I was recently asked what is the nicest gift a client has given you. I thought about that one for a moment or two. My reply follows.
This easily could be titled "Why I am a Realtor."
Very early in my career, I was giving business cards to anyone that slowed down long enough to take one. Sales people at registers, waiters, waitresses, gas station attendants were all on the receiving end. One evening, I was standing outside a dressing room while my wife tried on a dress. The sales lady was standing there and I turned to her and asked "Are you or is anyone you know looking to buy or sell a home? If so, here is my card." She told me that they were living in a 2 bedroom rental unit with their 5 children. They had fled Afghanistan with the clothes on their back and they were trying to make it in this country. Her husband had a job as an engineer with the local government water and sewer agency. She invited me to come to her home at 10 the following Sunday morning. Being eager and wanting to make a good impression I figured that showing up at 830 would dazzle them. They answered the door in pajamas. Rather than be upset, they welcomed me heartily. They made tea and cakes and we sat down and discussed how they could purchase a home.
They had not been pre-approved and I thought that my lender would be delighted to chat with them. I called the lender at about 9 or so. She was not as happy to hear from me as they were when I placed the call. I handed the phone to the husband and waited. After a few minutes, she told him that she would call back. We shared tea and cakes and waited.
She called back. I smiled while the voice in my ear said "John, what are you crazy. They have no credit. They have no credit score. They have nothing." I cheerfully replied, "Well then, what can we do to fix that situation?" She outlined a plan for them. I left and decided that maybe it was too early for them to be looking and went about my business.
Eight months later I received a call, "Mr. John, I now have credit. Will you help me find a home in this country for my family?" He was approved. We went out that Saturday in the most frantic time of our recent sellers market. We looked at two well priced townhomes. He chose one. I wrote the offer for list price and included a home inspection. Those offers were dying before the ink was dry at that time.
It was accepted.
We went to closing. His wife turned to me and handed my a piece of candy before the settlement began. She explained in her country this was done for good luck. Throughout the settlement, they turned to me and asked "Is this o.k., before signing the "boiler plate" documents. When the last paper was signed and the sellers handed them the keys, they stood and smiled at one another. They then turned to me and took me in their arms with tears in their eyes. The husband softly said "When I came to this country, I promised my wife and children, one day we would have a home of our own. Today, because of you Mr. John, I have fulfilled that promise."
Perception is reality. I cried and had the understanding of what it is that we do. That understanding and thanks for me just doing my job is the greatest gift I have ever received from a client. Others since then have probably been as grateful, but I will always remember that day.
Thursday, June 29, 2006
Saturday, June 17, 2006
Father's Day
So, I was already to share my views on the local housing market. I read an article written by Ron Sitrin, an associate of mine at Long and Foster that appeared in the July issue of Montgomery County Insight. It is worth the read.
Then somebody said........"What are your plans for Sunday? It is Father's Day."
I will be holding and open house. Both of my children are grown. My son and his new wife have just opened their second restaurant in Fort Lauderdale and my daughter is great with my first grandchild. Father's day no longer includes bad neckties, hand written cards or things purchased by someone else for me. Those days are long gone. They remain fond memories.
Father's Day is now the one day that I can take a moment to be thankful that I have had the opportunity to be a dad. Every experience from the first burp to walking my daughter down the aisle are memories I cherish. I thought I would not bore you with all the details, but I will share some of them.
Rocking my daughter (colic stricken) throughout her first few months, bouncing her on my knee while I sang the Notre Dame fight song. Crawling through sleep deprived periods at work only to come alive upon arriving home to her gurgling smile.
Watching my 2 year old man-son mimic my professions in our front yard. Tapping my foot impatiently through each day so I could get home and play.
Sitting in the backyard on a cool Autumn night, waiting for meteor showers to rain down upon us. Believing every cry of "I saw one dad, I saw one!".
Spending time observing my little gymnast spin and twirl through routines and swearing afterward that I had turned my head during the performance as promised.
Loosing the feeling in all my toes while my answer to Wayne Gretzky went through his paces at various local outdoor rinks at 6 in the morning in the dead of winter.
