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What's The Solution To The Stagnant Market...The Pent House Sweet!!!

What's the 'hot topic' on AR these days? Well Lenn Harley and Ed Rybczynski have kindled the flames of a great discussion on mortgage foreclosure and abuse in general in our real estate industry.

Both posts and comment threads contain a wealth of good information and knowledge...for everyone in the real estate industry...new, old, and everyone in between!

My focus is on solutions rather than blame. We all know solutions to our present problems in real estate are hard to come by. History can help us, but this present day dilemma poses its own unique challenges. I have been through a few of these cyclical events in 35 years around the real estate business, but truthfully this time around is somewhat different.

In trying to sort out the similarities and differences between this latest stagnant realty market and those 'down cycles' that have occurred before, one particularly glaring phenomenon seems to keep rearing its ugly head.

Some have suggested that even '911' may have contributed greatly to our present day woes. I wouldn't argue with that but I would like to propose a more sweeping and deeper consideration.

The United States has always been a 'global player' in the 'economics game'. This time around, however, our problems seem to be CONTROLLED by 'off shore' entities...yes, controlled, not merely influenced...there is a marked difference...think about it for a moment!

Again, setting aside the inclination to blame, to solve, to identify the root of the problem, there are 3 things I'm sure that will help us...three things that WE can control and of which we can be sure:

1) The demand that has all but dried up in our present market is being 'pent up'...that is, all the people who are presently waiting to purchase their first or next home will at some point be 'unleashed' and flood the market with potential buyers.

2) The housing inventory or 'lack of' coupled with excessive demand 'to act now', which caused a seller's market unprecedented in modern history in real estate in our country, and that precipitated a spiraling rise in property values, has turned a 180...a virtual u-turn. Inventories are aplenty heralding the appearance of the first true 'buyers market' in years.

3) It will be a sweet thing to see when the pent up demand is unleashed on a market glut of inventory...this will invariably occur with first time homebuyers and begin in the lower price sectors...and will make its rise up the price point ladder, culminating in a renewed sense of equilibrium in the real estate market.

Is this a prediction, a forecast, or a pipedream?

It is none of the above...it is a 'vision', a picture, a glimpse into a promising future for our economy and our real estate industry in particular.

People of vision...welcome to this post!

Before change can occur...meaningful, progressive, and responsible change...people with a vision must come onto the scene...this is mine...what is yours???

P.S. For an interesting history of how we got here please click

Posted by Fran 'The Title Man' Gaspari Title Insurance-PA & NJ on 11/25/2007 01:16 AM

Comments (79)

people with vision, stagnant market solutions

Originally posted at: Fran The TitleMan's Blog: What's The Solution To The Stagnant Market...The Pent House Sweet!!!

79 Comments on What's The Solution To The Stagnant Market...The Pent House Sweet!!!

NOV

2007

Fran

This is a case where I hope you're right and I'm drastically wrong. A good post as always.

Ed,

You're factually right in practically all your recent assertions...I'm trying to move us along to solutions...mostly out of fear!!! A great motivator! Thanks, Fran

There are solutions. Thinking outside the box is one. I've seen many market cycles in the real estate industry and this one is by far more complex than any other. Prices have escalated so rapidly it made normally stable people go berserk; investing in pre-construction- hoping to resell at windfall profits. Some doid succeed, most are left holding an empty bag... THINGS WILL CHANGE!

Hi Fran. Very good post. I too know that this shall pass. I don't think it will be easy and I don't think it will be soon. But it will pass. My market Poinciana Fl has always been price driven. Up until mid 2005 it was very affordable housing with the average price being around $180,000. Then it shot up to about $225,000 now it's rapidly coming down down again. Once we get down to 2004 levels, $150s, things should start moving again. I'm hoping this will happen by the end of 2008. In the meantime I am loading up on inventory and helping the folks I can help now. When things change and they will, I'll be ready.

