Blog :: 01-2008

We've Hit Bottom? Hooray

Your Opportunity to Lead
The following is based on my recent interaction with Agents across the country in a wide variety of markets. I realize that it contradicts the doom and gloom news that you will continue to read and hear in many places. Where media is concerned good news does not travel fast. The information and recommendations below provide you with the opportunity to lead and take advantage of the very positive signs that are likely to be more and more apparent to you in your market.
Your positive attitude, your confidence and your enthusiasm based on the truth attracts business. Your choice to lead instead of follow can bring you tremendous success.
We've finally hit bottom
"Hooray, we've hit bottom." Perhaps a more appropriate response is, "Phew, we've finally hit bottom."
The first weeks in January have seen unusually warm temperatures in parts of the Northeast. In addition to record temperatures for January in the Northeast, in many markets across the country Real Estate Agents are seeing record numbers of buyers responding to marketing, showing up at opens and making offers.
As predicted (by me in my article Sensationalism and the Housing Bubble last year and by smart economists) prices in a growing number of markets are bottoming out.
Some markets have experienced little or no drop in prices over the past two years. They are the first to experience renewed activity and value appreciation.
Many, perhaps most markets across the country experienced a mild decline in prices. These markets have some exciting activity as buyers who were waiting for prices to hit bottom are realizing that they now have that price advantage they were waiting for.
In the hardest hit markets that experienced the greatest price declines, there is mixed news. On one hand it may take another twelve months for enough of the excess inventory to be absorbed for those markets to experience growing appreciation. On the other hand a rapidly growing number of buyers are coming back into the market anticipating that the bottom may have arrived. These buyers are getting great values while they are absorbing the inventory. These buyers are actually creating the future value increases that they perceive.
Let's be realistic
Let's be realistic. Things don't turn completely around in one year. We are not going to immediately see the kind of demand and seller's market that create double-digit appreciation this year. We will see the end of price depreciation and mild growing appreciation in market after market.
Hmmm... what will the media have to talk about? Oh, they still have the banking industries woes recovering from the subprime crises, and of course there is an election. Hey, if one of the presidential candidates is really smart, they'll talk about how they will solve the problems of the housing industry so that they can take credit for the inevitable turnaround that is already occurring.
As one market after another recovers there will be increasing appreciation. In your market some time between 2009 and 2011 you will see another seller's market. In the hotter markets you will again see double-digit appreciation.
That REALTOR® friendly seller's market will last seven to ten years followed by another correction. The cycle continues; seven to ten years or more years of a healthy seller's market followed by one to three years of a softer buyer's market.
A little perspective
A little perspective is in order here. Real Estate values, particularly single family housing in the USA has increased in value consistently for over a century ever since it has been measured and recorded.
The only factor that interrupts this positive momentum is when major employers abruptly leave a particular area creating a rapid increase in inventory and a long-term decrease in demand. Unfortunately, this happens in some markets.
Notice that I said abruptly leave an area. Many cities have suffered from a slow decline in employment and population. These slower shifting markets are often able to maintain a level of economic health as spin off businesses and new employers have time to replace the departing ones.
What does this mean to you?
What does this mean to you as a Real Estate professional? It means that good times are here again. It means that for most of you in most markets, you can honestly tell buyers that they should be getting back into the market to take advantage of the lowest prices that they may ever see.
You can sincerely explain that these cycles of softer markets normally last two or three years. As the cycle ends a pent up demand emerges of sellers who were waiting to sell and buyers waiting to buy. This gives a jump-start that shifts the price decline to increase in sales activity and therefore increase in prices.
In most markets you are seeing or going to see this as the spring of 2008 approaches. It will become apparent to the buying and selling public.
How can you take advantage?
You have the opportunity to begin to take advantage of it now.
How? Call the buyers and sellers who have told you they were waiting and suggest that there are signs of a healthier market arising this spring.
Call your past clients and the people in your Spheres of Influence. Check in on their lives and as they ask you about Real Estate and the market, both share your insight into the likelihood of a healthier market and suggest that if they know of anyone who is buying or selling that they should encourage it. Or at least suggest that they watch for the signs of emerging health in their Real Estate market.
Of course, offer to have them refer you so you can explain what you are watching, what you are seeing, and you can keep your eyes open for the right time for them to make their move.
Send an update of the Real Estate activity along with your insights to your Spheres of Influence.
Send an update of the Real Estate activity in your neighborhood or farm areas along with your insights.
Set up a mini website with a compilation of the local sales data or use one of the services available from your MLS or other vendors that compile this information. Put the site link on your mailings. Be sure to direct people to the data that corroborates your insights.
Send an e-mail to your e-mail list with the same insights and link.
Talk to everyone about what you are seeing and how it indicates that it has all the signs of being a great time to be buying or selling.
If people ask whether they should wait to sell because prices will increase, you answer that it is finally time when you have that kind of positive choice. Then ask why they may be thinking of selling and make an appointment to see their house and discuss it further.
Confidence and Enthusiasm
Knowledge leads to confidence. You having this market knowledge; leads to your confidence. People perceiving that you have this market knowledge; leads to their confidence in you.
Confidence leads to enthusiasm. Your confidence in the market makes you more enthusiastic. People's confidence in you because you have this knowledge leads to them being enthusiastic about doing business with you and referring you.
Enthusiasm leads to action. You will be more active listing and selling. People will be motivated to list and sell with you.
Lead the conversation
Watch the sales activity in your market. Look for the positive signs I discussed here, more sales activity, more buyers responding to advertising, more web hits, more open house visitors, etc.
Talk about this positive activity and how it benefits buyers and sellers. Talk about this with every one you encounter who is not an Agent. (Many Agents will be wallowing in negativity, or they will dampen your enthusiasm. That is poison to your efforts. Avoid it.)
Keep refining the way you talk about the market; so that you build more confidence in the way you discuss it and you awaken more enthusiasm in the people with whom you discuss it.
Watch the other person's reaction to your conversation about the market. When you see them take an interest, when they question you; when you see that they shift from their everyday demeanor to one of more excitement and enthusiasm then you have refined your conversation to one that is going to serve you and your business very well.
Be honest, I am not suggesting puffing up the truth.
There is no need to exaggerate. The truth is that in most markets the bottom has arrived. Take advantage. Hooray.