Loading an entire team of flag football players in a step van after games and stopping at the closest 7-11 for slurpees and delighting in the fact that no one cared who won or lost the game.
Enjoying a late night hot fudge sundae with my daughter after picking her up from a party she attended. (Years later, I discovered that she had tried beer for the first time and was feeling more than queasy while I told her to "eat up". She is still convinced I knew she had been drinking.) Ah, the beauty of being a dad and being oblivious to the world around you. Hell, I loved hot fudge sundaes.
Then came the dreaded teen years, the divorce and becoming the man that destroyed everything. I won't share the guilt here, but I will share that I don't believe anyone under 40 understands the impact that all of their behavior has on their children. I was the same dad. I had just turned their world upside down.
We got through that period. Both children discovered that life does have ups and downs but overall it is really ok. These little people were becoming young adults and all of the sudden they could share things they liked with me. We enjoyed music and road trips and pizza.
Music is the web that catches one mid-day and takes them back to a place or time. Music is a thing we shared and more than a few artists bring a tear to my eye today. We had such good times. It was great being the dad.
Then, like little birds, they had wings and were gone much quicker than I expected. One to California and the other to Florida. I was alone. They were starting the grownup phase of their lives and I had the occasional phone call (only if I placed it).
One day, I did receive the call - "Dad, I want to come home. Will you come get me?" I flew to Los Angeles met my daughter, loaded up her car and began the 53 hour journey home. Another wonderful memory. I was dad to the rescue.
Then last year, I sat in the front row and cried when my boy married his bride. We shared a brief embrace that I will hold forever. Later in the year, I walked my daughter down the aisle. We shared the father daughter dance and shared an embrace I will hold forever.
Happy Fathers Day? Thank you for the opportunity. I am the luckiest guy I know.
Then somebody said........"What are your plans for Sunday? It is Father's Day."
I will be holding and open house. Both of my children are grown. My son and his new wife have just opened their second restaurant in Fort Lauderdale and my daughter is great with my first grandchild. Father's day no longer includes bad neckties, hand written cards or things purchased by someone else for me. Those days are long gone. They remain fond memories.
Father's Day is now the one day that I can take a moment to be thankful that I have had the opportunity to be a dad. Every experience from the first burp to walking my daughter down the aisle are memories I cherish. I thought I would not bore you with all the details, but I will share some of them.
Rocking my daughter (colic stricken) throughout her first few months, bouncing her on my knee while I sang the Notre Dame fight song. Crawling through sleep deprived periods at work only to come alive upon arriving home to her gurgling smile.
Watching my 2 year old man-son mimic my professions in our front yard. Tapping my foot impatiently through each day so I could get home and play.
Sitting in the backyard on a cool Autumn night, waiting for meteor showers to rain down upon us. Believing every cry of "I saw one dad, I saw one!".
Spending time observing my little gymnast spin and twirl through routines and swearing afterward that I had turned my head during the performance as promised.
Loosing the feeling in all my toes while my answer to Wayne Gretzky went through his paces at various local outdoor rinks at 6 in the morning in the dead of winter.
Loading an entire team of flag football players in a step van after games and stopping at the closest 7-11 for slurpees and delighting in the fact that no one cared who won or lost the game.
Enjoying a late night hot fudge sundae with my daughter after picking her up from a party she attended. (Years later, I discovered that she had tried beer for the first time and was feeling more than queasy while I told her to "eat up". She is still convinced I knew she had been drinking.) Ah, the beauty of being a dad and being oblivious to the world around you. Hell, I loved hot fudge sundaes.
Then came the dreaded teen years, the divorce and becoming the man that destroyed everything. I won't share the guilt here, but I will share that I don't believe anyone under 40 understands the impact that all of their behavior has on their children. I was the same dad. I had just turned their world upside down.
We got through that period. Both children discovered that life does have ups and downs but overall it is really ok. These little people were becoming young adults and all of the sudden they could share things they liked with me. We enjoyed music and road trips and pizza.
