I spent 6 hours today (from 3am until 9am my time!) doing radio interviews about house prices around the country – Columbus, Akron, Tampa, Pittsburgh, New York, Portland, Grand Rapids, Boston, Denver and several others. Here are some observations:
- While nationwide homeprices are down 8% y-o-y, there are obviously huge variations by city. (Many of you have commented this on my previous post.) My interview with a Pittsburgh radio station was pretty upbeat – after all, they’re only down 2% and parts of the Pittsburgh area are actually still appreciating. Contrast that with the doom and gloom affecting Tampa (17% decline, and 3 out of 4 buyers from 2006 are now upside down on their loan).
- There is an extraordinary amount of interest in real estate and mortgages. Extraordinary. Each of these radio news programs devotes a significant amount of their airtime to real estate and personal finance issues. Our industry is right in the sweet spot of several national issues, which have resulted in so much press coverage: the national recession, the price of gas (and how it affects home values in suburbs), the presidential election, the weak dollar, the writedowns on Wall Street due to subprime loan exposure, the Fed's actions on interest rates, and much more.
- People out there seem to understand that the terms of their mortgage matter as much if not more than the price of the house they're considering. This is a new development. I haven't seen any data on this, but I'd guess that if you asked homeowners 5 years ago what type of loan and rate they have, fewer than 10% would know. I'd guess that now it's closer to 50%.
- I detected a lot of early optimism from the interviewers ("so are we almost out of the woods?" "it feels like we're seeing a light at the end of the tunnel"), which I believe is misplaced. Zillow's data shows that each of the last five quarters have had increasing rates of decline, meaning that things are still getting worse. Personally, I think it's much too soon to call a market bottom. The WSJ had an editorial on this yesterday titled "The Housing Crisis is Over" (as Richard pointed out in a comment on the previous post). I wish that I agreed.
- The interviews reminded me of something that I take for granted everyday: the extraordinary access to online information available to homebuyers, sellers, and owners. For almost any question that a consumer might have, there is an answer on the internet. Now before you all flame me in the comments, I know that this isn't always a good thing! A lot of those "answers" can be incorrect, incomplete, and/or misleading. Real estate professionals are needed to correct, explain and expand upon those online tools. No doubt.
- Most of the markets that I did interviews in this morning have experienced very bad y-o-y declines, but almost all of them still show healthy 10 year appreciation rates. (Examples: Tampa is down 17% this year, but up 8% per year for the last 10 years. Grand Rapids is down 8% this year, but up 2% for each of the last 10 years.) It's important to keep the current downturn in perspective: housing is still a good place to invest your money. What other asset class returns 5-10% a year with only the rare down year, and lets you live inside of it?
- I got a lot of questions about "blame" - who's fault is this current housing downturn? While not a very constructive topic, it's human nature to ask this question. And it's my human nature to try to avoid answering it.
- Finally, it's worth noting only one of the 20 or so radio interviews that I did today was with a woman; this compares with about 50% among the print interviews and close to 90% of the broadcast TV interviews that I do. Where are all of the women in radio?
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