Tag Archives: real estate sales

The Whys of Low Inventory

UnknownWe hear it all the time.  Buyers want to Buy but they are frustrated. Stuck. Mired in a market that doesn’t seem to be on the same page as their desire to buy.  And Sellers want to Sell but they can’t quite pull the trigger and put their houses on because they can’t figure out exactly where they are going or how they are going to get there.

The knot in the Mobius loop of supply gets tighter and tighter when Sellers insist on having a roof over their heads after they sell  (unless they have gone on to their final resting place).   In order to get it, they have to become Buyers in a market where there isn’t much worth buying.

We could offer up the suggestion that more Sellers could rent after they Sell.  But that’s pretty much of a non-starter for folks who’ve owned their own homes for awhile.  And if there’s anything more disappointing than the number of homes to buy out there – it’s the number of places available to rent.

So we arrive at the Static Quo of our current Status Quo.  Where the Quid No Quo of Low Inventory begetting Low Inventory doesn’t offer up many easy solutions.

Let’s dig in and continue the discussion.  If you want to catch up on previous columns leading up to this one, go to tombrezsny@wordpress.com  (the print is a bigger there too!)

Right now there are plenty of people talking about Low Inventory. But very few are talking about “The Why” of low inventory.  What’s causing it?  Perhaps it’s time to start outing a few of the factors contributing to the mix. Rounding up a list of likely suspects.

Here’s an initial list of some of the lesser characters involved in aiding and abetting low inventory. We’ll call them “accessories to the time”.   The hotline is open for any additional tips you’d like to call in.

Prop 13: The cap on annual property tax increases acts as a deterrent to selling in a market where prices are rising.

Capital Gains Exemption of $250K/$500K  for Singles/Couples:   Many longtime residents are over this cap and the tax consequences have ironically become a disincentive for some to sell homes

Rule Governing Step-ups in Tax Basis:  Act as encouragement for many married sellers to stay in their homes  until  one or the other to passes away before a move makes practical financial sense.

Sustained Low Interest Rates: Act as encouragement for homeowners and investors to hold on to the real estate they’ve already purchased at incredibly low rates

The list will get longer next week.  Then we’ll spend more time examining it in greater detail.  It’s a complicated mix of interrelated factors and underlying causes but I won’t leave you hanging.

Do You Have the Right Stuff?

george_carlin_0203Welcome to the discussion. It’s Week Four of Real Estate of Mind’s ongoing exploration of home and aging issues. Along with a slew of other ingredients that inevitably find their way into the complicated melting pot that gets stirred up when people start becoming more conscious of growing older.



If you want to pick up the thread go to tombrezsny@wordpress.com . When you get there, feel free to join in. Register your observations. Share your experiences. If nothing else, the font size online is bigger than it is here, so you won’t have to use a magnifying glass to read this.

Today, we are going to talk about a subject that all Realtors are intimately familiar with.  Something near but not always dear to their hearts.  A factor that’s part and parcel of just about every single home transition they have or will ever be involved with – to a greater or lesser degree.

What am I talking about?  I’m talking about that huge umbrella of a euphemism that fits under the heading of  “stuff”.

You know,  “stuff” as in all the stuff that people collect and fill their homes with. All the stuff that people form strange attractions to.  All the stuff that’s in their junk drawers and closets and attics and garages.  In bags and boxes. Piled high on shelves and jammed tightly in corners.

The stuff they are saving. Or the stuff they can’t  bring themselves to throw away. The “stuff” that over time, gets stuffed down like baggage from the past until it is overflowing or taking up way too much room or has gotten so heavy to carry around (physically and psychically) that it makes it harder to actually conceive of picking up to move.

Even if each and every one of us knows somewhere deep in our heart of hearts, that it is all “stuff” that we aren’t going to be able take with us when we die.