About the Author: Rich Levin speaks to Real Estate audiences coast to coast on raising Agent production. His insights are cutting edge and forward thinking. Rich coaches individuals and develops customized, highly effective training programs for Real Estate Companies. Contact Rich at 585-244-2700 or rich@richlevin.com. Register for Rich's free Newsletter at www.YourSuccessCommunity.com.

Comments

  1. Mallette Real Estate Inc. on

    I am looking forward to this year..2008 is going to be great!!

    Maggie Valley Calendar of Events

    February 2007

    1st - 3rd Weekends - HART Theatre presents "The Road to
    8th - 10th Mecca" a prize winning drama by South Africa's most celebrated playwright. Call 456-6322 for reservations.

    2nd & 9th Diamond K Dance Ranch and the Full House
    16th & 23rd Band are in full swing with country western & bluegrass music, line dancing and clogging.
    For more info call 828-926-7735.

    3rd Super Bowl Party & Buffet at the Maggie Valley Clubs Pin High Bar & Grille. 5:30PM till end of the game. Call 926-1616 for more information.

    5th Mardi Gras Party & Buffet at the Pin High Bar & Grille. 5 to 8PM. Call 926-1616 for more information.

    7th & 8th Cataloochee Ski Area "Law Enforcement Appreciation Day" 926-0285

    14th Join us for Valentine's Dinner at the Maggie Valley Club. Enjoy a 5 course meal at the Renaissance Restaurant at 7PM. Call 926-1616 for reservations.

    14th Valentine's Day Sweetheart Gourmet Dining Train. Enjoy a romantic evening aboard the Gourmet Dinner Train. Departs from Dillsboro Depot. Call 800-872-4681 for reservations.

    27th & 28th Cataloochee Ski Area "Fire & Rescue Appreciation Days!" Special reduced rate for fire & rescue personnel & their families. Must show valid I. D. 926-0285

    Great Smoky Mountain Railroad "Sweetheart Trains"

    Valentine's "Sweetheart" Trains
    Great Smoky Mountains Railroad
    Gourmet Dining Trains

    For Immediate Release January 11, 2008

    Contact: Roxanne Marshall
    Marketing Manager GSMR
    P.O. Box 1490
    Bryson City, NC 28713
    828 488 7015 or 800 872 4681 ext 7015
    WWW.GSMR.COM

    The Great Smoky Mountains Railroad is pleased to announce its' special Valentine's "Sweetheart" Trains on February 14, 15 & 16, 2008.

    The three trains will depart our Dillsboro, NC, depot at 7:00pm and will feature the award winning cuisine of Executive Chef Paul Swofford. Enjoy a romantic four course meal with full bar & wine service available aboard the vintage dining cars of the Great Smoky Mountains Railroad.

    The Sweetheart Trains' menu starts with Wild Mushroom & Rice Soup, followed by Spinach & Artichoke Dip served on Herbed Flatbread. The main course is a choice of Lobster stuffed Ravioli's served with a duet of sauces and Asiago cheese or Pan Seared Pork Tenderloin Medallions topped with Shitake mushrooms and demi glace served with scalloped potatoes. Your meal will end with Frangelica Flan and a champagne toast.