Bryant,

Makes sense to me...I'm making a lot of lemonade also...may have to open a lemonade stand...poor timing there too, what with winter coming on!!! Thanks, Fran

Mott,

Sorry, didn't mean to skip over you...we need to do some 'thinking outside the box' inasmuch as some of our problems are the result of 'new forces' in the market. Thanks, Fran

I think you are a realist and your vision will become a reality, but I'm no fortune teller, just another opinion

Michael,

The groundswell has to start somewhere, it might as well be here!!! Thanks, Fran

FRAN:

Sounds good to me (except for the 2008 date). I figure that: Fran's the man from Limerick Land!

Joan,

The sooner the better...I'm getting tired of making lemonade! Thanks, Fran

Fran- be careful what you wish for... because you just might get it.. This is a lot of what happened in Southern CA.. After the market tanked in the 90's because of all the aerospace layoffs times were tough. Eventually most peopl found jobs and as the economic situation improved all that pent up demand came into play. When coupled with cheap money we saw prices rise dramatically.

Kaye,

I haven't wished for years...LOL! But Sensibility and stability would be two good things to wish for!!! Thanks, Fran

Hi Fran, I do agree with you about the pent up demand, but where I differ is in the future ability of prospective borrowers to satisfy this demand with the tools they have used in the past. Consumer credit has been over extended, our houses are no longer an equity piggy bank, savings are non existent for most folks...and the stock market, well that's a wild card if I ever saw one. People will definitely WANT to enter into this game again...but the question will be...Can They???

Lola,

This is why I suggested that rebounds often begin at the lower price sectors and work their way up the price scale...some may have to restructure their budgets or even their 'dream home expectations'...credit counseling and restructuring could even result in a new wave of debt consolidation and refinancing...Who knows? We'll all have to wait and see how this all plays out!!! Thanks, Fran

NOV

2007

the media has contributed to a lot of what is going on. people read and react before actually finding truth.

I agree with Ed. I hope you are right and a very well written post.

I do agree with the "pent up". I know of a lot of people who are saving and getting ready. Great post Fran.

Hey Avtive Fran.....I am ready for all those home buyers to be un leashed among us.

Hi Fran,
I sure do like your "dream" and am ready to move on to the solution. The blame game does nothing for anyone, this is for sure. People very well might need to reassess their needs and adjust their expectations of their dream home. Not everyone can afford a 4,000 ft. 5 bedroom, 5 bath home on the water.

Fran. I have to agree with Lola.

The institutions that once protected the consumers are totally impotent. HUD is archaic in the extreme and Fannie and Freddie are paralyzed by scandal and criminality.

The institutions that once protected the consumer have ceded their functions to wall street, not your most reliable consumer protection entity.

While each downturn over the years has been caused by different things, I agree with you, that we will evolve out of this problematic market and once buyers feel confident the dynamics will change. It will be interesting to see how it plays out!

The demand is definitely there but not the confidence. And yet at every price level there has been competition for homes this year with my buyers. So they are figuring out they should buy when they feel it's a good value and not wait for another round of competition.

Lola is right that without the ability to pay for these homes, the demand won't be met. I think too many factors have to line back up for the recovery to be in 2008: prices, liquidity, consumer confidence, wages, savings, expectations.

Gary: The media over hyping bad news is an expected occurrence...we have to overcome misperception one client at a time!

Fran: Thanks for dropping by and commenting!

Jeff: This has been the only common denominator in all the down cycles...pent up demand!

Thanks, Fran

Someday we will all be saying "remember the years 2006/07...now that was a doozey". Change is constant and with that knowingness, this too shall change. Realtors just need to use this time to shift gears, sharpen their saws and educate themselves. I agree, we can come up with a gazillion reasons for this down market....but coming up with ways to push forward is this challenge ~ many can not do. I am here for the duration. I know things will get better. There is a saying I often repeat that goes something like this...."Real PEACE does not come after things have calmed down, it is having PEACE in the moment we are in."

Fran, I like your vision ! Yes, there will be pent up buyers they are waiting, hopefully with Gen x and Gen y buyers out there it won't be too much longer. In the mean time we work in the market we are handed and do the best we can for our clients.

