Monthly Archives: January 2013

Sending Up Thought Bubbles

thought-bubble-blackThings are getting better.  Every day  in every way?  No, that might be stretching the bounds of recent good fortune a bit too far.  And God Knows, we’ve sworn off anything that even remotely smacks of exaggeration or irrational exuberance for at least another seven years.

Nope. We’re not going to go down that road anytime soon.  But things are getting better nevertheless.  Whether we don’t like it or not.

Even if there are tons of buyers out there clenching their jaws. Gritting their teeth. Grinding their back molars in frustration.  Muttering under their breaths.  Sending tortured thought bubbles up into the stratosphere.  Issuing silent screams to a seemingly distant God and an utterly mystifying marketplace  that just doesn’t seem to care that they are back. And now…finally…..want to buy.

Yep. Things are busier.  But not nearly as busy as the growing ranks of would-be buyers busy railing about the supreme injustice of a market that should theoretically be welcoming them with open arms. And open doors and windows of sublime opportunity.  Rather than punishing them with what feels like some kind of passive-aggressive withholding behavior.  A depressing no-show act that’s keeping anything decent off the market. Out of sight and out of reach.

If you are an eager first time buyer or just a regular “organic”  buyer that can fog a mirror, generate a pulse and easily qualify for a home loan and a purchase somewhere in the vicinity of the mid level price range of  – $500k to $750k –  you’ve probably experienced humbling events and suffered some gross indignities over the last six months.   As infinitely patient as you’ve been, no matter how many times a day you check your property search engine, so far through the first three weeks of 2013 – nothing much seems to have radically changed the status quo of buyers’ woe.

– The number of bank owned properties coming on the MLS has diminished. Fewer choices.

– The number of short sale listings has diminished – and those that are coming on as short sales seem to be carrying some particularly ugly baggage with them. Fewer choices.

– The foreclosure flip market is drying up.  Less investor cash types plucking tarnished gems off courthouse steps, doing quickie makeovers and offering them back up to other folks who would rather not do the work themselves. Fewer choices.

– The sad fact that many mid-range properties languishing on the market for more than a few months  are simply too painful to look at or are irreparably tarnished by unfixable inspection issues, clouds on title or completely dysfunctional sellers.  Fewer choices.

– The sad fact that a high percentage of properties coming on new are located in suspect neighborhoods or on busy streets or have steep slopes or no sun or have just way too much deferred maintenance.  Fewer choices.

The sad fact that the few relatively good properties coming on in good locations with a little soul and a bit of curb appeal and nice lots – are being besieged by multiple offers.  Many of them tendered by all-cash buyers that other well-qualified people simply can’t compete with.  Fewer choices.

More than 23 years in real estate and I can honestly say that I’ve never seen a market with fewer choices.  So many Buyers that want to buy but such a painfully slow and tortuous drip of homes coming on – one or two at a time.

Back in the early 90’s there were times when 1500 single family homes were for sale. All addressed up. Ready to go.  But you could shoot a cannon down any street with five or six for sale signs on it and not hit a buyer.  They weren’t just scarce. They were all but non-existent.

These days any random cannon shot down any decent street is likely to nail a dozen buyers like bowling pins.  But it’s not just here – Stockton – the foreclosure capital of America – has a shortage of  homes for sale.  Las Vegas itself – the ultimate fool’s paradise of boom and bust –  has less than a five weeks supply of homes available.

Next week we’ll discuss the reasons.

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Playing Musical Chairs in the Marketplace

Musical-chairsAnyone disagree when I say this is one tough market to sell in?  Any dissenters lurking in the ranks?  What about the easy flipside of the collective coin – buying?

Sorry.  No matter how many of you might wish it wasn’t so or how many rabid boosters there are waving rally flags and raving about all the golden opportunities this big smiley-face button of a  “buyers market” offers us … the fact remains:  this is also one tough market to buy in – for all kinds of convoluted reasons that fly in the face of simplicity.

You may have noticed, real estate is getting more complicated.  Like most other things in life.

So, if it is a hard market to sell in and a hard market to buy in, then how exponentially hard is it to do both things at the same time?  How does it work?  How does someone wrap their brain around the notion of going onto the market and out into the market, simultaneously, armed with the flawed uncertainty of a “contingent” offer?

Since the well-being of real estate is partly dependent on figuring out how more buyers can sell and more sellers can buy,   we’re going to spend a few columns exploring the nuances of what I’ll call the CO-dependent marketplace – as in Contingency Offer.

Eventually,  I’ll either get tired of talking about our COdependent tendencies or you’ll get tired of listening. In the meantime, we’re fittingly stuck with each other until we can both figure out how to break the pattern and move on.

