Tag Archives: buyers market

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.


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.


The Sweet and Sour Spot?

Blog03Just a quick thank you to the pros at Michael’s on Main Restaurant for letting me take a wok on the wild side and a stroll down memory lane this past week. Indulging me with a guest-chef gig in their ongoing series of Tuesday food and wine events. After reprising a few of my old chops, I think I’ve got it out of my system now. Time to put the cleaver down and get back to food for thought…


Where did we leave off? Oh yeah. Talking about the “sweet spot” of the market. The erogenous zone of price where buying activity is really stirring. Where mounting excitement and the heady thrust of demand is firing on all cylinders.


When I returned to real estate from my culinary sojourn there were ten anxious voice mails waiting for me. Seven from different people – talking about almost the same exact thing. Coincidence? I think not.


See if any of this sounds familiar: “We’ve been holding off buying. Now we’re ready to get serious and take the plunge.”


Or: “We’re looking for a 3/2 in a great neighborhood between $550 -$650k.”


Or: “We definitely need 3 bedrooms or 2 with an office. Walking distance to a few restaurants.”


Or: “We could spend up to $750k but we really want to keep payments low. We’d like to stay closer to $650”


Or: “We’re first time buyers but we think now is the time. We can stretch as high as $500k with interest rates so low.”


Or: “We’re getting a gift from the folks. One of the condos in our complex finally sold. We can get out of this place whole and finally afford a real house with a real yard.”


Or: “We’ve been looking for something in the $600 – $650 range for a year now and there just isn’t anything available.”


Or: “Every time something decent comes on, it’s gone in a couple of days with multiple offers!”


Or: “We’re first time buyers. All we are competing with are rich investors. Every time we find something below $500k – someone throws a cash offer in.”


Or: “When are more places going to come on? How long do we have to wait??”


I’m guessing that for seven out of ten buyers reading this, some of the above resonates strongly with your own situation.


You figure: Market’s past bottom. Prices going up. Interest rates won’t stay low. Rents will get higher. Economy is more hopeful. Life goes on despite the distress of the downturn. A home is a great thing. You’re ready to get back in the game. Not in a crazy way. In a smart way. Buying below your means rather than way above.


Odds are: You’re looking for something in the “Sweet Spot” – $500 to $650ish. Three bedrooms – if possible. Two baths. Safe neighborhood. Yard. Not a fixer. Pride of ownership. Potential for appreciation down the road.


Simple right? Reasonable thoughts and desires. But what happens when everyone wants the same thing? And there’s not enough to go around? The Sweet Spot starts to develop a Sweet and Sour taste. A buyers market doesn’t always feel like a buyers market.


Will the $650k’s start pushing up towards $750? Will $850 places come down closer to where demand is? Will more high end homes drop below the magic million mark in search of buyers?


By the way, the other three calls on the machine were from Sellers wondering whether they should wait till spring to put their homes on the market. What should we tell them?



Circling Birds

This goes out to all you circling birds. You don’t mind if I call you that do you? Ok. It might help if I told you what circling birds are…You decide for yourself if the flight pattern fits.

Whenever I sit down with Sellers thinking about putting their home on the market, the conversation inevitably turns to active imagining of who their buyer might be.Everyone wonders. What does the profile look like? That mysterious Buyer X who is going to emerge from the shadows of the mysterious “marketplace” – made up of a constantly shifting mix of people. All different ages, demographics, life circumstances, future goals, desires, needs.

Sometime, somehow, someone is going to decide on their one right place, out of all the other possible places lined up like addresses on the lottery board. A buyer that’s going to pull it together. Summon up courage, and resources. Proactively take steps to make it home.

My answer to most Sellers is that the Buyer most likely to step up sooner rather than later isn’t someone who just started looking or is just thinking about looking. Rather, it’s one of those circling birds out there. One of those anxiously active, slightly frustrated buyers who has already really been looking for months – without arriving at their destination.

Yep. Circling birds have been at it for a while. Applying themselves. Doing their homework. Making the rounds. Defining what they want as they go.

Circling birds are tracking the market. They are hooked up to an intravenous fiber optic line feeding them search engine e mails and a steady dose of new listings and price reductions. They are remarkably knowledgeable about what has sold. What’s gone into escrow. What prices used to be. They know their own little market niche better than most Agents.

