Bubble Bloggers, Naysayer and Animal Rights Nuts
Posted on March 19, 2008
Filed Under bubbles, Relationships, Portland, blogging, Real Estate | 60 Comments
A comment on this post, from the perfectly named Naysayer:
I love how you real estate people and the homedebtors try to blackmail the rest of us with your ominous threats about how the return to sane housing prices will be bad for all of us. Bullpucky.
Let it crash. Let it crash HARD. The dotcom bubble burst didn’t hurt everyone and this one won’t either. Well, no one except stupid people who bought overpriced dwellings and the real estate industry that reaped the benefits. A return to sane pricing is the very least of our problems. More pressing is the damage done by the lending practices of the financial industry. Propping up prices won’t alleviate that one bit.
You people have only yourselves to blame. Save the warnings. We’re past that.
Charming.
But, again, Naysayer, thanks for accepting the invitation. I have a point I want to make and want to make only once, but I didn’t want to make it on Ron’s site; he’s much, much nicer than I am. This fits. Perfectly.
I’ve been through this before. In the early nineties I was involved in - and even moderated for about thirty six hours - an animal rights newsgroup. I had a friend who was in medical research, and my wife was involved with the AKC and the breeding of dogs; both were targets of these nuts, and the Animal Liberation Front - originality is not the strong point of sociopaths - was busy burning mink farms and research labs in order to prove a point.
Profiles emerged almost immediately:
- The AR devotees - note this is the rat is a pig is a dog is a boy club - were for nothing; they defined themselves by what they were against. They didn’t love animals, they hated humanity. Still do, for all I know.
- As you might expect, intellect wasn’t a dominant trait, but even those who should have known better - one even had a law degree and a PHD in philosophy - lacked any measure of discernment; logical flow simply wasn’t part of their arsenal. That was, well, logical: When you begin with a conclusion, as they had, and try to work backward for proof, logic gets in the way. They were forced to resort to non sequiturs, begged questions and, most popular, ad hominem to make a point, and almost all thought they were infinitely more clever than they actually were.
- Most, of course, cowered behind anonymity. It was there that it first came to my attention that those not willing to put their name to an idea likely didn’t have an idea worth hearing.
- Perhaps most importantly: in their zeal for a world of utopian parity, they confused lifting themselves up with bringing others down. As long as they could damage their perceived nemeses, it didn’t matter if it scorched the animals they were pretending to champion or, ultimately, even themselves. Destroy, destroy, destroy, destroy.
Are you getting the point, Naysayer? Even your handle fits the profile. The biggest difference between you and me is I want people to succeed; I value excellence and the rewards that come attached to it. You are invested in failure: you want more foreclosures, you want the economy to tank, you want more people to suffer, so you can accommodate your poorly sourced narcissism.
I want the very best for my clients, and work to get them the very best information possible so they can make informed decisions. That’s why I tell them to stay away from the crap that NAR puts out, but even more emphatically tell them to stay away from the crap put out by bubble blogs. Both have agendas, but you have the added disadvantage of not knowing what you’re talking about. You know nothing about the business of real estate, nothing about the decision dynamics that go into buying and selling, nothing about market forces. [‘Propping up prices’? What the hell does that mean?] You don’t want people to have good information, you want people to only have your information; your whole paradigm is wrapped up in the decidedly fatuous “If people buy now, they’re stupid”.
I’ve spent the better part of the last two months trying to find ways for a couple not to put their home on the market, including working with their lender and getting them into HUD counseling. I have nothing but contempt for anyone who’s delighted by their angst. [Let it crash. Let it crash HARD.]
We’re in a tough market, a fact I’ve never tried to hide. While it’s not going to crash nearly as hard as you hope, we’re going to be in it for at least another six months, possibly much longer.
But it is what it is. I’m going to do everything I can to help those who need my services to see their way through it.
What, exactly, are you going to do?
