August 2003. I was reminded of the hottest month in real estate just the other day. Someone was telling me how the housing market has improved and we were heading back to the good old days. Really? I’m struggling to make ends meet. So, I asked for some clarification and was told how busy her husband, a title clerk, is now a day. She doesn’t mention that the “husband” works four days a week because the company cut back his hours. She doesn’t mention that almost half the work force in the company was let go almost two years ago. She doesn’t mention that several title companies in the area are now closed, including their own small office.
At any rate I am now compelled to seek out the husband and ask first hand if his work load has increased. I mean other than the stock market catch phrase of “doing more with less”, or, “working smarter, not harder” that seems to gives justification for the CEO’s pay raise, is he busier? As I approach the man, I see his body stance and think to myself, he looks a lot like me, a little worn, subdued, trying to put on a good face but his smile is strained. I ask straight out, “so, how’s business? I hear you are very busy.” I get a look of shock. I further my questions with, “are you getting commercial accounts now? Because I see some activity on some business sites that had been dormant for years. Or, is it residential?” I tell him that I am not doing much.
I can see right away that he is uncomfortable telling me about work. Not that he was shy about discussing his work back in 2003, 2004, 2005, 2006, or even, 2007. No, with his head down he states there is no commercial activity. There is no re-finance going on with his company anymore. He states that some weeks are busy and some are not. He tells me people still push for an end of month closings and most of the residential title searches are for short sales. Hmmm, seems kind of similar to my own business, or, the lack there of. He wants to drop the conversation. I take the hint and start anew with my observations about his favorite baseball team. It is a safe subject, that and weather, since we differ in our political opinions.
But, my mind is back in the day. The day my income helped support our family. It has not been that way for me for some time now. Back then Real Estate Brokers everywhere were recruiting (stealing) agents from each other or starting schools to train and recruit more agents from the student population. It seemed like Mortgage Representatives were growing on trees, stopping by our office with the promises of getting the best rates on no doc loans. And, the title companies sprung up over night. Those were the days I was remembering.
That’s right. August 2003 was the absolute peak in real estate sales for my immediate market area. The median price of a home sold during that month was $144,750 up about $10,000 from the previous year. The total homes sold for the month was a whopping 112 homes. Flippers were everywhere. And, that MLS count, does not include the many brand new homes from builders and that very special group of for sale by owners that did not list their homes with agents and share in the local Multiple Listing Service. It had been a steady climb in sales since the devastation of 9/11 in 2001 when al-Qaeda launched its attack on the Twin Towers and other targets in the US.
Area homes were believed to be undervalued by many investors. The market heated up with many home buyers coming from areas near the attack sites of 9/11. They sold their homes in North Jersey that were within commuting distance of the city for a great profit and then they came ready to pay top dollar for the home with the amenities their previous homes lacked. Corian and marble counter tops, crown moldings, stainless steel appliances, pavers, and the works. The prices of homes in our area would continue to climb until December 2005 when the median price peaked at $279,900 and days on market would fall. Imagine it taking only 29 days on the market before a house went to the closing table. That’s how it was in September 2005 – 29 days from start to finish. It wouldn’t be for another year before the then Federal Reserve Chairman, Alan Greenspan, would declare the housing market to be suffering from “irrational exuberance”. Something that some of those in the business of selling homes knew for a fact. Not everyone knew. There are enough mortgage brokers, real estate sales men and women that got caught up in the excitement and know firsthand about short sales because they had to sell their own home under those circumstances.
Many did know that the rising prices could not be sustained. Homes that were sold three months before were back on the market and selling a full twenty percent more. The flippers only had put in a minimal effort from the previous seller with a clean up, paint and new carpet. It seemed everyone was quoting Mark Twain with “buy land, they are not making it anymore.” Of course, the Arab World with its massive accumulation of oil wealth tried to mock that by building Dubai. A western lifestyle in the desert without any intimacey allowed. Those that foresaw the financial mess that was to be left behind were writing blogs predicting the end of the world as we knew it. Many predicted what other employment they could undertake when the market would no longer pay their bills. Some passed it off as just a mild adjustment.
The National Association of REALTORS launched a campaign telling the world “it’s a great time to buy” and then a new refined message with “each market was different” as soon as they were called upon to justify their first advertising blitz to the general public. To their members they sold the idea that it was a good time to hone in on your marketing skills and real estate knowledge by attending their many classes that offer the alphabet soup or letters to place at the end of their name and on their business cards. We were assured we would be in a position of advantage by paying the association to attend classes that would help our customers when they returned. It is the same organization that now says for forty bucks they will protect our jobs by sending lobbyists to Washington on our behalf.
Returning to our current market conditions, I present you with the data to show that special someone that the market may in fact be returning to that hot August in 2003. The median price of homes sold in the MLS in April 2011 was $171,500 down a little more than a hundred thousand from the high of $279,900 back in December of 2005. Last month the average days on the market was 197 days. Brokers have got to spend a lot on advertising that does little to actually get the home sold and they must push for lengthier contracts than the typical six month listing agreement. Yet, I am sure someone somewhere will declare the market has rebound since there was four more house sold that the same month in 2010. Good Luck with that. The popular web site for REALTORS states there are 253 experienced agents available to sell one of 550 active listings that are on the market today. In April 2011, 28 homes located in Tuckerton and Little Egg Harbor were sold.
That's my take on the current market condition. No pictures. No change in type. Just an opinion. You got one?
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