Just finished reading Bryant Tutas' blog and commenting on same.
While writing my comment I started thinking (while writing) about what may have got us all into this slow real estate market (at least it's my opinion that we are in one - dispite comments by some of the talking heads) we are now experiencing.
Who's responsible for the sudden, and unexpected by some, "bubble"?
Several postings ago I presented a chart showing how the market "progressed" here in the Fredericksburg Virginia area. Homes for sale here in Fredericksburg rose to unprecedented highs. The higher the prices, the more intense became the feeding frenzy. We (agents) even discoverd escalation clauses! Were we doing our clients a disservice by authoring same? Did we really think that the offering price was realistic? Were we writing them only to keep our buyer(s)competitive? Did we really think that in the current market the price was realistic? Before we are too quick to blame ourselves (if real estate agents) let's look at it from this perspective. If the price is too much the lender will not approve the loan.
Did lenders really believe that your firms' money (or some investor's for that matter) should be devoted to that loan? Were you concerned that if you did not approve the loan, some other lender would? Was the thinking that you should wait and see what the appraiser said? Why not, they know the market.
OK appraisers, the ball's in your court. Did you really think that the value you placed on the home was realistic or were you thinking that it was a bit high but . . . how many appraisals will I get if I continually assign less value to a property than the price indicates?
Wait a minute here, why blame those who are actively involved in the real estate market? Why not blame the people who are buying and selling real estate? Let's start with the buyers.
If you want to believe the storys told (and the infomercials inundating TV) the way to make money is through investing in real estate. After all, isn't buying and selling your own home about the only way you have ever made any "big" money?
It would be easy to blame buyers until we think of the scenario where relocation is mandated by job reassignment; some of it mandatory without any salary compensation too. Well, you might say, why not rent under those circumstances? Do you think that rent payments were realistic?
How about the sellers? Did they see an opportunity to sell at an inflated price and get involved when the fish were biting? Can''t blame them can we. Should we as agents not have taken those listings at a price we thought much too high? But wait, Johnny from ABC Realty would be next in line on a listing appointment and we all knew he would take a listing at any cost; and who's to say what price is too high. After all, real estate is worth only as much as someone will pay for it.
Have we got ourselves into a never ending circle (yeah, I know that all circles are never ending) with all of this or are we getting close to a solution?
Real estate is not all homes. Ever hear the addage that homes do not appreciate but land does? Is there validity to that? I sure think so. With that assumption, can we identify the "land sellers" as the culprit in this whole mess? Personally, I saw finished lots in a nice subdivision sell for $150,000 when they were worth between $45 and $50,000 according to the seller. However, national builders had run out of lots and were in the market! Blame the seller? How about the farmer whose sons and daughters did not want to get into farming; after all, their parents lived in a very simple and uncomplicated way but had to scrape to make a profit every year. Why shouldn't they sell to the "guy from the city" who would pay them enough money to allow them to live very comfortably for the rest of their lives?
Folks, this is not a situation that can be explained easily. But how about this . . . should we be even trying to solve this perceived "problem" at all. Could it be that no one is to blame and contributors to the situation did not even know they were causing the situation to exist? Perhaps the solution is upon us now and there's no one to blame and it is normal for an adjustment to be made when this happens.
Next question - when will the adjustment be complete? Got an answer?