Tri-County, MA Real Estate Blog: November 2009

• Housing will not fully recover until 2012.  That is when the glut of backlogged foreclosures is expected to be phased out of the market. 

 

• Housing will recover by the end of the year.  Now that inventory has contracted to average levels for what constitutes “normal” regional markets in major metropolitan areas where prices have declined as much as 50% in the past three years, and month to month sales have steadily increased over the past six months, demand has realigned with supply to arrest the freefall in values.

 

• The housing recovery began in early 2009.  Median price increases in some markets indicate that even while many pundits were openly wondering when the bottom of the market would appear, it was actually several months in the rearview mirror.

Many factors and variables, and just as many divergent opinions to boot.  So many, in fact, that you almost have to choose amongst the purported experts to determine whether you fall in the half empty or half full category.  Job rates, interest rates, unemployment rates … psychiatric rates, for spending too much time poring over the data and extrapolations will render one in need of a head exam. 

Overanalysis 101.

You don’t need flow charts to tell you where things stand at the moment.  You won’t need a market report to tell you when things are better.

You’ll know the market has recovered when you no longer dread the trip to the mailbox or evening phone calls.

You’ll know the market has recovered when you can confidently re-enable automatic bill pay from your checking account instead of prioritizing which ones get paid this month by how far past due each is.

You’ll know that the market has recovered when you don’t have to decide whether you or a loved one is really ill enough to warrant the cost of a trip to the doctor.

You’ll know the market has recovered when you no longer have to explain to the kids why you can’t go to the zoo or stop for ice cream today. 

You’ll know the market has recovered when sleep comes as readily as worry formerly did.

You can stop looking to someone else to tell you when the market is fully healed as the housing implosion is the root of these greater ails.  It’s far easier to take stock of your own life, and those of your friends and family, to see where along its arc the pendulum is currently settled.  As the finance/housing sector dragged our economy into the muck, it will again lead us back to dry ground.  No need to watch the stars for celestial clues.  Just do what no pundit can and watch your own life for improvement.  You’ll know housing has recovered when both of your own feet are planted squarely on terra firma. 

Most importantly, beware the forecasts that don’t jive with your own internal index.  Those who would adamantly assert the rosiest or bleakest prognosis are likely more interested in influencing your behavior than in your well being. 

“Buy now before prices shoot back up!” 

“Sell now before prices erode further!” 

When you stop listening to yourself, you risk placing all of your trust in the megaphones of those who have a vested interest in your fear.

Is the housing market improving?  Is now the time to buy?  The time to sell?  For months, I have been asked to provide the answers to these questions.  I have dutifully provided my vague predictions with the obligatory caveat that no one truly knows how a free market will behave from one day to the next.  I realize, though, that in supplying answers to those who actually give the market context, that we have all been looking at this thing from the wrong perspective.  It makes zero difference where I think the market stands at present, and where it is headed.  The very consumers who ask me these questions are the ones who will ultimately provide the truth or fallacy to my various hypotheses.  So I turn the tables and ask the consumer, the actual authority, the very same question. 

“What is the state of the Real Estate market?”

Feel free to comment here or send me an email with your thoughts.  Looking for opinions from consumers and laypersons, not agents or financial wizards (all comments welcome, though).  I will post the results in a follow-up piece.

Mr. Homeowner & Mrs. Homebuyer, the floor is now yours.

Everything was perfect.  I had a first time buyer that was pre-approved and motivated to find their dream home.  We spent countless hours together.  He relied on my expertise and market knowledge, and I happily showed him house after house.  We met for consultations. 

Then we wrote two offers together.  One finally got accepted, but the whole house inspection turned up sour, so we began the process over again.  I thought everything was going great.  Until the phone call...

John: "Hi, Kristina?  This is John Doe.  Did I sign anything with you saying I had to buy a house through you?"

Me : <stunned silence> "Umm, well not specifically.  Why?"

John: "Well, I knew you had family obligations today so I was driving around on my own.  I drove past one of the houses you e-mailed me, and I really really liked it.  So, I called the agent on the sign.  She came out right away and showed it to me.  And you know, what?  She told me I could actually get a better deal if I bought directly from her.  We went straight to her office and wrote an offer and guess what?  It got accepted by the sellers!  Isn't that awesome?  I just wanted to tell you thanks for all your hard work.  I'll send you a Christmas present."

<click>

I felt like the wife that just found out her husband cheated on her.   Did the buyer know any better?  Probably not.  He wasn't trying to keep me from getting a paycheck.  He simply didn't know - because I didn't tell him any different.  He thought I would be sincerely excited that he got the house he wanted.  Did the agent know better?  Probably, or he wouldn't have asked me if he had signed anything.

This was back in 2005, when I first got my license.  Since then, I've found that I have to be the one to educate my buyers.  Although I've still had a few buyers get cold feet, their financing falls apart, or they just flat out change their minds - I rarely have a buyer call the agent on the sign. 

So how do you keep your buyer from straying?  It's simple - just educate them about the process.  If you don't focus on building a relationship with your buyer and explaining to them that they have responsibilties in the process too, who will?  The answer is either no one or another agent.  Remember, most buyers (especially first time buyers) don't know the inner workings of real estate.  These are the five key points I tell all of my buyers.

1.  Don't call the agent on the sign.  I will do everything in my power to be available during the times that you need appointments, but I'll need some notice.  If I can't show you homes at that time, my partner can.

2.  I'm your advocate.  I'm looking out for your best interests, and I want to get you the best deal.  I'm on your side in this process and we are a team.

3.  I don't get paid a salary, or per house I show.  I only get paid when you buy a house.

4.  I'm making a commitment to you to share my time, expertise and market knowledge.  I need you to make a commitment to me that I am your agent. (After a few showings or when it's time to write the first offer, this is when I bring out the buyer's agency agreement.)

5.  If we work together, we can have a successful outcome.

The key point is this - Never forget that although we do this every day, not everyone does.  It may seem simple to us, but to others it's not.  Help your buyers understand how the process works - it's not just for your benefit, but for theirs. 

About the Author:  Kristina Pratt is a REALTOR® with Goshen Realty Group at RE/MAX Preferred Partners in Edwardsville, Illinois. She and Nancy Milton help their customers buy and sell homes and investment properties in St. Louis' Illinois suburbs of Madison and St. Clair counties with special emphasis on the communities of Edwardsville, Glen Carbon, Maryville, Collinsville and Troy. For more information, visit their web site at http://www.GoshenRealtyGroup.com or e-mail Kristina@GoshenRealtyGroup.com