Music is the web that catches one mid-day and takes them back to a place or time. Music is a thing we shared and more than a few artists bring a tear to my eye today. We had such good times. It was great being the dad.
Then, like little birds, they had wings and were gone much quicker than I expected. One to California and the other to Florida. I was alone. They were starting the grownup phase of their lives and I had the occasional phone call (only if I placed it).
One day, I did receive the call - "Dad, I want to come home. Will you come get me?" I flew to Los Angeles met my daughter, loaded up her car and began the 53 hour journey home. Another wonderful memory. I was dad to the rescue.
Then last year, I sat in the front row and cried when my boy married his bride. We shared a brief embrace that I will hold forever. Later in the year, I walked my daughter down the aisle. We shared the father daughter dance and shared an embrace I will hold forever.
Happy Fathers Day? Thank you for the opportunity. I am the luckiest guy I know.
Wednesday, May 24, 2006
Something I just never understand...
The spring market seems to be caught up in the ice cold winter market. There does not appear to be a thaw on the horizon. It seems that everyday more people decide to list their home. You can drive down some streets and see three, four or five for sale signs. At the rate we are going, open houses will be replaced with block party's.
Speaking of open houses, I had the opportunity to host one this past weekend. I like to have copies of the listings for comparable properties available for any guest with a small map that shows where the other properties are located. This weekend's map looked more like a walking tour of the neighborhood than a poor man's version of mapquest.
I did notice one thing about the visitors that seems to be more prevalent than in years past. The guests that replied to the question "Are you represented by a Realtor?" in the affirmative, had no Realtor in tow. They were either just out looking on their own or their Realtor gave them a list of "open houses" and told them to report back if there was anything that interested them. This is a rather disturbing trend in our industry.
I first noticed buyers coming by "open houses" without their Realtor a few years back. They were usually represented by an agent that offered a cut rate service. The deal was something like - you go out and find a home that you like and I will then write an offer for you. These poor folks would faithfully take newspaper ads, a full tank of gas and go off spending their Sunday's visiting as many "open houses" as they could fit into the one o'clock to four o'clock schedule. If they came across the home of their dreams, they would call the agent and start the ball rolling.
Those agents set a precedent that is horrific to those of us that understand the importance of true representation. Their cost saving business plan has begun a trend that does nothing for the poor consumer and lines the agents pockets with commissions paid but not honestly earned. Homebuyers are supposed to be excited when they find their dream home. The prospect of possibly paying less for full service and getting the home they want seems like a great deal.
All that appears on the surface is not the total picture. When a buyer enters an contractual agreement with a buyer's agent, the agent's responsibilities are much more than just writing an offer. Agents are trained in every aspect of the transaction. An agent sees more in a house than any buyer will see in a potential home. A Realtor begins using their knowledge when they first review a listing in the multiple listing service. Who is the agent representing the seller and what is the reputation of that broker regarding how smoothly the transaction will unfold? Does that broker have a reputation that indicates the transaction may not close on time if at all? How long has the house been on the market and why has it been on the market that long? What are similar homes in that area selling for? After compiling a reasonable list of homes that meet their current buyer's needs, a Realtor goes over this information and PLANS TO VISIT the homes with their clients. Realtors know that the listing agents will give directions that take you through the best and enticing route. The agent representing a buyer should make sure that their client is aware of everything in the area surrounding the home.
Buyers love the feel of homes. Their Realtor is supposed to review the disclosures and condition of the home. Many first time homebuyers don't know the difference between a furnace and a hot water heater. If they know that, they usually don't know the tell tale signs of trouble on the horizon. Most buyers can not decipher the condition of a roof. A Realtor can judge the wear and tear with a glance. The list of potential pitfalls is quite long. It is much bettor to have these potential problems pointed out in the beginning. It is a disgrace that the "stay in the office and let them look agents" fall back on the "we can do a home inspection" route. Information gathered at a home inspection comes well after the buyers have fallen in love with the home. A hot water heater with little life left may not seem as important after a home has already been emotionally purchased. If that information had been shared at the initial viewing - it may have knocked the house out of the dream home category.
