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Hope is No Longer a Good Strategy

By
Real Estate Agent with Pacific Inter Capital Solutions

Hope is no longer a good strategy. Like everyone else, I am hoping for a recovery in the hConsumer Confidence Fallingousing market. However, all indications are that the real estate market will remain soft for some time to come. It will be better for everyone if we accept that fact and move on with our housing plans accordingly. Over the last week, there were three major reports released that prove that many people are still unclear as to the severity of the market:

SALES

Each month the National Association of Realtors (NAR) puts out their Pending Sales Report which measures the number of existing homes that went into contract the previous month. Based on the expected expiration of the Home Buyer Tax Credit, everyone expected that the June report would show a substantial decrease in contracts. Bloomberg News surveys economists each month prior to the release of the report to establish what the economists assume NAR will say. For the June report the economists predicted it would show a 14% decrease. The actual number was a decrease of 30% - over twice what the economists had predicted!

PRICES

MacroMarkets LLC has just started to release a monthly survey of the leading 106 economists and analysts. They asked them to determine whether home prices will increase or decrease for the rest of the year. The first month of the survey (May) found that only 40% of those participating felt values would decline. The number jumped to 56% in last months report (June). An additional 16% turned negative on future home prices in the last 30 days! These are the top analysts and economists in the housing industry and they are starting to become much more bearish on any housing recovery.

CONSUMER CONFIDENCE

In the Wall Street Journal article titled "Consumer Confidence Appears on the Mend" which appeared on the morning of Tuesday, June 29, 2010 it was reported: "Surveys of U.S. consumer confidence are closely watched on Wall Street, thanks to their decent track record in foreshadowing recessions. That makes them particularly relevant now as investors work to gauge the odds of a renewed downturn. But while confidence is certainly fragile, it isn't behaving as if another downturn is at hand.

Today, June consumer-confidence figures are due.

Economists expect the index to post a small retreat to 62.5 from 62.7 in May."

Sounds Great! However, here are the actual results that came in later that day:

"Consumer Confidence Index declined sharply in June. The Index now stands at 52.9, down from 62.7 in May."

One of the most reliable of sources for financial news (WSJ) got it completely wrong. The index fell 9.8 points. not 0.2 points!

WHAT DOES THIS MEAN TO YOU?

When you hire a real estate professional (either an agent or loan officer), don't hire someone who is hoping the market will turn around. Hire an expert who understand what is actually happening and will take the time to sit down and explain it to you. That is the only way you can feel confident that you are making the right choices for you and your family.

 

 

 

Indera Coggins
Re/Max 100 - Dunkirk, MD

Shelley, you made a good point about hiring professionals. A lot of people get into real estate because they think that its easy money until they get into the business and realize it's hard work and heart ache, especially when we come to the short sale process.

Jul 08, 2010 09:32 AM
Bob Engert
Georgia Elite Realty - Marietta, GA

 Never apologize for the market. Tell it like it is. Always!

Jul 08, 2010 09:36 AM
Jon Budish
Resident Realty - Fort Collins, CO

Do you feel lonely being realistic about the housing market in the near future? Thanks for the straight talk, it's refreshing.

Jul 08, 2010 09:52 AM
Mike Martin
(909) 476-9600 ~ WeLoveSellingRealEstate.com - Fontana, CA
Realty Masters & Associates

I agree - looking at things from a "what MIGHT happen" standpoint is a recipe for failure. Great post!

Jul 08, 2010 11:21 AM