If this were 2005-2006 we wouldn’t be having this discussion. It wouldn’t even be a blip on the radar screen obscured as it was by the opium cloud of irrational exuberance.

What did people do way back then if they wanted to sell their current place and buy a new one?  Simple, they just threw out the status quo and proceeded ass-forward through the window of opportunity.  They didn’t have to sell first in order to buy. That was the old economy.

All the tools were in place to ignore the little voices of reason residing inside our heads. The ones that whisper cautious mantras in the middle of the night.  The same ones that have staged a full-blown coup and are now shouting down any decision that contains even a hint of risk.

It went something like this:  First, tap the equity line on your existing home for the downpayment you don’t have.  Then get some version of an easy-qual, pre-approval letter at a low, low teaser rate. Go out looking in a marketplace where everyone else just like you is going crazy trading places. New choices are popping up everyday.  Pick one. Then try to wedge your way into the front of the multiple-offer queue –somewhere north of asking price.  No need to worry about the appraisal.  Praise the Lord. They all appraise.

From there you buy as-is. Close in 30 days.  Take your time moving.  Own two houses and pay two mortgages for a few months.  And then….best of all…. sell your old house for even more money – because the market has continued to shoot up the whole time!

Until it didn’t.  And if you happened to be one of the last ones standing in the musical chair monopoly game – you  were suddenly stuck with two mortgages you couldn’t afford and one lifestyle completely engulfed.  And you understood in painful, inescapable fashion why it had always been conventional wisdom to sell first and then buy second.

Next week:   CO-dependent Real Estate confronts the paradoxical quality in human beings that refuses to let go of the past in hopes of knowing exactly where the future is.

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Pushing the Reset Button

PushingResetOk. Huddle up y’all.   Gotta get busy.  Time to hitch up our big boy pants.  We’ve got a real estate market to run.

Specially here. Specially now.

Can’t shirk our responsibility any longer.  Can’t dodge our duty.  Or cop out on our commitment.  Someone’s got to do it and it might as well be us.  Realtors R Us, afterall.   And the clock is already running on 2013.

We’re done being passive.  No more whining. No more slack. No more woe is me. No more laying back, patiently waiting for something/someone else out there in the economy to grab the bull by the horns of the dilemma, take the reins, carpe that old diem and lead real estate out of the wilderness and back into the sunny promised land of milk and honey and  20% appreciation every year for the next twenty years so we can keep tapping the bottomless well of equity in our HELOCS –  and buy lots of boats and new cars and ski vacations and tons of other cool stuff… ad hoc ad infinitum ad nauseum.

Whoa. Whoa is me.  Hold on there big fella.  Let’s not get too far ahead of ourselves.  We just got past the bottom. We’re slowly climbing up.  How about if we take one small baby step at a time?  Maybe we can just be content to learn to crawl again before we try to leap over too many monster homes or juggle too many escrows at the same time or leverage our behinds to the hilt.

Back to the point…  Since the debacle of 2008, real estate has been looking outside itself for some form of magical thinking to materialize, give it a good shot in the arm, dispel all the fears and turn everything around.

Something like a giant wave of IPOs flowing over the hill – a thousand Facebooks each launching a thousand millionaires each hoisting their own sale along the sandy shores that line the Monterey Bay, ready to cash in on some surf and silicon-laden turf to stash in their newly minted asset allocation portfolios.

Didn’t quite happen did it?  Face-plant is a better description. At least to date. And not a whole lot of other new IPOs have had the courage to follow in the wake of its underwhelming performance.

Meanwhile,  back at the ranch, all this time everyone else on the planet has been waiting for real estate to wake up, step up, get the lead out and lead.  Just like it has almost always done in past recoveries.  Nothing creates jobs and gets money circulating through the economy – trickling up and trickling down – like a good old fashioned,  solid, everyday real estate market.

Real Estate in the Goldilocks Zone. Not to hot. Not to cold. Just right.  Regular people. Regular lives. Regular sellers. Regular Buyers.  What a concept!

So here we are on January 5th.   Pushing the reset button.  Ringing in the new year with a resounding refrain and resolute belief in our own resolutions.  In my head I hear the immortal words of Kevin Costner in his albeit less than immortal film – The Postman. Who among us wasn’t on the edge of their seats, practically moved to tears,  suffused with an inner call to righteous action when he intoned these inspiring words in his signature monotone: “ Stuff is getting better.  Stuff is getting better everyday.”

There you have it.  Motivational speech almost over.  I know how fired up you are. Let’s repeat the team chant/mantra one more time:  “Om Mani Gimme Sum.”   Now say it five times really fast before we break huddle, thunder through the tunnel, and burst onto that field.  We’ve got our work cut out for us.

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