I suppose the major problem I have with buyers left to their own devices is that it represents a total disregard of what our profession used to stand for. People became Realtors because they enjoyed helping people buy and sell homes. Sending clients out on their own is a total abdication of responsible behavior. The agent is still liable for problems that arise out of their action or lack of action. Those that cut costs and fail to fully do their job may be rolling the proverbial dice and hoping nothing bad will happen, but I dare say they have failed miserably when it comes to doing the job they should be doing.
I am not soliciting anyone, I am just sharing a fact. If your agent is sending you out on your own, you may save a dollar now, but you are not getting the representation you deserve and are paying for.
The spring market seems to be caught up in the ice cold winter market. There does not appear to be a thaw on the horizon. It seems that everyday more people decide to list their home. You can drive down some streets and see three, four or five for sale signs. At the rate we are going, open houses will be replaced with block party's.
Speaking of open houses, I had the opportunity to host one this past weekend. I like to have copies of the listings for comparable properties available for any guest with a small map that shows where the other properties are located. This weekend's map looked more like a walking tour of the neighborhood than a poor man's version of mapquest.
I did notice one thing about the visitors that seems to be more prevalent than in years past. The guests that replied to the question "Are you represented by a Realtor?" in the affirmative, had no Realtor in tow. They were either just out looking on their own or their Realtor gave them a list of "open houses" and told them to report back if there was anything that interested them. This is a rather disturbing trend in our industry.
I first noticed buyers coming by "open houses" without their Realtor a few years back. They were usually represented by an agent that offered a cut rate service. The deal was something like - you go out and find a home that you like and I will then write an offer for you. These poor folks would faithfully take newspaper ads, a full tank of gas and go off spending their Sunday's visiting as many "open houses" as they could fit into the one o'clock to four o'clock schedule. If they came across the home of their dreams, they would call the agent and start the ball rolling.
Those agents set a precedent that is horrific to those of us that understand the importance of true representation. Their cost saving business plan has begun a trend that does nothing for the poor consumer and lines the agents pockets with commissions paid but not honestly earned. Homebuyers are supposed to be excited when they find their dream home. The prospect of possibly paying less for full service and getting the home they want seems like a great deal.
All that appears on the surface is not the total picture. When a buyer enters an contractual agreement with a buyer's agent, the agent's responsibilities are much more than just writing an offer. Agents are trained in every aspect of the transaction. An agent sees more in a house than any buyer will see in a potential home. A Realtor begins using their knowledge when they first review a listing in the multiple listing service. Who is the agent representing the seller and what is the reputation of that broker regarding how smoothly the transaction will unfold? Does that broker have a reputation that indicates the transaction may not close on time if at all? How long has the house been on the market and why has it been on the market that long? What are similar homes in that area selling for? After compiling a reasonable list of homes that meet their current buyer's needs, a Realtor goes over this information and PLANS TO VISIT the homes with their clients. Realtors know that the listing agents will give directions that take you through the best and enticing route. The agent representing a buyer should make sure that their client is aware of everything in the area surrounding the home.
Buyers love the feel of homes. Their Realtor is supposed to review the disclosures and condition of the home. Many first time homebuyers don't know the difference between a furnace and a hot water heater. If they know that, they usually don't know the tell tale signs of trouble on the horizon. Most buyers can not decipher the condition of a roof. A Realtor can judge the wear and tear with a glance. The list of potential pitfalls is quite long. It is much bettor to have these potential problems pointed out in the beginning. It is a disgrace that the "stay in the office and let them look agents" fall back on the "we can do a home inspection" route. Information gathered at a home inspection comes well after the buyers have fallen in love with the home. A hot water heater with little life left may not seem as important after a home has already been emotionally purchased. If that information had been shared at the initial viewing - it may have knocked the house out of the dream home category.
