“………. that falling home prices in America are nowhere near the bottom”
Did you read last week what Alan Greenspan said about the real estate markets?
“………. that falling home prices in America are nowhere near the bottom”
This won’t be a surprise to HREU Realtor Coaching Students.
But for all the future HREU Realtor Coaching Students…did you know that single largest year-over-year drop in U.S. home prices happened in May? A record 15.8% plunge. Thats simply stunning.
Harris Real Estate University has students in every major real estate market. Matter of fact there are now enrolled students in 6 countries other than the US. All of you are telling us the same thing. Home Sellers have their heads in the sand and refuse to accept reality. This isn’t a real estate ‘correction’…this is a real estate depression.
For 7 years (1999 to 2006) US home prices sky rocketed. Never in the history of the US have home values appreciated so quickly. Many of you who have been involved with HREU heard us warning that the housing crash would be deeper and longer lasting than anyone expected. It made no sense that home prices would do anything but crash.
In other words, there really was no reason for home prices to do what they did. Other than what is going to go down in history as the ‘housing financing fluke’. Low interest rates, easy credit and a $500,000 capital gains tax exemption. It became trendy to ‘be in real estate’. Everyone was an investor or house flipper.
In a handful of housng markets the fast appreciation made sense. Local economic conditions created jobs, jobs that were filled by relocating families. Sometimes creating a housing shortage. Even today as bad as the market is for most of the U.S. there are markets that are doing great. Overall housing appreciates around 6% per year. According to Freddie Mac, U.S. home prices have climbed 6.2% a year over the past 30 years.
One of the best barameters of the housing market has been the Case/ Shiller housing reports. Yale economist Robert Shiller’s inflation-adjusted housing chart, go back more than a century.
When you look at the research you will learn that, no one alive today has ever seen anything like the run-up of the past few years. So, forget about all the ‘real estate experts’ who compare this market to any other market. There are no comparisons, we are in uncharted waters.
Fellow agents, current and future HREU Realtor Coaching Students…its going to get worse before it gets better. Accept this. Decide NOW to take the actions required to make this your market. Be ready for what is coming.
The economy is in the tank. I don’t know if this is a recession but it sure feels like one. Warren Buffet recently stated that this ‘recession will last much longer and go much deeper than anyone expects’. Few Americans are in the mood or have the ability to make any big purchases…homes are the biggest of them all.
With very few exceptions the housing markets are horrible. Foreclosures are at record levels. And we will see new records in the months ahead as variable mortgages reset higher and prices drift lower. We are in direct contact with all the major lenders and they are gearing up for vastly more homes entering into the early stages of foreclosure. They know we are just getting started. Agents, sieze the opportunity and learn how to make money in this market. Learn the exact steps to becoming an REO Listing Agent. Lenders will have thousands of homes that have to be sold..become the agent with those listings.
There are more homes for sale now than any other time in U.S. history. Nationally, there is a 11-month supply of unsold homes.
Mortgage rates are rising. Two weeks ago, the national average for a 30-year mortgage surpassed 6%, a 52-week high.
Banks and other mortgage lenders have raised their standards, too. In recent years, even borrowers with spotty payment histories were able to buy a home. All the sub-prime and Alt A mortgages allowed for no-money-down, interest only, adjustable rate, negative amortization, “pick-your-payment” mortgages. Just recently Wachovia stopped offering “pick-your-payment” Mortgages. Its no surprise that Wachovia is on the governments watch list of banks that may fail.
Simply put, these are dark times for many in our industry. Yet, this market is creating a new breed of real estate top producers. Agents who are helping more people and making more money NOW, in this market than they ever did in the previous market. They know what you may not. They know how to list and SELL short sales. They are taking REO listings. If you haven’t mastered these skills yet..what are you waiting for?
Put all these factors together – a weak economy, declining home prices, higher mortgage rates, tougher lending standards and rising home inventory – and you’d think that home sellers would slash prices. You would also think that Realtors were flocking to learn the skills that they must know they are lacking.
But they aren’t. At least, not enough. Not yet.
Many Realtors are following (frankly) bad advice and simply ‘working harder’ doing the same things that may of worked in the previous market. Many agents don’t yet ‘get’ that this IS the market and there is no ‘bounce back’ coming anytime soon.
Sellers are often getting bad advice as well. Because their agents don’t know the truth about this market, they aren’t advising their sellers correctly. Agents, accept what this market will give. Then do the hard work and tell your sellers the truth.
There is no easy way around this. You must learn the scripts and skills required. Be the agent who is known for having sold listings. Be the agent who isn’t afraid of telling their sellers the truth.
No Seller ever wants to take a loss, of course, or to realize a smaller gain than anticipated. You must tell your sellers that potential buyers do not care what we paid for our homes or how much they were “worth at the top.” Be willing to have the tough conversations with your sellers.
Heck, we are in this market with you. Matter of fact we own several homes that are upside down. We too are working with sellers who are scared and frustrated. You are not alone.
We need to make a collective agreement to tell the sellers the truth. In order to do that we (fellow Realtors) must accept the truth ourselves. No more talking about how the market will bounce back. If you are feeling scared and uncertain make the decision to learn the skills required for this market.
Eventually, we will be able to breath a collective sigh of relief. The markets will bottom and we can start talking about homes going up in value again. We too look forward to that day. But, don’t forget and don’t choose to be fooled…
As Greenspan pointed out last week, “we’re nowhere near that now.”
