How do we recover? What do you plan on doing if we have a "2nd dip"??? Have you asked yourself this question? Look back on the days when caution was a word we did not use much less act upon when it was needed the most. I could go into depth here, just covering all the gory details of how this recession began and how it has worsened as time goes on; but I will not do that. Instead,I would like to open up a discussion of just how we, as real estate professionals, are approaching the potential "2nd" housing dip that is projected by a handful of economisits.
I don't have all the answers, but I think we need to talk about the potential and AR is the best place to do it, I think! We need all the thinking on this so that we can plan our next approach with our buyers and sellers....otherwise we end up in another downward spiral that will end badly. It may end badly anyway, but I believe that if we take a bold stance now and bring our ideas to the table, we will be able to soften the blow.
I am a "realist" and I am frankly quite alarmed at the idea that the banks are about to "dump" hundreds of thousands of "short sales" and foreclosures on the market in the next few weeks.
Are we prepared for this? I am serious---do we have the intestinal fortitude to handle another huge slug of houses coming on the market all at once?
Are we ready to get out there and warn current homeowners that property values are going to take another big hit???
HOW DO WE TALK TO OUR BUYERS? WHAT DO WE TELL THEM ABOUT THE STATE OF THE MARKET? WHAT DO WE SAY ABOUT THE PRICES THAT ARE CURRENTLY 20-25% OFF THE HIGHS OF '07. DO WE TELL THEM THE FACT THAT WE ARE GOING TO SEE ANOTHER DROP IN PRICES? HOW MUCH? WHEN DO WE SEE THIS HAPPENING? HOW WILL WE APPROACH THE POTENTIAL "STALLING" OF SALES WHEN IT APPEARS ANOTHER "HIT' IS ON IT'S WAY?
- SOME IDEAS FOR THE NEXT "BIG HIT"
1. How much discount is figured into your inventory now? Begin to evaluate current asking prices on houses in your area. Identify the difference in asking to selling prices.
2. How many short sales have taken place? Compare this to the number of regular sales in your area. Short sales and foreclosures WILL affect your inventory and it must be included in your plans for some time to come.
3. Using this %, Calculate the necessary discount going forward. Even though there are still a number of regular sales happening now, this could change quickly. This percent change in price is critical to know in order to price properties appropriately going forward.
4. Plan FOR a 2nd dip! Even if we think the worst is over, there are a number of economists who believe that there is a lot more to come! Be Prepared!
These are just a few things that I have started to incorporate in my work as I talk to homeowners who think the worst is over--and there are plenty of those out there! In this particular area we have an 80% second home market and it is very difficult to talk to someone who has a primary residence elsewhere and who thinks we are immune to the housing downturn. So, knowing that and realizing that most RE professionals on AR are in primary home markets, I am taking on this project. I am expecting to hear as many "reasons" that we CAN'T come up with something of value as those that say we CAN collectively contribute to the things that will work!
Let's do this together and come up with the best tools that will help get us through the difficult things ahead---even if the 2nd dip does not happen, we at least will be prepared if it does!