How Do We Recover? What Do You Plan On Doing If We Have A "2nd Dip"???

By
Real Estate Agent with Douglas Elliman Real Estate 30HA0800896

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.

MORE AND MORE QUESTIONS WILL COME UP

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? 

WE NEED TO PLAN OUR NEXT MOVE

  1. 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!

WE NEED INFO TO GET THROUGH THIS

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!

 

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Anonymous
marisue mullins

Paula,

I appreciate your post. I do not feel the market to be on a true upswing. I bebelive we

are seeing the last of the absorbtion of the First Time Home Buyer Credit right now. I

think we are going to need analytics after the final June, 2010 final closing date at the

end of the year. I believe we will be lingering with absorbtion until 2014.

www.marisue.com

Apr 04, 2010 04:21 AM #1
Rainer
30,618
Mike Wilbur
Guild Mortgage Company and Oregon Homes For Heroes - Salem, OR

I have a friend that works for BofA and he told me a year ago that they were sitting on a ton of houses and not releasing them to the market so as to not kill the market value of the current inventory listed.  It is interesting and scary and the same time that he was correct on this. 

Apr 04, 2010 04:24 AM #2
Rainmaker
455,517
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Paula - I'm not as concerned with a "second dip" as I am with a fundamental change in the economy, years of below normal growth and high unemployment.  I do believe it's incumbent upon all of us to make prudent choices and to develop ways of doing business when there's less business being done.

Happy Easter!

Apr 04, 2010 04:27 AM #3
Ambassador
3,675,572
Patricia Kennedy
RLAH Real Estate - Washington, DC
Home in the Capital

Paula, I have yet to list or sell a short sale or foreclosure, and it's easy to sit back and say that it won't impact my DC markets in Georgetown and Cleveland Park.  Yet it will.  I think it's important for all of us to re-think our strategies and look for ways to make whatever the market is work.  It will certainly be good for buyers, or it could be.  And if I do venture into this part of the market, it will be interesting.

Apr 04, 2010 04:31 AM #4
Rainmaker
494,549
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Marisue: Thank you for reading and commenting on my post...I have a feeling that it may be much longer than 2014. Unfortunately, we have such a long way to go with the build up of short sales that banks have been sitting with that it takes a government order to the banks to divest themselves of the inventory..that is the scary thing.

Apr 04, 2010 04:32 AM #5
Rainmaker
494,549
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Mike: I have heard the same thing and it is frightening; think of it--the longer they put it off the bigger the dip! Yet if they all come on the market at the same time--who knows what the impact will be? Thanks for your input and let me know of any ideas you may have on how you plan on handling it....

Apr 04, 2010 04:37 AM #6
Rainmaker
494,549
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

John: Right you are! The whole economy is a reflection of the housing market and the other way around. We dohave something to say about how it all goes down, though. My thinking is that if we take the bull by the horns now, we can be instrumental in the outcome....maybe not, but at least try, right?

Patricia: I am in the same position as you; Ihave not done a single short sale yet--I don't have the training to do the right thing for short sales...my fear is that we all will go "whistling past the graveyard" as the whole RE market goes into the tank again....I would like to try to avoid that by being prepared--any good ideas?? Thnaks for reading and commenting too.

Apr 04, 2010 04:43 AM #7
Rainmaker
1,311,924
Li Read
Sea to Sky Premier Properties (Salt Spring) - Salt Spring Island, BC
Caring expertise...knowledge for you!

Appreciated your post....like you, I'm in a predominantly secondary home/discretionary marketplace.    That seller euphoria is something I deal with almost daily.