Maybe the ancient Egyptians were able to pack a few important possessions for personal use in the afterlife, but there’s not enough real estate left on the planet to start burying even modest members of modern consumer culture with a fraction of the stuff they’ve accumulated.

To get into a better mood for this discussion, try Googling the old George Carlin video on “stuff”. It brilliantly captures our weird, addictive, all-too-human love affair with things.

We’ve spent the last three weeks talking about the huge importance of homes in our lives and their dual roles as our biggest assets and hallowed psychic centering places.  Is there anything that ranks higher on Maslow’s Hierarchy of Needs than home does for human beings?

But how ironic is it that home so often acts as a huge repository for all kinds of junk that so many people can’t quite seem to figure out how to recycle back into the flow of the world.

It’s my passionate belief that in order to figure out more graceful strategies for growing older, facing change and moving ahead in life,  all those aging baby boomers out there are going to have to get better at rethinking their relationship to the stuff they define themselves by.

What’s important from this point forward?  You can’t move down unless you are ready to give some things up.  You can’t shrink your debt and conserve your personal resources if you can’t quit buying things.  You can’t open yourself up to all those “life experiences” you’d dearly love to have before you leave the planet unless you are willing to empty your rice bowl.

Next week:  Emptying the rice bowl


Show Us The Money!

showmethemoneyphotoIf you want to pick up the full thread of recent ramblings,  you’ve got to go to  https://tombrezsny.wordpress.com  and read my three previous columns exploring different dynamics that are playing themselves out in very distinct price ranges of the Santa Cruz County real estate market.

Last week we looked at market stats for the highest priced homes in SC. Those listed above $2m and $3m (all the way to $15m!) We ended with the observation that the market for the highest of our high-end homes has been conspicuously missing in action for the first 7 months of 2013.

What should we make of the high-end slump we are in?  After 7 months, with more than 50 properties actively listed in the upper-echelons, shouldn’t some  properties be selling for $3m. Or $5m. Or higher?

They did last year. And the year before. And the year before that.  You gotta go back to the earliest days of the advent of the million-dollar home market in SC, to find a drought lasting this long.

It begs further questions.  We’re right next to Silicon Valley. The overwhelming consensus is that the general economy and the housing market are both much-improved. There’s big money out there.  So why isn’t that money buying one of those great beach homes on the sand or one of those beautiful view estates up in the hills overlooking the Bay? Writing the offer even as we speak? Where is that money riding and/or hiding?

I’m going to give you my own ten cent tour of the landscape.  A quick synopsis factors/trends/trajectories/shifts that I think are contributing to our lack of high-end activity.

I’m sure my thinking is flawed but I’m going to take some solace in advance,  knowing that back in 2006, Alan Greenspan,  arguably the most well-informed man on the planet when it came to economic information, data collection and statistical analysis,  apparently had no clue about what some of the rest of us in the lowly ranks of the uninitiated knew long before that big old bubble burst.

– Stock Market on a Roll:  When the stock market is up, the real estate market doesn’t necessarily follow. It often goes in the other direction.  High Net Worth Individuals (HNWIs) like to keep their money in the stock market.

– Interest  Rates Low:  When the rates are low, moderate income people purchase primary residences with long-term fixed-rate mortgages.  When interest rates are low HNWIs keep their money invested in equity markets and put off buying those discretionary homes by the beach till later.

-Facebook Fall Out:  When Facebook’s IPO didn’t happen as planned, those teeming hordes of Facebook millionaires weren’t unleashed on the real estate market.  Dozens of other high-profile IPOs geared to follow were held back.  Less crazy IPO money = less crazy real estate purchases.

– Concentration of Wealth:  Big money is getting concentrated into the hands of fewer people. Even among the wealthy.  Venture Capitalists in Silicon Valley have the biggest bucks – but that’s an increasingly exclusive club of HNWI.

