The November numbers are out and there are a few interesting things to note.

Across the board, the number of new listings coming on the market is down, inventory is down and sales and new contracts are down. It's not unusual to see a little drop in new inventory coming on the market in November. But I believe that part of this is that we're seeing fewer foreclosures hitting the market. We do not necessarily see a similar drop in contracts and sales in November. So, there are probably non-seasonal reasons for this. One possibility is that fewer foreclosures on the market means fewer properties of interest to the buyers out there. Another possibility is that all the bad economic news out there has some buyers waiting to feel better about their own financial future. A combination of these is the most likely culprit. And, while you may have heard about the recent surge in mortgage apps, most of those are refinancing applications and may not affect sales here in the next month or two.

Culpeper is showing a further drop in inventory to 592 units. That's the lowest number we've seen in over 2 1/2 years. Only 75 new properties came on the market and only 40 were sold. 42 new contracts were ratified. It's interesting to note that the last time inventory was at this level in April of 2006, there were 67 properties sold and 70 new contracts ratified. The inventory in Culpeper is actually a little overstated. There are two new condominium developments in Culpeper that are showing a lot of individual units listed in the MLS. But since there aren't any actual units built yet, the housing units actually in existence is a little smaller. You don't see this in most of the other counties.

Fauquier County shows an inventory decline as well, down to 631. Sales dropped from 49 to 35, but contracts written stayed steady. In Fauquier as well, it's the lowest inventory number in 2 1/2 years.

In Prince William County we're back where we were, in terms of inventory, in early 2007. There are currently 3919 properties on the market. As in Culpeper, all numbers dropped this month, new listings, new contracts and solds. Since Prince William had also been seeing large numbers of foreclosure sales I suspect the decline in those listings is having an effect.

Rappahannock County, having weathered much of the real estate downturn without dramatic changes, is still seeing stubbornly high inventory. It's edged down from its peak of 103 last month to 98 this month. But I expect that we may be stuck around 100 for a few months, at least. Since sales in Rappahannock remain slow, it will take a very long time to get down to a more rational inventory level.

I had the good fortune this week to attend a leadership conference sponsored by the Virginia Association of REALTORs. I think VAR is a top notch organization and I'm proud to be a member. The conference itself contained some really excellent content.

I was especially pleased with the presentation by a college psychology professor from California. His field of expertise is influence, a field of study I didn't even realize had it's own experts! His presentation talked about how influence is an outgrowth of credibility. Credibility he defined as being expertise plus trustworthiness. Typically establishing credibility is a very lengthy process. But given the nature of what we do, it's not always possible to wait a few years while you establish credibility with a client. And, so we were treated to a presentation on how to speed up that process. His ideas were good and although the topic sounded like we could possibly talking about manipulation, the bottom line in everything was honesty and integrity. I liked that. Clearly no one ever established credibility by trying to short circuit those essential ingredients.

An important part of the process he discussed was being willing to share hard truths that are not necessarily in your self-interest. So, let's say I tell you, as a seller, that you shouldn't sell your house right now. Theoretically, that's going against my self-interest since I'm unlikely to make any money in the short term if you choose not to sell. But you are more likely to perceive me as credible when I do this because you know I've spoken against my self-interest in order to give you the truth.

This presentation was immediately followed by a public affairs spokesman from the National Association of REALTORs. I'd like to feel as good about NAR as I do VAR. Really I would! But they definitely make that difficult!

The gentleman from NAR gets up and starts the same old song and dance about how the media isn't fair and doesn't love us. He talked about how they only publish bad news. He used as an example the latest sales numbers that were released to the press in a nice package that even gave them the positive headlines they could use to lead the story.

Talk about no credibility! If journalists had used NAR's proposed headlines for the last two years they'd be out of a job by now! NAR has continued to tell everyone how we've hit the bottom every single quarter! Of course, they've been completely wrong, but it hasn't stopped them from continuing to lose credibility with the public, journalists and economists as they keep trumpeting their positive spin.

Tell the truth, the whole truth, the ugly truth, the painful truth. You can not spin your way into an up market! And, in fact, you hurt every real estate agent's credibility when we sit down in front of a seller and have to tell them how rough the market is after you've been telling them the reverse!

It was a very odd way to follow a piece on gaining credibility through truth telling! I don't know exactly who put the agenda together. And, they may not have known exactly what the full content was for either presentation. But it's surely an odd juxtaposition of messages!

President Bush gave a speech last week on the mortgage mess. In case you missed it, here are the main points:

1. The FHA rules will be modified to allow them to offer loans to more of the families who need to refinance out of their current Adjustable Rate Mortgages (ARMS).

2. The President will sign the bill currently in Congress to eliminate federal income tax on debt forgiveness from mortgage companies.