I suppose the major problem I have with buyers left to their own devices is that it represents a total disregard of what our profession used to stand for. People became Realtors because they enjoyed helping people buy and sell homes. Sending clients out on their own is a total abdication of responsible behavior. The agent is still liable for problems that arise out of their action or lack of action. Those that cut costs and fail to fully do their job may be rolling the proverbial dice and hoping nothing bad will happen, but I dare say they have failed miserably when it comes to doing the job they should be doing.
I am not soliciting anyone, I am just sharing a fact. If your agent is sending you out on your own, you may save a dollar now, but you are not getting the representation you deserve and are paying for.
Thursday, April 27, 2006
Why are listings priced like grapefruit?
Real estate agents price homes like produce in a super market. They go into a listing presentation and they close the deal. Everyone agrees the home is worth $300,000 so the agent suggests that they put it on the market for $299,900. Everyone knows the psychological advantage of slipping under a price point by a penny or a dollar or a hundred dollars or even one thousand dollars. It just makes the price look like a bargin.
Why?
You are not selling grapefruit. You don't put a big sign in the yard "For Sale, ABC Realty, $299,900."
You put the home into the multiple listing service. I have never met an agent that pulled up listings and highlighted all of the "almost" numbers. Agents representing buyers, usually do a search based on what the buyer is qualified to spend. Does anyone ever get an approval letter that states the buyer is approved for $299,900? Does anyone ever get an approval letter that is not in round numbers that always end in 000? I don't think so.
I think you have someone in your office that can spend up to $325,000 and you enter a search with the list price range $300,000 to $325,000. And I know (even with my limited understanding of search engines and bells and whistles in computers), the home that is listed at $299,900 will never appear in that search.
What does this mean JMac?
It means that by listing the home at $299,900 you have precluded a large segment of the buying population from ever seeing your listing. It means that the buyers that would find your property a true bargin (remember $300,000 is at the bottom of their search) will never see your listing. Anyone looking between X and $300,000 will find your listing but it will be at the top rung of their search, and your listing will be competing with what they may deem more affordable homes.
They are not buying grapefruit and their purchase will not initially be swayed by the difference you create using the 999 or 900 in your price. You are just using yesterday's produce pricing mentality and losing traffic to an archaic way of marketing.
Maybe it is time we understood the tools we use and dropped the 9's.
Just a thought.
jmac
Real estate agents price homes like produce in a super market. They go into a listing presentation and they close the deal. Everyone agrees the home is worth $300,000 so the agent suggests that they put it on the market for $299,900. Everyone knows the psychological advantage of slipping under a price point by a penny or a dollar or a hundred dollars or even one thousand dollars. It just makes the price look like a bargin.
Why?
You are not selling grapefruit. You don't put a big sign in the yard "For Sale, ABC Realty, $299,900."
You put the home into the multiple listing service. I have never met an agent that pulled up listings and highlighted all of the "almost" numbers. Agents representing buyers, usually do a search based on what the buyer is qualified to spend. Does anyone ever get an approval letter that states the buyer is approved for $299,900? Does anyone ever get an approval letter that is not in round numbers that always end in 000? I don't think so.
I think you have someone in your office that can spend up to $325,000 and you enter a search with the list price range $300,000 to $325,000. And I know (even with my limited understanding of search engines and bells and whistles in computers), the home that is listed at $299,900 will never appear in that search.
What does this mean JMac?
It means that by listing the home at $299,900 you have precluded a large segment of the buying population from ever seeing your listing. It means that the buyers that would find your property a true bargin (remember $300,000 is at the bottom of their search) will never see your listing. Anyone looking between X and $300,000 will find your listing but it will be at the top rung of their search, and your listing will be competing with what they may deem more affordable homes.
They are not buying grapefruit and their purchase will not initially be swayed by the difference you create using the 999 or 900 in your price. You are just using yesterday's produce pricing mentality and losing traffic to an archaic way of marketing.
Maybe it is time we understood the tools we use and dropped the 9's.
Just a thought.
jmac
Bricks, mortar, fear mixed up in a new real estate chess match and stalemate means no check.