– Old Tech vs New Tech:  The nature of the tech in Silicon Valley these days is fundamentally different. Old Tech was chips, software, lots of employees, highly-paid engineers, older executive-level salaries, infrastructure and huge buildings. Silicon Valley was growing towards us – migrating further south towards the beaches of Santa Cruz.

New Tech is younger, smaller, social media/web-based/mobile apps, algorithms, fewer employees, information in lieu of products. Silicon Valley is moving farther north from Palo Alto to the urban coffee houses of San Francisco.  Different home choices follow in the wake..

-Demographic Shifts.  Big changes are afoot. Tough to see when your are living in the middle of them.  But the signs are everywhere, all around us.

For the first time in more than 100 years Urban Areas are growing in population and Suburban Areas are shrinking.     Nuclear Families now represent a minority of American households.  Aging Baby Boomers and Young Urban Techies are drawn to places where they can walk and experience active lives and rich cultural offerings.  People are downsizing. Getting more green. Leaving smaller carbon footprints.  Driving less.  Owning less stuff.  Many of these factors combine to promote the cultural and aesthetic antithesis of large homes and conspicuous displays of wealth.

Ok folks,  there’s  some Food for Thought.  I’m open to other suggestions about why the high-end market is flat.  Share ‘em if you got ‘em


Real Soul Work No Agenda. No Strings Attached. No Moolah…

ETS Logo Hi Res3This might sound like anathema to some colleagues,  but I’m going to say it anyway.  Nothing better for a Realtor’s soul on occasion than to do a little pro bono work.

I’m not talking about all the charitable things Realtors do.  Making donations.  Serving on Boards. Putting in volunteer hours.  I think the real estate community ranks right up there in terms of its commitment to the larger community we live in.

When I say pro bono… I really do mean donating free time, free advice and perhaps even an occasional free transaction to someone in need of real estate help. No strings attached. No agenda. No moolah.

And this is where we get into the grey area.   For some Agents it crosses a line.  Spending an afternoon pouring wine at a fundraising event is one thing.  Spending an afternoon giving away for free, the same advice that usually earns Agents their livelihood and allows them to buy groceries, pay college tuition and make their own mortgage payments – is quite another.

It can feel like a violation of professional integrity.  Something that undercuts the way the average person views Realtors and the value of their work (largely misunderstood concepts in the public domain.)  If it’s available for free, why value it at all?

The thought of free work pushes emotional buttons for many Agents.  Mostly due to memories like:

That time they drove buyers around for months looking at every new property. Sacrificing weekends and evenings. Then out of the blue the clients stopped into an open house, wrote up an offer with the Agent there because somehow they thought they’d save a few thousand bucks.

Or the last time Sellers of an overpriced listing refused to lower the price while demanding bigger ads and more open houses.  Then, after the listing period expired they relisted the property $200,000 lower with another Agent who put it into escrow in a week.

When an Agent gets a few of these crushing experiences under his belt he often locks his boundaries down tighter. Becomes almost unyielding in the way he spends his time or allows his clients to spend his time.  And in an ironic way, it reinforces the stereotype of the real estate agent as salesperson.  They: “Don’t want to do anything unless they get paid.”

Real estate agents sell time.  Time is their currency.  They don’t own the homes being sold. It isn’t their money getting exchanged for grant deeds.  They receive commissions for time spent – assuming something actually transacts.  Realtors broker homes .Realtors market homes.  Sellers sell homes.

The word “sell” is so charged with baggage that it’s almost impossible to un-tether it from all the veiled assumptions, hidden expectations and loaded suspicions that precede it into an actual relationship between real people.

Sometimes the first month I spend with clients is mostly about convincing them that I‘m not trying to “sell” them something  they don’t want to buy.
The stigma attached to “selling”  never completely goes away. It’s painful when clients reject your best advice. Not because it isn’t good advice. But because they think you are trying to push your own agenda rather than speaking to theirs.

Agents often become hyper-conscious about how clients perceive their motives.  They temper their advice. Sugarcoat it.  Spin it with vague, diplomatic reasonings.  Worry obsessively about blurting out what they really think before editing it into some pallid version of real estate lite.

