Tag Archives: Changing Real Estate Market

The Sky Isn’t Falling But The Market is Slowing

Chicken+Little+Sky+FallingA public announcement from your full-service real estate column:  Remember to turn your clocks back or you’ll be out of sync with tomorrow’s open houses. Might miss something really good.
 
There are probably more than a few Buyers out there who’d like to turn their clocks back a year or two.  To a time when home prices and mortgage rates were lower.
 
Remember when we finally hit bottom and a great big window of opportunity for aspiring Buyers suddenly began to emerge from the doom and gloom?
 
In January of 2012 the Median Home Price in Santa Cruz County was  $425,000 and mortgage rates had dipped to 3.9%.  A couple of months ago (September 2013) our Median Price was $640,000 and prevailing rates were at 4.49%.  Wow. What happened?
 
Despite a significant surge in prices, Sellers are still more prone to remember the Median Price from September of 2005 & 2006 .  A whopping $750,000. Lots of them would love to turn the clock back to re-experience those bubble years. Some still think they can.  Check a few of the list prices we’ve seen recently.
 
The past is the past.  The market isn’t about to plunge into the dark ages of the great recession OR   ride the Way Back Machine to the epic boom that preceded it. 
 
We don’t get to go further back than 1 hour.  This whole clock thing isn’t a reprieve from fate.  It’s simply a device to bring a little more daylight into our lives as we move towards 2014.
 
In preparation let’s shed some light on where real estate is at right now.
 
Without question and in no uncertain terms… the market has slowed. 
 
Relax. I’m not Chicken Little. The sky isn’t falling and the market hasn’t disappeared.  And it’s not going to.
 
But we do have to resign ourselves to the fact that we can’t continue coasting on the same wave of heightened frenzy that market perception has been living off of since February/March/April. 
 
Some of you remember how crazy it was. Ten offers first day. Over full price. All cash/no contingency/quick-close.  It did feel like 2005 reincarnated.  For a while at least.
 
The competition for homes was so strong  I wrote a 7 week series on how Buyers could increase their chances in one of those multiple offer situations that felt more like a steel cage wrestling match.
 
Not any more.  Two or three offers maybe – with a little luck and good Seller karma.  More days on market. Numbers of pending sales and actual sales down.  Fewer calls. Fewer e mails. Fewer web hits.  Fewer Buyers coming through open houses.
 
Six months ago most new homes came on the MLS with standard language announcing that all multiple offers would be reviewed on a pre-set date.  Multiple offers were a given.
 
The listing was entered on a Tuesday.  Brokers open Thursday. Saturday and Sunday open houses.  And then whammo! Have offers ready by Tuesday at 5pm. Be prepared to stand in line to present them.
 
These days, Sellers who assume in advance that they’ll certainly have multiple offers by a certain date are pretty much risking certain embarrassment for shooting themselves in the foot.  Those same offers aren’t out there hanging like ripe fruit. The bucks aren’t flowing so freely.  Buyers aren’t jumping in with such wild abandon.
 
Get used to it .We are have moved into a different phase. The market has come a long way. But it hasn’t come all the way.  And that might not be all bad for either Buyers or Sellers.
 
 Next Week:  The three most important words in the new real estate vocabulary:  Inventory, Inventory, Inventory.

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 Less Fluffing Of Real Estate’s Invincible Aura

lessfluffingA couple of weeks ago, I was scratching my real estate of mind out loud.  Wondering whether our market might actually be shifting gears.  Taking a breather? A little less wind billowing out those sails (sales)? Less collective fluffing of real estate’s recently invincible aura going on?

DESPITE ALL THOSE HEADLINES WE KEEP READING.  Median price jumps.  How hot San Francisco is.  All-cash Chinese Investors buying bazillion dollar places sight unseen.

This of course, after four sad years of doom and gloom and a steady diet of after-the-end-of-the-world real estate woe up until…well… just an incredibly short time ago!  Talk about Mr. Toad’s Wild Ride!  Sometimes it’s hard to tell whether the market is coming or going.

I’ve been trying to share some of the quizzical and very equivocal observations I’ve been collecting in my daily travels .  In the here and now.  In Santa Cruz. Not anywhere else. In real time. Not tape-delayed.

As some pundits point out:  There is no such thing as a National Real Estate Market.  Only a local one. Or at best a regional one. What may be true in Las Vegas or Phoenix real estate-wise isn’t necessary the case here in Tree and Sea Paradise.  North Dakota may be en fuego in terms of jobs and rising home prices.  But I’m not feeling a lot of warm and fuzzy connection with whatever the nitty gritty is in the heart of the great plain states.

Fact is,  Santa Cruz median prices blow most of the rest of the country away.  And our average rents would easily service the mortgage on most mansions in Mississippi.  We’re different than most other places.  But we kinda knew that already didn’t we?

A few columns back,  I tossed out some random ideas for your consideration. I also made a pledge not to try to tie them all up in a neat little package for you.   Our brains love to make little stories out of everything.  Beginning. Middle. End.  We crave certainty.  We want it all to make sense.  All the time.

From my vantage point the only way to navigate gracefully through real estate is to embrace its ambiguity.  Accept the fact that it’s going to push and pull us in a dozen different directions at once. From a buyers perspective. From a sellers perspective.  From someone trying to do both at the same time’s perspective.

There’s no one truth.  No such thing as a good market. Or a bad market.  Only the market.  When prices were falling – was that bad for buyers?   When prices were running through the roof was that good for buyers?

F. Scott Fitzgerald said: “The test of a first-rate intelligence is the ability to hold two opposing ideas in the mind at the same time, and still retain the ability to function.”

Welcome to Real Estate!  Whether we embrace its ambiguity or not, we still need to live with it.  And keep functioning.

Here are few of the fascinating push-pulls our real estate market has wrestled with in recent times and some we will undoubtedly continue to scratch our heads and wonder aboutt:

– A buyers’ market with almost nothing to buy.  No inventory.

– Buyers competing with multiple-offers in what was supposed to be a buyers’ market.

– Historically low interest rates stifled by full documentation loan regs and a credit crunch.

– Multiple-Offer Price Overbids jumping too far ahead of the trailing appraisal curve.

– Sellers who would like to sell but can’t quite figure out where to go. Or how to get there.

– Rising interest rates that will either scare more buyers off the fence or inhibit their ability to purchase altogether.

– Rising interest rates and full doc loan regs that limit how much buyers can afford and how high prices can go.

– Rising prices that refuse to trickle up into the higher price ranges. The heat of the marketplace stuck below a glass ceiling around $800k.

– A general economy that can’t quite seem to decide whether it is over the hump or not. Alternately insisting that it is and it isn’t.
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