Apr 04, 2010 05:35 AM #8
Rainmaker
494,549
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Li: That euphoria is everywhere right now; the perfect storm is building again and we need to recognise it...if we don't, it may be worse than we could ever conceive. Thanks for reading and commenting--if you have any suggestions I am all ears! :)

Apr 04, 2010 05:45 AM #9
Rainmaker
2,446,424
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Paula...........very sobering post.We have yet to handle our current load and yoour views on what to expect makes this subject daunting. I forced to say that it will get worse before it gets better. The banks also know that if they do not respect supply & demand and instead flood the market, they become their own worst comp for setting prices. Yet, if they ration it out, they sustain additional losses. My only thought is for them to open a property management division (or outsource it) and at least collect revenues from their holdings while they slowly liquidate. I know there is a lot more going on that I know about it. Your post at least casues us to be aware and that is a very good thing. What to do about it will be upon us soon enough. Thank you Paula

Apr 04, 2010 01:21 PM #10
Rainmaker
155,388
Ted Tyndall
Davidson Realty Inc. - Saint Augustine, FL
I will help You find the Home YOU want to Buy

Paula, very good post. I believe we will see another wave of short sales.

Apr 05, 2010 06:45 AM #11
Ambassador
699,519
Lee & Pamela St. Peter
Berkshire Hathaway HomeServices YSU Realty: (919) 645-2522 - Raleigh, NC
Making Connections to Success in Real Estate

Hmmm - maybe a greeter at Walmart??  Seriously - ups and downs, good and bad, it all comes and goes.  Get back to basics and keep your head down.  I'm not a Pollyanna I just choose to keep focused on what matters.

Apr 05, 2010 09:00 AM #12
Rainmaker
494,549
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Ted: Just this morning, a fellow agent told me she is refinancing her house here in the village--a place that has been fairly immune to the impact of short sales....guess what? She was told her house is worth $600K less than she thought--based upon valid recent sales on the next block! She was floored! The appraiser would not take her valid comps and told her that, by law he was not allowed to speak to her!!! That was it---closed book! Now these people are well prepared for a downturn, but that took the wind out of her sails---she now realizes that other houses elsewhere will be even more impacted than hers---there are no short sales in her neighborhood!

Apr 05, 2010 10:37 AM #13
Rainmaker
494,549
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Lee: Better get the old Walmart T-shirt washed and ready to wear! (see my response to #11) If only we could just bury our heads in the sand and everything will be OK!!! What matters is preparation which we did not have before September 2008...we have been forewarned; would it not be naive to think that we won't get hit again??? Thanks for responding 

Apr 05, 2010 10:41 AM #14
Rainmaker
494,549
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Erica: I think prices will have to come down significantly in order to have any chance of selling---people are now looking at Trulia and other websites, but not for regular houses---they are looking at Lis Pendins and foreclosures...that is what they want to buy and I think it will only get worse!

Apr 05, 2010 10:47 AM #16
Rainmaker
1,827,357
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

I think the spin doctors are trying to convince us that happy days are here again, but locally I don't see those signs !!!

Apr 05, 2010 10:55 AM #17
Rainmaker
494,549
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Michael: I don't either---any ideas as to what to do to prepare for the next hit? Anything that you think will help to lesson the blow?

Apr 05, 2010 11:05 AM #18
Rainmaker
885,945
J. Philip Faranda
J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY - Briarcliff Manor, NY
Broker-Owner

Cut overhead. There is talk of that REO shadow inventory you speak of, plus I have concerns that after April 30 buyers will dry up as well. On May 1, sellers face a stimulus free market for the first time in over a year. 

Apr 11, 2010 06:24 AM #19
Rainmaker
494,549
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Hi J.Phillip: You are right--nothing to stir up the buyers aftetr May 1 but the sheer need(or desire) to buy a house--looks like the markets may drop off the cliff again and unless there are a lot of people out there with money to spend, it won't matter how low the prices go with the short sales, etc....we may have another stalemate with buyers waiting for prices to drop even futher while sellers will be thinking the market has picked up; I don't want to look! ..Thanks for reading and commenting.

Apr 11, 2010 11:34 AM #20
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...The Most Informed Agent In The Hamptons!
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