O.K., I think I have figured out our current market. Everyday I check the multiple listings to see what is new on the market, what has been marked down and who has given up trying to sell. It is important. Someone may actually call hoping to buy or sell a home and I like to have enough knowledge to guide them in the right direction.
Today there are twice as many listings as there were this time last year. I checked public records and we have not seen a double in population in the last year. Babies are being born, people are dying and folks continue to be transferred into and out of the area. Hmmmm.
Prices are leveling off and even dropping below sales figures of a year ago. Fear is taking hold of the market. Those that are attempting to sell are discovering that unless they price their home correctly, they will not get any offers. Those that do price their home correctly are finding out that buyers are still coming in with an offer that is a bit lower than hoped for and the buyers want to actually be able to have the home inspected. Some people are even realizing that they will have to make needed repairs to sell the home.
Buyers are sitting on the couch. Nobody wants to buy at the top of the market. Nobody wants to buy at the top of a market that may see values go down a bit. Interest rates are rising. Some buyers are paralyzed by the notion that last year they could have gotten more money for the monthly payment they can afford.
It is an emotional stalemate and no checks are being passed from buyers to sellers.
There is hope.
At some point, sellers will become educated about the shift in the market and they will sit with a Realtor that understands the market and they will price their home to sell. They may not realize the same gain as folks did last year, but they will sell their home and they will move into a nicer home. They will be able to buy more home for the dollar this year than they could have last year! If they price their home favorably, they may even receive multiple offers. It is still occuring everyday on homes that are priced for the current market.
At some point, buyers will realize that there has not been a better market for them in a long time. While interest rates are going up, they are still well below what we have seen in the past 20 years. As a matter of fact, they are half of what they have been in the not so distant past. It may be true that your monthly amount does not buy as much house this year as it did last year. The facts are, you can get more house for your money today than you could have gotten last summer. If a buyer works with a good Realtor, they will benefit. Any dip in property values will be short lived. It will not take long for your home to increase in equity. Interest rates are always in flux. When they take a downward turn in the future, you can refinance your home and at that point you will be in more house for less money. It is a great time to buy.
F.D.R. may have said a lot of things, but he was never more accurate than when he shared the following - "We have nothing to fear but fear itself".
Just remember, those that step boldly forward are rewarded with the spoils of those that feared to step at all.
O.K., I think I have figured out our current market. Everyday I check the multiple listings to see what is new on the market, what has been marked down and who has given up trying to sell. It is important. Someone may actually call hoping to buy or sell a home and I like to have enough knowledge to guide them in the right direction.
Today there are twice as many listings as there were this time last year. I checked public records and we have not seen a double in population in the last year. Babies are being born, people are dying and folks continue to be transferred into and out of the area. Hmmmm.
Prices are leveling off and even dropping below sales figures of a year ago. Fear is taking hold of the market. Those that are attempting to sell are discovering that unless they price their home correctly, they will not get any offers. Those that do price their home correctly are finding out that buyers are still coming in with an offer that is a bit lower than hoped for and the buyers want to actually be able to have the home inspected. Some people are even realizing that they will have to make needed repairs to sell the home.
Buyers are sitting on the couch. Nobody wants to buy at the top of the market. Nobody wants to buy at the top of a market that may see values go down a bit. Interest rates are rising. Some buyers are paralyzed by the notion that last year they could have gotten more money for the monthly payment they can afford.
It is an emotional stalemate and no checks are being passed from buyers to sellers.
There is hope.
At some point, sellers will become educated about the shift in the market and they will sit with a Realtor that understands the market and they will price their home to sell. They may not realize the same gain as folks did last year, but they will sell their home and they will move into a nicer home. They will be able to buy more home for the dollar this year than they could have last year! If they price their home favorably, they may even receive multiple offers. It is still occuring everyday on homes that are priced for the current market.
