A friend of mine is a member of the Arizona Real Estate Educators' group - I plan on joining in the near future myself. Yes, my friends, I'll soon be passing my wisdom on to others ... makes you want to move to Delaware, doesn't it?
In any event, one member of the group sent over an article on Tuesday written by Joe Klock, a writer with 50-odd years experience in real estate. Think about what Phoenix was in 1956 and you'll appreciate the longevity. (He's based on the East Coast, but we won't hold this against him.) Mr. Klock put together his observations on the current real estate market as well as those observing the market. Some of it is directed at real estate professionals, especially those who are so busy waiting for the sky to fall on their heads that they've stopped working for their clients. But the bulk of the article applies equally well to those within and without the real-estate industry.
CHICKEN LITTLE BECOMING CHICKEN BIG (A JPK Sermonette)
Is the sky of real estate brokerage really falling? You might come to think so if you read the mainstream media and listened to the doom-shouting pundits.
"The housing bubble has burst" wails an "economic advisor" on the front page of the Money Section of USA Today, echoing the gloomy view of many of his colleagues.
It is worth noting that, prior to becoming a modern Nostradamus, the background of that visionary was exclusively in the banking business and he presently structures investment portfolios, which are, one can safely assume, mostly resident on Wall Street.
Elsewhere in the same news item are these undeniable facts:
The median price of single-family detached homes in the USA fell 1.7% in August 2006, compared with the same month last year, the first such year-over-year drop in more than a decade - and the number of sales was down 12.6%.
Such a "bubble burst" in the stock market would have been brushed off as a mere "correction" or pause, but the economic gurus pounce on it like vultures when it occurs in real estate.
Equally factual is that the reported "plunge" in value and activity are from the unprecednted highs reached during our recent feeding frenzy, which might be characterized as an order-taker's market.
Sellers who are "losing" money these days are, for the most part, simply enjoying reduced profits. Not true, of course, of those who bought at the peak and now are forced to sell, but these unfortunates are relatively few.
Most grievously wounded are the recent "flippers" who counted on short-term profits during the heydays just pat. They bet and lost, which is a reality in the gambling game.
Predictably, many buyers who are able to act have chosen to be unready and/or unwilling, but they represent a small minority, leaving acres of diamonds in the prospecting mine.
Major casualties without our industry will occur among the aforementioned order-takers, who will swoon at the siren song of the Chicken Littles and sit on the sidelines until "things get better." Trust to tell, things WILL get better in real estate, as things always have, but in the meanwhile is an opportunity for those willing to seize it.
Sellers who want to sell - or have to sell - can do so by simply matching their prices to the best offers obtainable from the best buyers available in the "now" market. What they could have gotten last year is as irrelevant as a losing lottery ticket. Those unable or unwilling to meet that critical criterion are not really in the market and should save themselves (as well as their agents) a lot of discomfort by getting out.
Buyers who wish to and are able to buy should pay whatever they have to pay - no more AND no less - to get what they want. What they might gain by "bottom fishing" is likely to be offset by limited choices and/or missed opportunities.
Brokers and agents - as opposed to those order-takers and hand-wringers cited above, have an obligation to sell those facts of real estate life to the prospects who will otherwise be signing and "if only" dirge in the future (Why, I remember when I could have....!")
During my 50-pus years of involvement in real estate, there have been many periods when the sky was said to be falling in our world, but no sky - high or low - ever was or ever will be the limit for any but the chickens in real estate marketing.
The KlockWorks, Inc. PO Box 72, Holderness, NH 03245; website: www.joeklock.com