Ginger: We can't sit around and wait...we need to go out and find them...like lost sheep!

Cynthia: Especially with 1 or no children!!!

Lenn: Ed thinks that even RESPA is no longer viable...I think real estate professionals need to join with Congress to draft a comprehensive Omnibus Bill with teeth in it for non compliers to be swiftly and heavily prosecuted. The free market will take care of the rest.

Thanks, Fran

Diane: Don't underplay the value of an election year either!!!

Josette: All those factors are real, but stranger things have happened...once the 'worm turns' momentum is a powerful force!

Renee: I couldn't have put it better!

Thanks, Fran

Missy,

I've said before our near 0 population rate isn't going to help us in the future with either real estate or social security. Thanks, Fran

I agree the demand is pent up. We are seeing it here! New construction started dropping prices after the last mortgage fallout aftershock in late July. The bottom fell out of that market the last couple of weeks in October. Beginning last week we are now seeing (in the lower SFR price ranges) waiting lists, long builds and price increases. New construction units closed rose from Sept to Oct, which we normally see a decline each month thru Jan. I was happy to report this in my blog!

I do think we need to learn from our mistakes by figuring out what happened and correct it. My comments in Ed's blog and my own, only reflect my feelings that we do need to go after large scale fraud that has occurred and is STILL occurring in our market. To me, the ultimate buyer confidence will be achieved once buyers realize that they do have control over their purchases and don't have to worry about the nasty words "mortgage fraud" or just "fraud" in general. Unfortunately more education will have to take place (as the media isn't doing that) and some heads will have to roll before that ultimate confidence can be restored.

I hope you did not misconstrue any of my words as playing the blame game. I am only trying to educate the public on how we may have gotten here (and point out that it is MY OPINION) and if they are in a position to be put in a nice, safe, conforming, fixed product: foreclosure may not be a word in their future vocabulary.

I don't think anyone can disagree that post 9/11 cheap money may have been a small step in getting us here in the first place, factored with greed and frenzy.

Fran - Thank you for this post - There are things we do have control over. A seller does not have control over their location or their price (within the price window anyway) or the market, but they do have control over appearance and condition. A Staged Home does allow control over a small facet of this process - and Buyers do buy on emotion. When the pent up demand is unleashed - Staged Properties will be an even sweeter thing than unstaged properties (smile)!

Thanks for sharing, great post and thoughts!

Renee,

I agree with your assessment 100%...people like you, Lenn, and Ed should be strongly supported by the rest of us because you all have a message that needs to be told and HEARD!!! There are many scoundrels still around in our business and they deserve swift justice. I have enough confidence in you and others I admire to carry that torch...meanwhile I'll focus and dwell on solutions, supporting your efforts all the way.

They haven't responded to our trumpets...maybe they will respond to an entire orchestra!!!

Thanks, Fran

P.S. Please don't change!!!

Margaret Ann: I'm for whatever makes the boat float...ethically!

Denise: Thanks for dropping by!

Thanks, Fran

It's so pshycological at this point. Once prices start to come down and people think that the economy is strengthening, the rush will be back.

I also feel that there is pent up demand. And I'm waiting...

I will be here ready, willing, and able when the market changes. And it will!

Fran,

I love your take on the market - it is mine also. We are sooo lucky here in my market area. Silver Spring is still fine, just not as swift or crazy right now. We don't see many, if any, foreclosures here. The only difference I see with listings is they are taking longer to sell - but they still sell! Prices haven't really dropped here either.

There are certain areas of Silver Spring like those areas not close to a METRO station or way outside the beltway that are doing poorly. It is a buyers market - but not as severe as other states or other areas of the county and state. Our market will probably change next year - an Election year seems to have an affect on our market every time.

There are so many really sweet deals out there right now waiting to be taken! I had someone waiting and waiting - now they are starting over, because everything they were interested in SOLD!

Gil: I think the key is 'consumer confidence'...I'm watching 'gold prices'...when they start falling I think that will be the early signal!

Kelly: We can't just wait...we need to start cultivating the ground so when the seed comes...!