At some point, buyers will realize that there has not been a better market for them in a long time. While interest rates are going up, they are still well below what we have seen in the past 20 years. As a matter of fact, they are half of what they have been in the not so distant past. It may be true that your monthly amount does not buy as much house this year as it did last year. The facts are, you can get more house for your money today than you could have gotten last summer. If a buyer works with a good Realtor, they will benefit. Any dip in property values will be short lived. It will not take long for your home to increase in equity. Interest rates are always in flux. When they take a downward turn in the future, you can refinance your home and at that point you will be in more house for less money. It is a great time to buy.
F.D.R. may have said a lot of things, but he was never more accurate than when he shared the following - "We have nothing to fear but fear itself".
Just remember, those that step boldly forward are rewarded with the spoils of those that feared to step at all.
Thursday, April 20, 2006
What, me worry?
The Washington Post continued it's attack on the housing market this morning. Those of us that work in real estate have watched the market change from optimistic to "running scared" as the Post has continued to print articles predicting a burst of the housing bubble. Today's offering, under full color photo, questioned the stability of the DC housing market. The column written by Tomoeh Murakami Tse went to great lengths to reveal that no one agrees which direction the market is taking. Different experts and institutions are quoted to support widely diverse theories on whether or not the market is up, down or sideways. Who to believe?
I live this industry. I work in a very active office. The market has changed. That being said, the market is always changing. There is a normal ebb and flow that occurs in this market. Buyers and sellers are impacted by interest rates, the cost of living, government policies and the amount of first time buyers in the market. This area does not feel the pain of a fluctuating job market. Local governments continue to support the housing industry. The market is alive and well in the Maryland suburbs.
The one thing that impacts the housing market above all other factors is the media. If the press begins reporting gloom and doom, the populace seems to follow. If reports tell of a booming market, sellers end up receiving multiple offers and prices soar. Local and national papers can offer findings from all the ivory tower institutes that support both sides of every equation. Thousands of dollars can be spent to produce reports that are then in turn analyzed to explain pricing of property. No one can seem to agree on the reason that home values shot up in the last two years, nor can the offer a concrete reason why things have leveled off.
A visit to your local library and reviewing news articles will reveal stories that told of the wild market we were experiencing over the last couple years. Agents were unlocking doors at open houses while a parking lot full of buyers waited a chance to quickly walk through and make an offer. Homes were listed at one price that was the starting point of a bidding war that rivaled EBay. Sellers were accepting offers at a certain point in time (a deadline to the bidding war) and then review multiple escalating offers for their property. As one house sold, another up the block came on the market at a higher price and the cycle began again. Stories continued to be printed.
As last fall began, the natural slow down in home buying occurred. One reporter after another began to herald this annual event as the actual end of the wild market. Housing sales began to slow somewhat, but the media continued to predict the bubble was bursting and lean times were ahead. Interest rates began to creep up and the market slowed some more.
Spring is here and the market is not as frenzied. Today the Post printed the story I mentioned. I do not have concerns. I have been around long enough to understand the natural cycle of our market. It is slower. There was no bursting bubble. The cost for the first time homebuyer has increased beyond the comfort zone. It is not just interest rates, they remain very low from a historical perspective. It is the ugly appearance of points which have re-entered the loan approval process. Points translate to increased cash needed to purchase a home (on a $300,000 purchase, 2 points equal an additional $6,000 needed at settlement). The uncontrolled cost of living increases such as gasoline headed above $3.00 per gallon and Pepco rates increasing 40% are an example of items that are depleting expendable cash available to first time buyers. As budgets are adjusted, the market will become more active.
I can only share that if you are thinking of buying or selling a home, today is the best day to do so. Housing may go up and down over the short term, but it remains the American Dream. If you must read the Post, understand that they have to sell papers and touching your fears does that much better than just sticking to the facts.
The Washington Post continued it's attack on the housing market this morning. Those of us that work in real estate have watched the market change from optimistic to "running scared" as the Post has continued to print articles predicting a burst of the housing bubble. Today's offering, under full color photo, questioned the stability of the DC housing market. The column written by Tomoeh Murakami Tse went to great lengths to reveal that no one agrees which direction the market is taking. Different experts and institutions are quoted to support widely diverse theories on whether or not the market is up, down or sideways. Who to believe?
