong way. We’ve been acting like One Trick Ponies trotting out the same old MO’s (modus operandi) dressed in different clothes.
It’s time to stop appealing to people’s greed.  It’s not working.  Consumers’ erogenous zones are exhausted.  Played out.  Numb from all hyper-activity they got groped with for way too long.

Instead of finding new and bigger and better ways to stimulate the greed glands of the marketplace, we have to do an about-face and move towards the other end of the spectrum.  We have to start finding more effective ways to deincentivize  people’s fear.

Greed and fear. Fear and Greed.  Self-proclaimed real estate pundits have always mouthed those two words together like they were twins separated at birth.  Time to forget greed for awhile.  Flip the coin. Walk to the other side of the talk.

We don’t need one more litany of all the reasons Buyers should buy a home.  We need to pare down the list of reasons Buyers fear buying a home.  We shouldn’t keep harping on what Buyers have to gain.  Rather, we should be reducing their nagging suspicions about what they have to lose. We don’t need to inflate their endorphin levels. We need to diminish the adrenalin rush fueling the fright and flight mechanisms that send them scurrying for cover.  Less emphasis on carpe-ing the dinero and more attention aimed at shrinking all those inflamed what-ifs that torture the psyche and hold us hostage.

So CAR is on the right track.  An insurance program for one of the biggest what-ifs: “What if I lose my job?!!!!”  Way better than an $8,000 tax credit.  But this is only the beginning.  I’m thinking CAR can take it to another level.  Steal a page from Lloyds of London which has insured just about everything under the sun at one time or another.

If Lloyds can insure a food critic’s taste buds, Bruce Springsteen’s gravelly voice and Jennifer Lopez’ famous ass for a whopping billion dollars, not to mention issuing more than 400,000 policies insuring against alien abductions, werewolf attacks and vampire bites, why should real estate stop with simple job loss.  Let’s get all our fears out on the table and really insure that we’ve got everyone’s butt covered!

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