I know it’s that season when transactions should be occurring and yes, there has been a little bit more activity but we are far from the end of the crisis.
The stock market showed glimmers of hope this morning in anticipation of some positive signs in the real estate market but that reversed when the numbers were released.
Read here for the numbers.
Let’s keep at it…after all life is almost always about “showing up.”
It’s been a long and very cold winter.
Has spring brought a thaw? I am not so sure. Banks are still very clingy with their cash (not that this is a bad thing), some sellers are still in denial, and people are still nervous.
I read a great article that might shed some light for the future. The arguments seem to make sense. My gut – housing is still softening, will eventually bottom and base there for a fairly long time.
Read this: http://www.bloomberg.com/apps/news?pid=email_en&sid=aiiT.sNeq2YQ
What’s clear to me is that things have really changed. The party as we’ve known it for the last 25 years is over. But I am OK with that – I never really understood how things could keep going. And of course I doubted myself for thinking that the buying and building frenzy were fueled by easy credit, not earned income.
So now that the proverbial chickens have come home to roost, how do even the sane among us cope with the sea changes ahead!! The secret is simple – don’t spend beyond your means, save your pennies, conserve everything (gas, energy, time, money) whenever possible. I hear my grandmother and now her words are being channeled through me.
As for the real estate market – it really goes back to the old rules too – buy a house you can afford and plan to live in – it’s not a buy and flip asset.
It’s a struggle to adjust to the “old” realities but it’s a relief as well. To a simpler, less cluttered life where the emphasis is on relationships, family, home and community.
I promise to write more this year – it’s been difficult during these challenging times to get inspired. I’m back!!
I was reflecting the other day on some very interesting thoughts. For argument’s sake, stock are down about 50% since last year – that’s pretty disastrous, I’d say. And real estate is down on average, 22-25%. So why is everyone focusing on the decline in housing as the major drag on the economy? Stock are twice as bad as housing assets.
In fact, I would argue that real estate is the better performing asset, except, of course for cash. And we all know that cash will be a terrible investment a year or two from now because all the economic stimulus needed to boost the economy will begin to create massive inflation.
And, if I go back to my finance text books, I was taught that the best assets to own as hedges against inflation are real estate, stocks and gold. (Did you know that the Saudi’s are now requiring to get 10% of their payment in gold – what does that tell you??)
I’d be buying all three if I had cash. I think that real estate will begin to bottom and people will stick their heads up out of the bunker and begin to plan for the coming inflation. Start looking for those values, be opportunistic and of course when it comes to real estate – locattion, location, location!!
Here’s a sobering bullet that I read on the “Seeking Alpha” news feed:
•Home prices spiral. U.S. home prices fell the most in at least 17 years and are under continued downward pressure from the highest foreclosure rate on record. According to Federal Housing Finance Agency data released yesterday, home prices are down 5.9% from the previous year while Q3 foreclosures rose 71% from the previous year. Every quarter another 250,000 houses enter foreclosure, with each foreclosure pulling down the value of nearby homes by a total of $220K.
And sadly foreclosures are even up in the Berkshires. As a seller, you must be cognizant of this information. As a buyer with good credit and cash – what an opportunity!! Stay tuned as this marketplace continues to unfold. I am now calling it a rolling crash as it’s been coming for months and may continue for months.
I was re-reading my blog entries from last winter and spring and boy did I call it. We are in a recession – gee what a surprise!!
But it’s not a garden variety recession – it’s one caused by the biggest credit bubble in history and the consumer is not likely to buy the US out of the recession any time soon. The consumer was also lured into cheap credit both taking equity out of their houses to spend beyond their means and amassing huge balances on their credit cards. So not only do the banks,hedge funds and corporation have to de-lever BUT so do the consumers. This is bad and good. Bad because there is no quick fix and we are likely to be stuck in a recession for a good year or so. The good news is we may become SAVERS!! And saving is a good thing!! It keeps money in the banking system, it takes the burden off of our children’s futures and it helps avoid the types of problems we now face.
So, the US government has helped thaw the credit markets and lending is beginning to happen again but the Stock Market is behaving like a yo-yo, not even a roller-coaster. I think it’s because there is uncertainty about the magnitude of the recession, uncertainty about the outcome of the election and uncertainty over the future of the US capitalist system. We have never experienced the Fed as the lender of first resort – is it a bailout or a movement toward socialism?? I wish I knew. I am however an optimist and I believe we will work things out and happy days will be here again.
Hello friends. Where have I been during this mess? For one, I’ve been staying calm and remaining very focused and working very hard. The pundits are working 24/7, the central bankers are wringing their hands, and Iceland (yes the Country) has declared bankruptcy. What happened? Everyone was drunk on the excess of extremely loose credit and no amount of aspirin is curing the headeache and the puking.
And then I open the local paper, the Berkshire Eagle, and as clear as day Greylock Federal Credit Union has advertised on an entire page – “We have $100 million to lend” – They are solvent and thriving!! Wow – this local thing really does make sense – they didn’t sell their mortgages, loaned money in a market they understand and are happy to loan money to people they know. Seems so simple.
So as the world financial markets spin out of control, the Berkshires seems to function in its own orb. I hope it continues.
Last week I cut out a piece from the Wall Street Journal titled “Get Real With Your House Price” and of course because it caught my eye, I wanted to share it. For a long time I have felt like a salmon swimming up stream when discussing pricing with sellers in this market. My advice is: “How you price your property is how the marketplace perceives your desire to sell it.”
For instance, I just closed a sale last week. My seller had listed her property with another agency and had no success. When she called me, I had to give her the bad news that despite the fact that she bought her house in February of 2006, she stood no chance of selling at a profit. The market had gone down since then and if she really wanted out, I said list it at the price at which you purchased it and you will broadcast that you really are a seller!! And voila – we had many showings and a purchase price just $1500 below the asking price.
So, back to the Wall Street Journal article – it asks a simple question – “How can sellers tell if their homes are overpriced? Look for the following signs:
1. Not Enough Showings.
2. Some showings, but no contract.
3. Similar homes are now selling for less.
4. Repeated negative feedback
5. You’ve cut the price but not enough.”
I didn’t write the article but it resonated with me like I had. If you are a real seller or are thinking of selling, pay attention to the pricing!!
Winter’s over. The days are longer. Things feel better. Is it the vitamin D or are we emerging out of the depth of the bust? I’d like to believe that things are basing.
What I’ve noticed in the real estate market is that sellers (and I mean real sellers) are reducing their prices and are telegraphing that they want offers. Buyers (and I mean real buyers) are making offers on these properties and transactions are happening. Additionally, I have a May 6th Wall Street Journal article pinned on my bulletin board boasting “The Housing Crisis is Over”. And I believe that it is a well-reasoned article grounded in sound statistical information.
So where’s the conflict – it’s the economy stupid!! Gas prices are still making new highs, inflation is really showing up in the data and a myriad of other indicators are spelling RECESSION. So I might suggest that we all hold onto to our hats and get ready for a wild ride.
Don’t be greedy, be realistic. Get a bicycle. Plan ahead for the coming winter and pay attention to the election campaign.