Debbie: I have found that similarly true in our area...you can't paint with too broad a brush...there are some 'pockets' which have continued to rise in value! Not many, but some.

Barbara-Jo & Bill: Yes, I wish I had some extra money around...I never seem to when there's a buyer's matket!!!

Thanks, Fran

you hit it right on the head. there neds to be a BIG change in the way we do our business or everything we do may be unravelled.

I think that there is a possibility that the actual turn might start with off-shore buyers. Look at the dollar exchange rate. We are just flat out cheap right now... Of course, with the mindset, they wouldn't be trying to push prices down, and I do think that many markets need to see a price drop. But, I think that if the inventory levels started to drop, and the media started to report that drop, buyers would start back into the market. Oddly, I think the trigger might be the dollar's strength coming back.

Trevor: The time is right for change...we can clean up the shysters at the same time we're turning the pent up demand into buyers...a clean sweep!!!

Lane: You make some good points about the 'off shore' buyers...the dollar or gold prices are keys to monitor turn around in 'consumer confidence'!

Thanks, Fran

Excellent post. Thanks for sharing.

Bob & Carolin,

Thanks for dropping by! Thanks, Fran

NOV

2007

I agree and when I talk to my buyers and sellers, I talk very different than most agents. They tell me that and ask me why I'm so positive about what is going on. I said, if I am positive, you are positive and the market is moving. The only people that it isn't moving for are the people that say it isn't. I can get in my car and complain all day long that it isn't going, but is my fault for not putting the key in?

Put the key in the car and go sell some houses!

Wow, what a great thread! Todd, I enjoy your attitude as it is my ideal! The media has its way of convincing the masses that we are all in trouble. All we can do is remind our customers that something must be going well or they wouldn't be buying or selling!

Okay Fran, it sounds simplistic but I posted about there being no slump in my area and I've gotten listing calls and calls for purchase from the posts. The callers tell me they like my attitude! It also helps to be in a higher dollar market as the folks I deal with are financially stronger. Sales with my smaller dollar properties have dropped some but the bigger ones are still moving.

Luckily my area hasn't felt the bubble effect like California and others. The media will begin reporting a more positive slant closer to and shortly after the election. History repeats itself...repeats itself...repeats. You get it. As far as being controlled by offshore entities, don't get me started. This fact brings up dozens of issues from the competency, trustworthiness and greed of our government to the "supposed" war in Iraq. Ah-oh. There I go. Time to retire now. I can't let the blood pressure rise. :-o) Deb

Todd: I've played the game, and I've watched the game...it is more fun to be a player!!!

Debra: Your area which has an oil rich financial base, is one of the few that is still burgeoning...Real estate IS a 'local' phenomenon and will vary from region to region...as I keep saying and as Todd said above, you have to get out there and deal with the market one buyer, one transaction at a time!

Thanks, Fran

NOV

2007

Hey, Fran. Great post and I love you for being part of the solution.

Helps to have the voices of experience to say it's as "perennial as the grass" don't despair, just know you'll use this wisdom to shine the light of truth for those you mentor.

Hey, Fran. Great post and I love you for being part of the solution.

Helps to have the voices of experience to say it's as "perennial as the grass" don't despair, just know you'll use this wisdom to shine the light of truth for those you mentor.

NOV

2007

Very good post! Thank you.

Diane: Nice to hear from you...thanks for dropping by!

Joyce: Thanks to you also for taking time to read my post!

Thanks, Fran

Hay, BTW. Are you and Ed doing a bad cop good cop routine on this issue?

Diane,

Brilliant minds think alike, I guess!!! Thanks, Fran

NOV

2007

Fran

This is the third time I am seeing this type of market and I believe the worst hasn't hit yet. But we need to continue to flood the market with inventory in hopes someone out there will buy it. You are right we need solutions. Anybody got any?

NOV

DEC

You rock. Have I seen you on youtube?

Gary: First time homebuyers will be the key to a turn around!!!

Janice: Never been on You Tube, but been around the Title business a long time!!!

Thanks, Fran

DEC

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