3. The government will launch a foreclosure avoidance initiative aimed at allowing families in troubles to stay in their homes and find ways to refinance.

4. New regulations will be issues requiring mortgage brokers to fully disclose their fees and closing costs.

5. Those in the mortgage industry who have engaged in wrong doing are being investigated and will face consequences for their actions.

To all those of you who are struggling, worrying and praying for some help, you didn't get much here.

Let me explain what I mean by that. The main provision here is the first point saying the FHA will be modernized to enable them to help more homeowners refinance. It's a nice first step, but it will help only a tiny percentage of homeowners, at least in our area.

Let's say you bought your home two years ago with zero down for $350,000 and it's now worth only $300,000 and on top of that your lender has pre-payment penalties that must be paid if you refinanced. In this fairly common scenario the proposed FHA program is likely to be useless to you. The big problem here is that you have no equity in your home. In fact, you actually have negative equity in your home.

The new FHA-Secure program requires that you have at least 3 percent equity in your home. Unfortunately that means only a tiny fraction of homeowners will qualify. And, if they do qualify they already probably had other refinancing options.

The second point is important and needs to get done and I've written about that proposal in this blog. But all the President did here was say he'd sign the bill when and if it gets to him. Again, not terribly helpful in the short term.

The third option appears to primarily involve counseling. It's a good idea but, again, unlikely to have large scale impacts. I've yet to see the details on this one and I hope that when I do I'm proven wrong.

Items four and five clearly are of no help!

I do wish the President had said a little more and asked for a little help from the American people. I wish he'd added something like this:

"My fellow Americans this is a time when we can all work together to help solve the problems before us. Our economy needs to stay strong because we've got important work to do, here at home and elsewhere in the world. In order to do that I'm announcing the following initiatives:

1. In all the reports about the mortgage problems some buyers may not have noticed that it's a great time to buy a home. Interest rates are near historic lows and prices are very attractive. I'm encouraging home buyers who have been sitting on the side lines to go ahead and buy that house. You'll be helping your fellow Americans and your country. I commit that my administration will do its part to ensure that you're making a good economic decision by working to keep the housing market and the credit markets strong.

2. Mortgage companies who deliberately defrauded borrowers will pay large fines and those fines will be used to help those they defrauded. The executives in charge of those companies will be held accountable as well.

3. Because real estate is a local issue I'm asking that each state governor appoint a task force to determine what other steps can be taken to assist homeowners who are in danger of foreclosure. The federal government is standing by to assist where it makes sense."

4. While the federal and state governments are looking for ways to help families in danger of losing their homes, let there be no doubt that this offer is not for those who were only looking to make a quick buck. The home in question must be the primary residence, not an investment property.

I believe that these additional items would have made a serious difference. One of our biggest current problems is a huge backlog of inventory. The housing market can not recover as long as that's true. And the foreclosure problem isn't going away until the overall market conditions improve. By helping reassure potential buyers that the government is committed to keeping a close eye on the market and avoiding a complete melt down the mind set could start to change. It's the kind of leadership we need right now!

• Gas prices will likely remain high.
• Home prices are not low enough to make the extra fuel/time costs attractive.
• Traffic congestion will likely only get worse.
• There are unlikely to be any mass transit alternatives available from this area any time soon.

• No more overbuilding!

• Any new construction that gets approved should reflect future demographic/housing trends.

• New construction needs to be developed with a view to the larger community, not just that subdivision.

• Education (at all levels) must be a top priority.

• We need to attract employers who will employ highly skilled/highly paid individuals.

• We need to be a destination in our own right, not simply an “outer suburb”.

• We need to look to other regional centers of growth and opportunity and foster mutual cooperation with those centers. (Culpeper – Charlottesville, for example)

I wrote on this blog earlier last year about all the money we've been taking out of our homes and where it's been going.

Here's a great story on just that phenomenon illustrated by very interesting charts. It's based on a report issued by the Fed which has just been updated.

The bottom line is still that too many of us are taking too much equity out of our home (an appreciating asset) to spend on consumer goods (depreciating assets) and in the end it is making us all poorer!

It's also clearly had an effect on the housing market. If you've tapped out your equity to buy the car, pay off credit cards or take that vacation to Maui, you've got no down payment to move up to the bigger house when it's time. I hear it from sellers all the time! They can't afford to take any less and pay off all their existing mortgage debt.

Unfortunately, buyers aren't willing to pay you more than your house is worth to help you out of a tough spot! And when you move up, you won't want to help either!

I'm not saying everyone who takes cash out of the equity in their home is an idiot! There is a time and a place where it makes sense. I'm saying for most people, most of the time, they've made a bad decision.

What do you think?