So Agents,  I’m extolling the virtues of pro bono work.  For your sake as much as anyone elses’.  Go ahead. Try it. You might like it.

You may find it’s an incredibly liberating experience to sit down with someone and tell them what you really think without worrying that somewhere in the front or the back of their heads they are assuming you are saying what you are saying because you want to make a sale.  Like I said – Good for the soul.


Of Two Minds:   Getting Your Yah-Yah’s and Your No-No’s  Out 

Dear Tom:

We’ve been back to the same house a few times and we think we want to make an offer. Every time we visit though, we notice a strange feeling that’s difficult to describe. The house doesn’t show very well. The Sellers don’t seem interested in giving it any curb appeal or cleaning it up. They act like they don’t really care if it sells. Why put a house on the market if you don’t want to sell it? This has given us pause and we can’t quite get over the hump. There’s something invisible holding us back. Any thoughts?


Hang on a second… I know I’ve experienced the same nagging voices in my head dozens of times. What exactly are those Sellers trying to tell us anyhow?

Ah, bingo! Thanks for waiting. I think I’ve got it now. Hopefully I can explain “it” in a way that makes sense.

You are intuitively picking up on hidden clues the Sellers have left littered around their house like brightly colored Easter eggs. And your own sense of disconnect is rising in direct proportion to their heightened state of ambi-valence. (Note that I’m using a hyphenated “ambi-valence” here to illustrate the concept a little better.  Think flip-flop, push-pull or yes-no-maybe.)

The definition of ambivalence is: ” simultaneous and contradictory attitudes or feelings towards an object or action.”  Ambi-valence expressed in the most basic fundamental real estate terms sounds something like this: “Yes! I really want to sell my house!! But to tell you the honest truth, there’s something in me that doesn’t want to let it go!!!”  And I’m going to make sure that Buyers get the message!!!! One way or another!!!!!”

Ambi-valence comes part and parcel with lots of big life changes and home sales.  Sometimes the underlying cause is obvious – like divorce situations where one spouse still lives in the house and doesn’t want to leave. The house is really only half for sale. The other half may see it as a demonstration lab for all the unresolved emotions still roiling around on the ex-homefront.

Often,  Sellers are uncomfortably unaware of their own deeper feelings. The ones that are silently shouting behind closed doors. All walled and balled and locked-down inside them. Perhaps they aren’t in touch with their own grief about leaving a place they’ve loved and nurtured. Or their own fear about life’s scary changes. Or their anger about the unfairness that’s forcing such an unexpected passage. Perhaps they are having trouble packing up and organizing all their old baggage.

Offering a home for sale and putting it on display to the world affords Sellers all kinds of creative opportunities to express subtle emotions and mis-directions they might not even know they are entertaining.  There are plenty of ways they can get their yah-yah’s and no-no’s out.  The ambi-valence list is legendary.

Mysteriously there’s never any time to wash the dishes or make the beds.  Somehow, the lawnmower broke and I can’t find anyone to fix it.  I really did mean to change that old kitty litter box but somehow I forgot.  And let me just say that I don’t care whether anyone likes my antique doll collection. Or the black paint in the bedroom. And why should I get up off the couch while Wheel of Fortune is on, just because someone wants to come through the house?  If they really like it, they can see past it all. If they really want it, they can make an offer.

HOLD, it is almost impossible to separate the sale of a home from the larger changes Sellers are going through. If Sellers aren’t dealing with their transition issues gracefully or if they are ignoring them altogether, you are probably going to find yourself on the receiving end of some ambi-valence.

What can you do about it?  You have to become a little ambi-dextrous and go through a few mental gymnastics to dodge the stumbling blocks they toss in your way.  Start by checking their emotions at their door next time you walk through the house.  And don’t forget to check-in with your own while you are at it.