Circling birds have tromped through those atrocious bank-owned properties that give us the creeps. Some have already made offers on short sales. Exhausted their patience waiting for a response. A few have lost out in multiple offer bids for a really great place. Felt bitter pangs of disappointment. Dragged their hearts up and gone back into the trenches looking.

Each of these experiences, every house they have seen, has sharpened their focus and desire. Circling birds have already narrowed their parameters by looking high and low. They’ve grown more sure of what they want – through the process of elimination. They’ve looked at everything in their price range.

And that’s the whole thing Sellers… Circling birds are ready to go. But the inventory is exhausted. There’s nothing else to look at except that next best thing that comes on the market – your place.

When your house goes on, all those ready, willing and able buyers are going to sit up and take notice. They are going to bug their Agents to show it to them. They’ll be doing drive-bys coming home from work. They’ll be doing virtual drive-bys on google earth. If it looks right and priced right, they’ll swoop in for that first open house.

In a market that is supposed to unequivocally be a “buyers market”, there’s a fascinating irony that keeps inserting itself into the proceedings. There are a remarkable number of all cash offers, and multiple offer competitions happening, despite all the stories about seller desperation we keep hearing.

Thank those circling birds. They know that if they don’t grab it, someone else will. Sellers, get your homes on the market. Forget all the bull about waiting till next spring. You want to be on the market when the fewest other homes are. The circling birds are out there waiting.


Tiptoe Through the Tulipmania

Welcome to the cognitive blog of dissonance called Real Estate of Mind. That’s right, the royal we  (me, myself and I) sit back all week and soak it in like a sponge. Then “we” try to wring it back out to you in a way that trips the light fantastic on the razor’s edge of realty, deftly tiptoeing through the leftover mind fields of tulipmania still dotting the landscape.

Call it an odd form of drip marketing.  But please feel free to follow the bouncing neuron until you hear your own synapse crackle and pop.

Rumor has it that there was an actual buyer sighting in the Aptos Hills on Tuesday! Another in La Selva! And three spontaneous buyer “outings”  were reported on the west side of Santa Cruz the very next day!

They’re there. They can run around but they can’t hide forever. They are going to have to flush themselves up to the surface sometime. When and if enough of them decide they really do want a permanent roof over their heads.

We’ve got good news and bad news for you Sellers in our studio audience today.
First, the number of single family transactions closed in March was significantly higher than those that blossomed in March of last year –  164 real deals vs.128!

That puts us 40 transactions ahead of 2010’s 1st quarter results.  I guess we can say, with the certainty of big bold font that SALES VOLUME IS UP IN 2011!!!   There’s a headline we can hitch our wagons to!  Giddyap!

The bad news?  Sales have increased but the median price has slipped well below $500k – three months in a row.  We’d have to ask Sherman to fire up the Way-Back Machine and chauffeur us to 2001 to see the last time prices were mired in the $400’s. Of course, a decade ago we didn’t see it as “mired.” We were happily moving up.  Not ratcheting our way down.

And condos? Uh.  Not a pretty picture on the stat charts.  One more unit actually closed this March than March of last year.  A score of 29 to 28 if you are keeping track for your rotisserie real estate league.  But the same marketplace managed to suck the oxygen out of the prices on those condo sales.  Without cabin pressure, the median fell to earth and hit $250k. You definitely have to recede to the turn of the millenium to find that price point.

A reminder to those who always ask the question: “Are condos a good investment?”  One answer is: “Yes and no.” The real answer, like anything else market-oriented is: ” Depends on when you buy ’em in relation to when you sell ’em.”  Timing. timing, timing (not location, location, location) is God when it comes to real estate.  You might want to friend the 4th dimension on Facebook if you haven’t already.

Condo sales & prices generally trail the single family market up. When the cost of regular old houses graduates beyond the level most people can afford, more buyers begin to look at the next best choice –  condos/townhomes/puds.  Suddenly demand skyrockets and overwhelms the supply. Condo Sellers are in luck.

Conversely, condos lead the way down, when the price of single family homes  drops.  When, people can afford it, most would rather own their own piece of the rock  instead of sharing it with strangers.

Condos appreciated much faster than single family homes did in 2005-2006. A great investment for those who got in and out at the right time.  But as March’s median tells us, some who thought they knew when to hold are now learning what it’s like to fold.