Bubblers and Ripples
Posted on March 10, 2008
Filed Under Portland, Selling Real Estate, Buying Real Estate, Real Estate, General | 3 Comments
USA Today has a story today re a connection between the decline in housing and the decline in electronics sales. As most things that show correlation without showing causation, it’s interesting but not much more. It does, however, dovetail nicely with a post I’ve considered writing to those numbered and universally nameless souls who’ve been predicting a Portland downturn for awhile now, and are gleeful that they’re finally right: Beware of that for which you wish; this affects everyone.
The following are estimates, but informed ones. It’s based on February, 2007 residential sales as compared to February, 2008, for just the Portland Metro Area. In Feb 2008 there was a decline of 706 units and $212 million. From those numbers:
In brokerage fees alone (@5%) you can deduct $10.6 million from the economy. Note that amount goes to brokerages, from which agents are paid, as well as the normal costs of doing business: support staff, equipment, leases, etc. Someone, somewhere, lost out on the sale of a new laser printer; and some facilitator and receptionist, somewhere, lost their jobs.
If last week’s numbers are correct, and owners average 48% equity in their homes, that means about $101.8 million won’t go to, mostly, new homes. Since that’s already figured in to the sales decline, more important is the amount taken out of the sale that doesn’t go to the down payment, perhaps to a plasma TV or home upgrades. Let’s say the average is 5% (I suspect it’s considerably more): that’s another $5.1 million.
Mortgage brokers - those that are left - for the most part don’t have the high commission products, so let’s assume 1% on average. If 75% is the average LTV, that comes to another $1.6 million.
Title and escrow companies: about $2.1 million.
Inspectors: $.3 million. Appraisers: $.4 million.
Note I haven’t calculated movers or contractors hired to complete inspection items. Even so, that’s $20.1 million that was in the Portland economy in February a year ago, but wasn’t there in 2008. One month.
That will buy a lot of cell phones…
Paul Potts: Horatio Alger in the Twenty-First Century
Posted on March 8, 2008
Filed Under Diversion, Excellence, General | 5 Comments
I’m a sucker for excellence, so that’s the theme of this Saturday morning diversion.
I caught the tail end of an interview on FOX news with an opera singer who’d apparently won the Britain’s Got Talent competition, the precursor to American Idol. I love opera, couldn’t imagine its appearance on AI, and the interview was of the “Aw, shucks, I can’t believe this is happening to me” genre, except it was genuine humility, not the Hollywood fabricated kind.
So I did some YouTubing. I found Paul Potts is his name, and found a video of his initial audition. It’s been viewed over 22 million times, so this isn’t exactly the first time it’s been posted. There is, however, a reason it’s been viewed 22 million times. Enjoy.
He ended up winning the competition, signed a multi-million dollar recording contract - his first CD has sold over 3 million copies - is on a tour of 13 countries and is now going to have a movie produced of his life.
I’ll leave it to each to decide how this relates to real estate…
HUD, FHA, GSE, ETC.
Posted on March 6, 2008
Filed Under FHA, Mortgage, Portland, Buying Real Estate, Real Estate | Leave a Comment
Housing and Urban Development just released its national list, by county, of new limits for conforming loans and qualified FHA loans.
Interesting: the median price for the Portland Metro area was figured @ $335k, so limits for both FHA loans and conforming loans went to $418,750. That’s insignificant for conforming loans - they’ve been $417k - but up considerably for FHA, which has been @ $304,950.
FHA has much different and in many ways less stringent qualifying standards - 3% down, doesn’t rely on FICO scores - than conventional loans; it used to be the standard for first time buyers. Consult your mortgage professional!
Note other counties in Oregon differ. Full national list here.
Feb 08: First look at the numbers
Posted on March 5, 2008
Filed Under Portland, Statistics, Selling Real Estate, Buying Real Estate, Real Estate | Leave a Comment
One of the nice things about transparency - as opposed to spin - is that when the numbers actually doreveal themselves there’s no backpedaling, readjusting or respinning necessary.
