Are you ready for some good news? Of course you are. We all are. While we wait, I want to pass along a quote, forwarded by a favorite local, Michael Umphrey of Prudential Santa Fe… “People who say it cannot be done should not interrupt those who are doing it” ~ George Bernard Shaw I suppose there is a hint of manifest destiny or ‘damn the torpedoes -full speed ahead’ in that statement, but if a “can do” attitude bothers you, you might want to read something else. In the real estate industry over the last 3 plus years, a can-do will-do must-do attitude has prevailed. It used to be you could roll out of bed and cash a commission check just because your hair was perfect. Now it takes hard work, some faith, a generous helping of consistency, a willingness to listen, a bazillion units of patience, plus the insight to know what your time is worth. If you have a plan for your life, which I strongly recommend, it could/should include what your career goals are, and what you will have to do to reach them. Is this going to be the year you execute the plan?
What the market is doing is difficult to spin into focus right now. We are within the seasonal trend of increasing listing inventory. Traditionally, many listings come on line between March and July and this year will be no exception. In fact, there may be some pent up demand from sellers that were unsuccessful finding quality buyers the last couple years; now thinking “this is my year”. If you are a seller and aren’t thinking this is your year, what are you thinking? Next year will be your year? Quick words are available if you need a byline to pass along: sales are up, inventory is up, prices are flat, buyers are getting more serious, sellers are getting more motivated, stuff like that. Help yourself. You can’t really say the wrong thing unless you start promising how real estate is always a wonderful investment with the doubling of values every X years. Those were the days. Ask me if anyone ever told me that their sales professional told them that they aren’t making any more land so get lots now while you’re younger. I stole that last part from a bumper sticker.
So please consume the attached and included information carefully. Things are what they are, which is, apparently, getting better all the time. That same tradition of ‘more properties being listed in the spring and early summer’ goes hand in hand with another seasonal tradition, that ‘a majority of sales in our market occur between July 4th and Thanksgiving’. Majority means over 50% of the year’s results in less than 5 months time. No, it’s not quite the frenzy of a toy store on December 24th, but it is usually safe to predict increasing sales in the summer and fall. You know those buyers have to look at practically 50 homes before they find one they like anyway, and that takes some time! And some tanks of gas. Thank you Al Gore and the Internet for making home buying an easier process by allowing buyers to shop online! Say what? They still want to look at 50 homes? One at a time? Okay, get in the car.
The attached Absorption Rate chart is compiled and sent out each month. You will see evidence of the increasing inventory (a seasonal phenomenon) and see a mostly level and steady line (NOT going down) for sales numbers. That’s where we are today. There is not likely to be any substantial shift in those numbers until we can include results from this summer (and beyond). Until then, we are going back to work to insure a better future for our grandchildren. Or at least accumulate something we can retire on some day. This is the year to begin.
In addition to tracking sales and inventory in a comparative spreadsheet with lots of rows and columns, I also track inventory over the months/years. There are signs of real improvement because inventory is down from this time last year. I am almost ready to say things have improved enough now that I can confidently proclaim that the burst housing bubble is now cleaned up and we will see a growth in sales and prices from here on. But almost ready to say is not saying. The one little thing hanging over our heads is pressure from the shadow inventory that lenders apparently control (or are hoping they do not end up owning). If you are not aware of that phrase, it is being used to describe the number of homes lenders and banks are purposely holding off the market while they try to get rid of the inventory they already have (due to foreclosure, deeds in lieu of, etc.) Many economic experts are cautioning those that would proclaim victory over the recession to beware of the shadow inventory. In other times, such an inventory might ‘self correct’ as values creep upward and buyers and sellers come to agreement on transactions and prices. But today we can’t expect homeowners to magically get current on their payments overnight and we cannot expect prices to climb fast enough to make those homes marketable again. Many mortgages are just now changing into fixed rates with higher payments (from adjustable status before) and how homeowners will handle these rate and payment resets will speak volumes about how fast we recover. My friends want the good news today and want to build on it. I would love to see it happen.
Looking forward, I will be sending out some inventory studies that will give you a closer look at those trends. And as always, you are welcome to use parts of this blog text in your own communications, or just ignore it. At least several Realtors quote from this in their own communications. Think they are concerned that I will steal contacts? It is all about the customer. They are deciding, nobody else decides for them. This is going to be their year!