    Enjoy a complimentary wine & cheese reception prior to boarding beginning at 6:00 pm. The Valentine's Sweetheart Train is $73.00 plus tax & gratuity per person.

    All Gourmet and Special Event Dining Trains run February 2 - December 23 and Mystery Theatre Dining Trains run May 2- November 7, 2008.
    For more information and reservations please call 800-872-4681 or WWW.GSMR.COM

    Maggie Valley Open House Today!

    Please join us today for a Open House in Maggie Valley. A very special and unique home, warm lunch what else can you ask for. Directions: HWY 19 into Maggie Valley to left onto Turner Branch. Follow the open house signs to the home! 11:30-2:00. We hope to see you there! (And yes this is a picture of the backyard!)

    Maggie Valley New Construction for Under 260K

    Talk about a great time to buy! New construction under 260K with easy year round access minutes from the center of Maggie Valley, NC. There are 3 to choose from and each have 2 bedrooms and 2 baths plus a nice sized loft for additional sleeping space. Other features are large fixed glass windows to bring in the outdoors, wood/tile/carpeted floors, granite tops, wrap around decking and natural mountain surroundings. To see more pictures go to http://www.realtyworldheritage.com/ and click on our office listings on the left side of the site.

    Existing-home Sales Down in December but 2007 was Fifth Highest on Record

    Article from Realtor.org: Some factual information that the media is not telling us on the nightly news.

    WASHINGTON, January 24, 2008 - Existing-home sales declined in December following several months of stable activity, with total sales in 2007 at the fifth highest on record, according to the National Association of Realtors®.

    Existing-home sales - including single-family, townhomes, condominiums and co-ops - slipped 2.2 percent to a seasonally adjusted annual rate1 of 4.89 million units in December from a pace of 5.00 million in November, and are 22.0 percent below the 6.27 million-unit level in December 2006.

    For all of 2007 there were 5,652,000 existing-home sales, the fifth highest year on record; however, the total was 12.8 percent below the 6,478,000 transactions recorded in 2006.

    Lawrence Yun, NAR chief economist, said the market is experiencing uncharacteristic weakness. "Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate," he said. "Home prices are lower, mortgage interest rates continue to decline and incomes are higher, but many potential buyers are delaying a purchase."

    According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.10 percent in December from 6.21 percent in November; the rate was 6.14 percent in December 2006. Last week, Freddie Mac reported the 30-year fixed rate dropped to 5.69 percent. "Although interest rates on jumbo loans have fallen somewhat, they remain well above conventional mortgage rates," Yun said. "It isn't surprising that the share of single-family homes selling for more than $500,000 fell to 12.4 percent of transactions in December from 14.2 percent a year ago."

    Total housing inventory fell 7.4 percent at the end of December to 3.91 million existing homes available for sale, which represents a 9.6-month supply3 at the current sales pace, down from a 10.1-month supply in November. "The fall in inventory in December is encouraging, but inventories remain elevated and buyers have a clear edge over sellers in many markets," Yun said.

    The national median existing-home price2 for all housing types was $208,400 in December, down 6.0 percent from a year earlier when the median was $221,600. Because home sales have slowed the most in higher cost markets, there is a downward distortion to the national median as the mix of closed sales has changed over the past year. For all of 2007, the median price was $218,900, down 1.4 percent from a median of $221,900 in 2006.

    NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said that raising the loan limit on conventional financing is urgently needed. "The most effective way to stimulate housing and minimize the potential for a recession is for lawmakers to raise the limit on conforming mortgages to $625,000, which would open safe and affordable financing to buyers in high-cost areas," he said. "It is grossly unfair that some Americans do not have access to low-interest rate loans. This would help people as they move away from risky subprime mortgages and high-interest rate jumbo loans."

    NAR projects the higher loan limit would increase annual home sales by nearly 350,000, reduce foreclosures by 140,000 to 210,000, and increase economic activity by $44 billion. "What's more, this would come at no cost to taxpayers - it's a policy change that could really boost the economy," Gaylord said.

    Other projections of NAR's analysis show raising the loan limit would reduce the supply of homes on the market by 1.0 to 1.5 months, and strengthen home prices by 2.0 to 3.0 percentage points. In addition, as many as 500,000 jumbo loans would be refinanced to lower interest rates.