And early February numbers - note they’ll continue to adjust for the next week or so - are exactly as expected. These are for all catagories in the Portland Metro area:
Median Price
It’s fluctuated in a very narrow range the last couple days; right now it’s about $600 higher in ‘08 than Feb ‘07. It will finish somewhere in the +- .5% range, or as flat as you can get. It continues to drop, though, from its August high, now down about 7%.
Unit Sales
I detect a pattern. Down right now from Feb 07 about 37%, will finish down between 30% and 35%.
Months Supply of Inventory
Again, this is based on pending sales for the month; MLS calculates on closed sales so is roughly a month behind and will trend higher (not all pending sales close). That number, calculated today, would be 10.9 months, will finish around 10 months.
Now, once again!, to emphasize that All Real Estate Is Local: I’m about to list a single family home in Tualatin for $310k. Here’s the MSI for Tualatin, under $400,000:
We have to take into consideration a much smaller sample and the fact that sales in the category are down here as well, but so is inventory, and Days On the Market for homes going under contract is 45, as compared to the metro area’s 88.
AREIL. Consult your local representative…
PS If anyone would like me to run numbers in a specific market at a specific price point, I’ll be happy to do so as time allows. Just email me via the ‘contact’ link on the right sidebar.
Standing athwart history, part 2.
Posted on February 28, 2008
Filed Under blogging, Relationships, bloodhoundblog, Marketing, Real Estate, General | 1 Comment
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The business of real estate is changing, not because of a tough market but in spite of it. [When homes aren’t selling, sellers understandably gravitate toward high-volume high-profile listing agents, reinforcing the status quo.] It’s a process, but the internet is turning everything on its head: Buyers are savvy enough to do their own searches, sellers savvy enough to know that if it’s not at least on Craigslist agents haven’t done their job. Both want more - and better - information, and they’d like it within a click or two. They’ll use the services of a professional to help process that information, but want to be the decision makers; they bristle at the thought of being ’sold’ what’s usually the biggest purchase of their lives.
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“Yes, Nike is a marketing company, but our product is our number one marketing tool.” Phil Knight
I’ve told the story but it’s worth repeating: one of the first seminars I attended after I earned my license was on time management, the underlying premise this: Productive agents spend 90% - 90%! - of their time marketing themselves or, in the delightfully sterile vernacular, generating leads. I thought then, and still think to a degree, if we’re spending 90% of our time selling ourselves, what is it, exactly, we’re selling?
But this is a marketing business, and not just in the sense of marketing homes. One could be the best agent in the history of agents, but if no one knows about it nothing else matters, especially give six catrillion agents from whom to choose. Agents are constantly looking for ways to differentiate, and the internet offers many possibilities, but here’s where those who stand athwart and the status quo part ways: The former thinks it necessary to utilize technology to make it better for you, the consumer; the status quo is interested in making it better for the agents. It’s the difference between improving our product and improving our selling.
Thus the buzzwords Web 2.0, SEO, Social Networking; it’s all just starting to work itself out. We’re still trying to define with precision what our product(s) looks like. Zillow, certainly one of the most successful of the Web 2.0 companies, was in Beta for two years before it had a handle on what customers wanted; it’s still evolving. Ron Ares points out that when he started blogging in 2005 there were only three real estate bloggers; now there are sixty, but note at least half of those aren’t kept up to date and there are 7000 agents in the Portland Metro area.
So in several venues around the US, people - Buckleyesque people - are gathering to share information and ideas. The graphic above links to a May 19-20 seminar under the auspices and talents of Greg Swann and Brian Brady and under the sponsorship and participation of Zillow.com. Russell Shaw, one of the very best in the business, will debate Glenn Kelman, CEO of Redfin. That, alone, is worth the trip.
In addition, thanks to Joel Burslem of Future of Real Estate Marketing , and Ron Ares, a group of local bloggers are getting together late in March to meet and discuss (and, perhaps, to tip a couple).