Just a few more realty bytes to digest as brain food for thought: The median for single family homes peaked in 2005/2006 at $790K.  Condos peaked at $572K in 2006. Last month 40 to 50% of the closed sales were distress sales. With more on the way. An increasing number of purchases were all-cash. Less lenders. Less tortuous qualifying. Even with exceptional interest rates.

Expert economists are now revising the revision of their formerly revised opinions.  They say the real estate market will continue to weaken till the end of the year, before we see a modest recovery.  Now if they can just define ‘modest recovery’ in terms everyone can understand, the prognosis will mean something.

In the meantime, let’s go back to the good news and bad news of the moment. Sellers, think of yourselves as one collective body. One group mind. One global consciousness.  What would make it a better market for you?  More sales? Or higher prices? You only get to choose one.  Which one are you willing to take?  Name your poison.


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!



We toss a lot of words around to describe the real estate market. Words that often come with an encrypted charge and a universe of silent subtext attached to them. Words that carry the weight of metaphor and chains of nuance extending far beyond what the sum of their individual letters are meant to imply.

Which is all to say… I’ve never believed in the fairy tale of a “good” real estate market and a “bad” real estate market. These terms never quite cut it no matter how you slice them. They are way too limited or lopsided in interpretation to do real realty justice. Good for who? Bad for who?

If prices are coming down, is that “bad” for everyone in the marketplace? Or just for some Sellers?  If prices are racing up 2% a month, is that “good” for everyone? What about first time buyers on the lowest rung of affordability watching their point of entry vanish upwards on the horizon?  Its not all so “good” for them.

Is it appropriate for us real estate agents to switch our valences back and forth from side to side, becoming devoted advocates of the buy or the sell depending on whether we perceive it to be a great buyers or sellers market? Just to call it all “good”?

How about  a “move-up” buyer?  One that wants to sell a lower-priced house and purchase a bigger, higher-priced home? There’s an underlying logic that suggests a declining market might be the “best” time for this kind of seller/buyer to make his transition.

The theory is:  The lower the price of the house sold, the more demand there is in that niche of the market.  A lower-priced home should fall less than a higher-priced home in the same declining area. Even though he may sell for less than hoped for, a move-up buyer should make up his “loss” on the other end.  He should pay less for that better, more expensive house. Way less than if the market were going up like crazy.

It is the “relationship” between what move-up buyers sell for and buy for that counts. Not the actual, dollar amounts themselves. Specially, if they can lock-in a portion of their new purchase price at near record low interest rates (like now, with Greece greasing the way).  Nothing like cheap money to help make it all come out nice and tidy in the wash.

So what about this market? This time? How to describe it? Good and bad are particularly inept descriptions for the daily phenomena manifesting itself all around us.

Months ago I mused that there should be two multiple listing systems existing side-by-side. One for corporate-controlled distress properties – REOs and Short Sales. And one for those euphemistic “Organic Listings”  – properties being sold by real human beings going through all the normal life transitions that used to drive regular real estate sales – birth, death, divorce, aging, heath -all the biggies.

But now the fragile dynamic between these two markets occupying the same place at the same time is splitting the market apart even further.  The split has become a full-fledged fracture with prices being driven dramatically up on the low end, at the same time the glass bottom is falling out of the market on the higher end.

If you want to feel like Jeckyll and Hyde for a day – start out in the morning looking for properties with a buyer approved up to $500k. By noon you’ll think you’ve mistakenly wandered into a time warp, transported back to 2004-2005. Everything you look at has 4 or 5 offers and is selling for more than list price.

Get some lunch and boost your blood sugar. Shake it off in time to make your 2pm appointment. That’s the one with the Seller who’s $1.6 listing isn’t selling, hasn’t had any offers and is accumulating days on market faster than cobwebs on the sign out front. Be prepared to spend a couple of hours acting as grief counselor and looking for a sensitive window of opportunity to break the news about just how low their price could really go. A different twist in the wormhole has deposited you smack dab in the middle of 1992!

So what happens when energy in the lower chakras is rising too fast at the same time that movement at the top of  the spine is headed for some serious down time? Welcome to the compression zone. That’s the dense little pocket of  the market lodged between the vertebrae of $550,000 and $750,00. The space being pushed together tighter and tighter from both ends. Its the tiny window of choice that more and more sellers, buyers and listings are finding themselves in – with quite a bit of gnashing of teeth and fraying of nerves accompanying the process.

Sound familiar? Get your helmets on and brace yourselves. Next week we venture into the Compression Zone.