    Gaylord said current housing conditions vary widely. "Many local areas continue to have healthy or improving local housing markets," he said. "For example, we saw higher home sales last month in diverse areas such as San Antonio; Syracuse; Springfield, Ill.; and Sarasota, Fla. If you're thinking about getting into the market as a buyer or a seller, consult a Realtor® to learn about conditions in your area - they may be considerably different from the composite national picture."

    Single-family home sales declined 2.0 percent to a seasonally adjusted annual rate of 4.31 million in December from 4.40 million in November, and are 21.6 percent below 5.50 million-unit level in December 2006. In all of 2007, single-family sales fell 13.0 percent to 4.94 million.

    The median existing single-family home price was $206,500 in December, down 6.5 percent from a year earlier. For all of 2007, the single-family median was $217,800, down 1.8 percent from 2006.

    Existing condominium and co-op sales fell 3.3 percent to a seasonally adjusted annual rate of 580,000 units in December from 600,000 in November, and are 24.5 percent below the 768,000-unit pace a year ago. Condo sales for all of 2007 fell 11.0 percent to 713,000 units.

    The median existing condo price4 was $222,200 last month, which is 2.5 percent below December 2006. In all of 2007, the median condo price was $226,400, up 2.0 percent from 2006.

    Regionally, existing-home sales in the South slipped 1.0 percent to an annual pace of 1.97 million in December, and are 20.9 percent below December 2006. The median price in the South was $173,400, down 4.1 percent from a year ago. Existing-home sales in the Midwest declined 1.7 percent in December to a level of 1.16 million and are 20.5 percent below a year ago. The median price in the Midwest was $159,800, which is 3.9 percent lower than December 2006. In the West, existing-home sales fell 2.1 percent to an annual rate of 940,000 in December, and are 24.8 percent below December 2006. The median price in the West was $309,800, down 11.1 percent from a year ago. Existing-home sales in the Northeast dropped 4.6 percent to an annual rate of 830,000 in December, and are 22.4 percent below a year ago. The median price in the Northeast was $258,600, down 8.9 percent from in December 2006.

    The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

    # # #

    1 The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

    Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample - nearly 40 percent of multiple listing service data each month - and typically are not subject to large prior-month revisions.

    2 The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns . Changes in the geographic composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if more data is received than was originally reported.

    3 Total inventory and month's supply data are available back through 1999, while single-family inventory and month's supply are available back to 1982. Condos were tracked quarterly prior to 1999 when single-family homes accounted for more than nine out of 10 purchases (e.g., condos were 9.5 percent of transactions in 1998, 8.5 percent in 1990 and only 6.1 percent in 1982).

    4 Because there is a concentration of condos in high-cost metro areas, the national median condo price can be higher than the median single-family price. In a given market area, condos typically cost less than single-family homes.

    Existing-home sales for January will be released February 25. The next Forecast / Pending Home Sales Index is scheduled for February 7, and fourth quarter metropolitan area median existing-home prices will be released February 14.

    Haywood County Weather Update

    Here in Maggie Valley we have complained that we have not had a "real winter" in years. Limited snow and not really cold temperatures have been the norm lately. Not this winter! We had the good 4 inches last week and I thought it would be gone by Friday. After going out of town for the weekend and coming back on Sunday I was shocked to see the original snow on the ground and a fresh inch on top. As of today, some higher elevation mountain roads are still impassable due to snow and ice. We did get some rain today and warmer temperatures, but the areas that do not get sunshine are still frozen. The forcast shows a possibility for some more snow later this week although this can change by the minute. If you are looking for some winter fun watch the weather and come visit!

    Interesting Financial Day Today

    I think most have heard by now that the Fed cut interest rates by 3/4 of a percent today. The stock market seemed to be tanking and it did manage to recover a bit. What does all this mean to us? Well, initally the interest rate that banks charge consumers did not change much today, but according to our mortage expert consumer interest rates may fall again once the smoke clears from today's happenings. Also, if the stock market continues to perform poorly I think that investors will start to look at real estate again. With the current buyers market and historically low interest rates ,I think real estate will once again become a safe investment for consumers. Thoughts? Feel free to participate in the blog poll on the right side of the blog (scroll down).

    Maggie Valley Winter Wonderland!

    We finally recieved a good storm and this morning there is about 4 inches of snow on the ground at 3500 feet of elevation. As the night went on it appears that some freezing rain mixed and has made the snow stick to the trees. Beautiful! I do not think it will last long, but it will be a fun day for the kids. Schools are closed and most roads are still snow covered. If you are coming up for a ski weekend it will be great! Enjoy!

    Comments

    1. Mallette Real Estate Inc. on

      LOVE THE BLOG PAGE. KEEP BLOGING!
      • Mallette Real Estate Inc. on

        Thank You! Keep checking back for new blogs.