I can’t imagine coming away from all this without a much clearer sense of direction. It’s safe to say NAR won’t be in attendance, and will largely consider it the dabbling of dreamers.
We’ll see who’s right.
PS We - all of us - would love feedback from the buying and selling public. What do you want?
“It stands athwart history, yelling Stop…”
Posted on February 27, 2008
Filed Under Relationships, General | 4 Comments
I started this morning with ideas germinating on real estate weblogs, web 2.0 and (once again) the state of real estate. The business is changing because how people approach buying and selling homes is changing, and web 2.0, still embryonic, is going to be a big part of it. We just don’t yet know how.
But when I got back to my desk an hour ago to start writing I learned William F. Buckley had died. Interesting how we react to the death of someone we’ve never met, but that floored me. My reaction shouldn’t have surprised me: I think no one outside my family has had the same visceral impact on my political leaning, thought process and, perhaps even most importantly, on my love for the English language. No one could string words together to such great effect.
===
The title quote is from the mission statement of Buckley’s National Review, a magazine I first read in the late sixties. And, agree with its premises or not, it did exactly that: Nearly alone it spawned a movement that at once kept the country from sliding inexorably toward collectivism, while simultaneously separating itself from the haters in the Klan, the John Birch Society, Dan Smoot and others. It was (and is) deeply intellectual; the first time I read NR it took me an hour to get through the letters to the editor.
But it was the only magazine to which I’ve ever subscribed, and, before the internet, I’d devour it the day it came. (Now, of course, there’s National Review Online, Buckley’s lasting legacy.) There were dissenting opinions, but all carried the inevitability of terrific writing. Just having been introduced to Florence King was worth the subscription.
Then there was Firing Line, and the overpowering graciousness with which he’d skewer his guests. He was best friends with John Kenneth Galbraith - politically his polar opposite - and always had great respect for those with whom he disagreed.
There are many wonderful tributes over at NRO, but I think it’s fair to note that what made William F Buckley William F Buckley is that he meant as much to aging real estate brokers who never met him as to some of his closest friends. He will be missed.
RIP.
On the Theory People Don’t Want Spin; Portland Market Dynamics
Posted on February 20, 2008
Filed Under Statistics, Portland, Selling Real Estate, Buying Real Estate, Real Estate, General | Leave a Comment
Charles Turner asks an excellent question: How Do We Measure Real Estate Markets? Statistics exist to prove almost anything one wants to prove; what, though, will give the best indication of a market’s health?
When I was with Nordstrom in the seventies, volume was king. While most department stores calculated success on their gross margin, we lived and breathed (and were paid bonuses on) how much went through the register. If there was a YoY increase, that meant we had what the customers wanted and things were running relatively smoothly; if a decrease either our inventory mix was wrong, our service was off, displays were poor or any of a number of lesser factors needed attention. If we had an increase but another store had a bigger increase, we still had to find out why.
Note we didn’t calculate yearly. Or quarterly. Or monthly, weekly or daily.
We took readings every hour. By doing so we could catch problems early, before they became disastrous. And problems were never, ever greeted with excuses - But there’s a recession! - they were always met with the question: What are you doing to fix it? We’d fly missing goods in at our expense just to make sure we could meet customer demand, something department stores couldn’t do with their margin fixation; but ironically our gross margin was the best in the industry.
Assuming we’re talking about the measurement of a given market and not whether or at what price an individual property will sell - AREIL - I think economists spend too much time with median price, which always gets the lede, and too little with YoY volume.
It’s comfortable knowing Portland is one of the very few markets in the country with a consistent line of median increases, but median price itself is a tenuous measurement: It doesn’t measure the value of individual homes, rather it measures the mix of homes sold. If a higher end customer is buying and a lower end not, median goes up accordingly, even though there’s been a 32% decrease in volume. I think the drumbeat of Prices up again! has led to a degree of complacency on both sellers’ and agents’ parts, keeping individual prices too high. It’s a little like the department store buyer who never takes a markdown to protect her bonus, then wakes up one morning to find out she has no customers left.
