Jim Crawford's Atlanta Mid-Year Real Estate Blog Post

Mid Year Blog Post - The longer we are in real estate the more change we will likely witness and then try to comprehend what exactly is taking place.  I was first licensed in NY State in 1978 and currently licensed as an Associate Broker in Georgia, Virginia and Maryland.  That is a lot of ground to cover but I cover it pretty well with the Internet. I am still learning everyday in this  business! My observations this year is to separate the media blitz and myth of a strong rebounding real estate market with rising prices and low inventory... and digest the news and then come up with my own perspective.  Yes home prices are rising in many markets due to lack of inventory and super low historic low mortgage rates and distress sales, but is this a totally healthy market?  Perhaps!  I think each individual will have their own perspective so here is mine and it is how I will proceed for the rest of the year.

Low Inventory - The real scoop!  Inventory is at super low levels nationally because over 55% of homeowners are not in a position to sell or buy.  Reductions in wages, shorter hours, lack of benefits, self-employed, damaged credit, and are upside down in their own homes with negative or flat equity is a major part of this picture.  For the banks this is a boon.  Their portfolios of higher priced homes make the banks appear to be actually solvent and they are happy with more of their assets appearing to be in the black than explaining a negative balance sheet.  However, every clud has a silver lining - it is a good time to sell if you need to!

Low Appraisals - Aside from what the media is reporting high prices and quick sales many of my friends in the business are still dealing with is lower appraisals.  The deal they are working on is ready to close and the appraisal comes in low.  It is a deal killer for several reasons.  Buyers lose faith in the agent on both sides of the deal and get gun shy for getting burned again!    They blame hte agent for this!  Here is what is really happening - closed sales have not yet registered into the system; no recent sales data to support the sales price, and yes banks and appraisers are playing it safe because of a cautious future outlook.  However, this is still a good time to buy for an educated buyer that has done thier homework well.

Flat or Negative Equity - In most markets sellers do not have enough equity to pay a decent commission. They are stressed financially, and cannot afford the 1st base box seat tickets! It  is not unusual for many homeowners have to scrape together money to bring to closing these days.  So these discounted listings, short sales, REOS is continuing to drive down the income of many in our industry.  It is what it is, and I do not expect this to change anytime soon.  This is not an easy truth to accept for most real estate agents. 

Rising Stock Market - Stocks appear to be rising to new levels pumping up SEP IRA's, pension funds, but is it a normal climb in values?  Yes the rise in equity prices is boosting consumer confidence and that is a good thing, but is it on solid ground?  Maybe we should look at the market for what it really is - a concerted global effort to stabilize economies around the globe.  Translated that is "Quantitative Easing" or dropping key interest rates ( by governments around the word) to almost nothing to spur flat lined economies that are in limbo.  The result?  The more QE pumped into economies - the higher the stock market averages.  Rising stocks build confidence of consumers.  This is  plus for real estate as long as the rise continues.

Consumer Confidence - If stocks continue to rise and home prices also that is a good thing for consumers.  Consumer confidence will rise and that eventually translates into hiring, new jobs, increased wages and a stable economy where the consumer again can plan for their own future.  When consumers are confident they spend money.  They buy big things, cars, homes, furniture and even second homes as a reward.

Competition for Real Estate Business - has never been stronger.  We now compete against multi-million dollar companies for a share of business on the Internet, and in our own market places. Companies like Zillow, Trulia, Redfin, and yes even Realtor.com have sucked money and income away from individual practitioners at an alarming pace.  They have their own SEO staffs, and strategies to cast a wide net, and many pad thier profit by charging various agent fees. I'm sure many profit from alliances and partnerships with affiliated businesses in mortgages, moving companies and other related goods and services add to thie bottom line while depleating yours.   The average agent does not benefit from companies such as these.

The Internet - As I mentioned above there are some very big players competing for our business and there are several others.  That includes the search engines themselves.  They realize the importance of high placement in the search engines and guess what?  They make a  hugh profit by charging for that position. For small players like myself, Google and its recent changes have taken away page # 1 positions from many real estate agents and brokers. Guess what?  The more people that want to be on page 1 - the higher the price to do so.

Bulk Sales of Distressed Properties - Large companies are actually going directly to banks and lenders in many markets and buying over 1000 homes at a time.  In many instances they are buying the cream of the crop and then renting these homes.  The plan is to rent the homes for 5 years and then sell them as the market improves and home prices increase in value.  This adds to the inventory scarcity and turns off home buyers.   The problem with this for agents like you and I... is that what is left on the market is overpriced junk that needs a lot of work and TLC.  Also it totally cuts out commissions for real estate agents and brokers because the sales are direct sales.  We have been cut out of this business!

The Future of Real Estate - right now is looking better, but only time will tell what lies ahead.  A quick rise in interest rates, a sudden change in the stock market direction or a change globally in some conflict could change things overnight.  I think the future of many like myself in real estate has to be based in reality, market research, and actions based on fact as opposed to speculation and conjecture.