I live this industry. I work in a very active office. The market has changed. That being said, the market is always changing. There is a normal ebb and flow that occurs in this market. Buyers and sellers are impacted by interest rates, the cost of living, government policies and the amount of first time buyers in the market. This area does not feel the pain of a fluctuating job market. Local governments continue to support the housing industry. The market is alive and well in the Maryland suburbs.
The one thing that impacts the housing market above all other factors is the media. If the press begins reporting gloom and doom, the populace seems to follow. If reports tell of a booming market, sellers end up receiving multiple offers and prices soar. Local and national papers can offer findings from all the ivory tower institutes that support both sides of every equation. Thousands of dollars can be spent to produce reports that are then in turn analyzed to explain pricing of property. No one can seem to agree on the reason that home values shot up in the last two years, nor can the offer a concrete reason why things have leveled off.
A visit to your local library and reviewing news articles will reveal stories that told of the wild market we were experiencing over the last couple years. Agents were unlocking doors at open houses while a parking lot full of buyers waited a chance to quickly walk through and make an offer. Homes were listed at one price that was the starting point of a bidding war that rivaled EBay. Sellers were accepting offers at a certain point in time (a deadline to the bidding war) and then review multiple escalating offers for their property. As one house sold, another up the block came on the market at a higher price and the cycle began again. Stories continued to be printed.
As last fall began, the natural slow down in home buying occurred. One reporter after another began to herald this annual event as the actual end of the wild market. Housing sales began to slow somewhat, but the media continued to predict the bubble was bursting and lean times were ahead. Interest rates began to creep up and the market slowed some more.
Spring is here and the market is not as frenzied. Today the Post printed the story I mentioned. I do not have concerns. I have been around long enough to understand the natural cycle of our market. It is slower. There was no bursting bubble. The cost for the first time homebuyer has increased beyond the comfort zone. It is not just interest rates, they remain very low from a historical perspective. It is the ugly appearance of points which have re-entered the loan approval process. Points translate to increased cash needed to purchase a home (on a $300,000 purchase, 2 points equal an additional $6,000 needed at settlement). The uncontrolled cost of living increases such as gasoline headed above $3.00 per gallon and Pepco rates increasing 40% are an example of items that are depleting expendable cash available to first time buyers. As budgets are adjusted, the market will become more active.
I can only share that if you are thinking of buying or selling a home, today is the best day to do so. Housing may go up and down over the short term, but it remains the American Dream. If you must read the Post, understand that they have to sell papers and touching your fears does that much better than just sticking to the facts.
Saturday, April 08, 2006
It seems that a lot of the folks I talk to say that they wish they had bought a home two years ago. The market has changed and even the wisest of experts can not predict which direction it will take. We have experienced a few years of price increases that have far exceeded any past predictions. Homes have literally doubled in price in some areas. Oh to have had a crystal ball in January of 2003.
I thought about it. I have to agree. If you are sitting there today, considering purchasing a new home, it is easy to say "we should have done that two years ago." Looking at today's prices, it seems logical that a purchase in 2003 would have been a great investment. I suppose you should remember that you are looking at 2003 prices with a 2006 income. Maybe you were not really in a position to buy two years ago.
I have one hope in talking with these folks. I don't want to be sitting with them in 2008 and hearing them say "we should have bought two years ago." Prices may level off or they may actually go down a bit, but as sure as the sun comes up every morning, those prices will rise again. There is no better time to buy than right now.
The current market stagnation has created an environment that supports buying now. There is more inventory and there are fewer buyers. Everyone seems to be waiting for someone else to make a move. Today's buyer is operating from a position of strength. Prices and terms can be negotiated to create the best deal for a buyer. Home owners are conceding points they held firm just six months ago. This current status will not remain.
People continue to receive jobs that include relocation. Babies are still being born. The need to find a new home remains. Those that act will reap the benefits.
If I hear from you, that will be fine. Just don't say "I should have bought two years ago." Now is the time to say "I'm ready."
jmac
Subscribe to:
Posts (Atom)