If we’d instead paid closer attention to volume - chart here - by last May we’d have seen serious problems coming, and by August, when volume was steeply heading south resulting in inventory steeply heading north, we could have adjusted accordingly. There’s an axiom in retail that the first markdown is always the cheapest, and we didn’t take it. Median price was still going up.
I haven’t gotten out of the habit; I still check numbers at least weekly: The consequence will be that in February we’ll continue the 30%+ decrease in volume, coupled for the first time (I predict) with a slight decrease in median price.
This needs to be emphasized: This does not reflect on individual homes, it’s a collective analysis. It does mean that we all - agents, buyers and sellers - need diligence in our decision making, and sellers especially need to understand that you’re better to be 5% under the market than 1% over, and you’re much better being the first to that price.
There are still many good reasons to buy and even to sell. It’s a tough - but by no means dire - market.
The question: What are we doing to fix it?
Conforming Loan Limits: In Portland, They Are What They Are
Posted on February 16, 2008
Filed Under Portland, Buying Real Estate, Real Estate, General | 3 Comments
Prior to the final passage of the recently signed and inaptly named Stimulus Bill*, it was speculated that the conforming loan limit - the $417,000 cap on loans bought by Freddie Mac and Fannie Mae - would be extended to as much as $729,000, thus allowing such jumbo loans to be financed at a much more agreeable rate.
Via InmanBlog: The bill did have such a provision, but with a twist: It’s capped itself at 125% of a metro area’s median price, up to the max of $729k. Since Portland’s never been above $300k - chart here - the conforming limit will remain where it is, $417k. In fact, only somewhere between eighteen and twenty (HUD has to run the final numbers) areas will be affected at all, and only three up to the max.
*Pulling $170 billion out of the economy in order to put $170 billion back in to the economy - minus the costs of shipping and handling - doesn’t stimulate much of anything.
Sellers: How to do it Right
Posted on February 15, 2008
Filed Under Selling Real Estate, Portland, Buying Real Estate, blogging, Real Estate, General | 2 Comments
In this market it’s now axiomatic that, next to the right price, the most important step in whether or not a home will sell is its condition when listed. I wrote this nearly a year ago, and repeat it in various forms in every listing appointment:
Condition. Unless you’re selling a fixer – and have priced it accordingly – make the obvious repairs before listing! Paint, inside and out if necessary. A few thousand dollars spent here can mean many more on the other end. Clean up the landscaping. Polish the appliances, get rid of clutter, clean carpets, get rid of clutter, clean windows in and out, get rid of clutter, deodorize pet and smoking smells, get rid of clutter: you’re selling your home, not your porcelain frog collection. If the home is already vacant – and sometimes even if it’s not – have it evaluated and staged by a professional stager. It can make all the difference, worth every penny.
Most people get it and prepare accordingly; those that don’t just need a nudge or two.
It’s never been my objective to use this blog to promote listings, but as much fun as it is to lightly ridicule, it’s much more fun to point out excellence.
It’s a newer home - 2005 - so didn’t require a lot of repair, only settling and paint touch ups. The sellers are friends from church, a young couple with two adorable babes, six months and two. [Ever tried to put a home in show-shape trying to take care of kids at the same time? Oh, and throw out your back a week into the process?] When we met three weeks ago it was already better than half the homes I tour, but intuitively they understood. They really got it.
When I went back last week with my camera, I walked into a model home. At the brokers’ tour on Tuesday, the reaction was what I hadn’t heard in awhile: “Charming! This should sell quickly.”
The full impact is here, but this should give you an idea:
It takes work, it takes concentration, but this is exactly what it takes to prepare a home for market.
I love people who do things well!
This should sell quickly…
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