Is Anyone Doing the Math? | Who's Buying Homes? | What's Your Take on the Market?

By
Real Estate Agent with Crye-Leike REALTORS® 165062

Is any of this making sense?  Increasing days on market, no buyer traffic, high inventory levels, fierce competition to sell, low ball offers, over leveraged sellers wiht no equity, and no offers... are all indicative of a change in the market!  Ya think?  Since NAR quote the number of resale homes in free fall from over a high of 6.35 million units a year ago in October of 2006 to an adjusted annual rate of about 5 million units this November past. (NARThat is a 20% drop in units sold.  The other shoe that is dropping is foreclosures which are about to go through the roof.  The real numbers lie ahead, not behind us!  The most recent number of foreclosures are up in 2007 another 75%.  A total of 1.3 Million homes.  If we look at the last few years of NAR sales statistics one of the largest blocks of buyers were second homes sales which accounted for over 40% of all sales for the last few years.  Most of the money used to purchase these homes were pulled from the equity from their primary residence.  The only problem this year is that a lot of that money is no longer available with lagging sales, and declining prices.  So I have to sit back and acknowledge that the numbers are pretty bad no matter where you obtain them from.   The numbers are so high, you have to ask "Who's buying?"  It isn't media hype, it is far worse. It isn't pessimistic to look at the stories, it is factual and needed to plan out profit for my business.   I'm not a social worker or a home stager, I make a living selling homes to buyers and getting them sold for home sellers.  Perhaps you are starting to wonder where the buyers are..as I am!  You are not alone!

Most of the problems that we encountered last year were due to $50 billion in sub-prime mortgages resets.  This year the number is 10X worse.  There are over 500 billion in resets due in 2008 on sub-prime loans.  It will be great that some will be able to refinance their payments lower, but with the neighborhood price declines...  owners may still be in over their head, but just have a little breathing room with the monthly payments.  Some home buyers in a declining market may assume they have made a great purchase only to find that next year the prices have moved lower still from last years highs.  In some markets this will be more pronounced than others. 

Wall Streets rise in the maker and volatility for the last few months is almost a classic "Dead cat bounce!"  That means that if you threw a dead cat off a very high building chances are it would bounce when it hit the ground, but it does not mean that is coming back to life.  A dead cat bounce is also referred to as  a "Suckers Rally!"  Both of the terms are synonymous with trying to get uneducated investors into a market so they can sell their stock at higher prices, and get out with some money.  The last one holding when the music stops has lost all!

Look for some parallels with the stock market.  So in the current market what are the rallying stocks?  Financial, and builder stocks!  That is the last place I would be investing right now.  The broader stock markets have already started quietly retreating.  Stock buys are more cautious! That is an unsustainable rally.  So what about real estate?  Are we exempt?  It is another market, with similar issues.  There has to be buyers to keep the sales up!  Wall Street is not exempt from losses, whoy will we be?  When buyers disappear, prices soften and drop. 

4 Questions: 

  1. What are your thoughts on the real estate numbers you read about?   
  2. How do you interpret them?
  3. Do they apply to your market?
  4. How are you redirecting your business?

Jim Crawford

 

 

 

 

Subscribe To Our Atlanta Real Estate Blog in a reader

Subscribe Now!

...with web-based news readers. Click your choice below:

addtomyyahoo4Subscribe in NewsGator OnlineAdd to My AOLSubscribe in RojoSubscribe with BloglinesAdd to netvibesAdd to GoogleOutpost 

Posted by

James Crawford ABR, Broker Associate

 

 

 

 

Atlanta Real Estate | Atlanta Homes for Sale - Call Now!

 

678-595-5283 Direct

 

What's My Home Worth?

 

Jim Crawford Crye-Leike REALTORS® AtlantaAtlanta Real Estate AgentsAlpharetta GA Homes for SaleAtlanta Luxury Homes, Dunwoody GA Homes for SaleAtlanta Real Estate &  Atlanta Homes for Sale,  Gwinnett Homes for SaleAtlanta Real Estate BlogCumming GA Homes, Decatur GA Homes for Sale.   

Atlanta Homes for Sale | Atlanta Listing Agents | Atlanta Buyers Agents

 

Atlanta Real Estate for Sale

 

Buying A Home

 

Selling A Home in Atlanta

 

Atlanta Real Estate Agents - Contact Us

  

Jim Crawford Atlanta Real Estate Social Media icons

Search Listings

Search By
City
Type
Price -
Beds/Baths /
 
 More Options
 Map Search
close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Tags:
home sales decline bubble slow stall excess inventory declining prices increasing foreclosures days on market bank owned short sales housing

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainmaker
386,634
Mark Horan
Resident Team Realty, LLC & Toni's Property Management LLC - Saint Cloud, FL
"The Resident Chef" - Resident Team Realty LLC &
Jim- Real Estate is a regional market. I read that 31 states had an increase from Oct 06 to Oct 07 in sales. We got hammered here in Florida. Buyers are starting to contact me in the last 10 days. We are starting to swing a little here. Is it short lived? I hope not. I am not bogging, a featured bank owned property every week. I am shifting.
Jan 30, 2008 12:46 PM #1
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR
Mark Horan PA Keller Williams Kissimmee, Florida  I am not sure that 31 states had increases.  I am also licensed in Virginia, and there was no increse in units sold over the previous year.  It is also not that way in GA where the sales in November we had a plunge of almost 45% and in December another 40% drop!  Best wishes!
Jan 30, 2008 12:51 PM #2
Rainmaker
424,158
Eric Kodner
Wayzata Lakes Realty: Eric Kodner Sells Twin Cities Homes - Minnetonka, MN
Wayzata Lakes Realty: Twin Cities, Madeline Island

Jim, I attended a meeting a couple days ago with an institutional investment advisor for a nonprofit board where I serve as a director.  They invest about half a million dollars for our organization  The guy said the only three sectors he could recommend right now were utilities, energy and materials (this category includes construction materials but also items like cement for bridges and asphalt for highway construction).  He also said global commodities like fertilizer, metals and oil have good potential in this market.

I still believe real estate markets are local, but unquestionably the residential market in many (if not most) metropolitan areas is soft and illiquid.

Jan 30, 2008 01:01 PM #3
Rainer
86,739
asdf zcxv
Keller Williams Realty - Ann Arbor, MI
Ann Arbor Area Real Estate
Everyone knows Michigan has had a very difficult year and years prior but this year the buyers are out there already.  Activity is up and there are suddenly multiple offers on homes.  I think Ann Arbor (not necessarily the rest of Michigan) is going to rebound soon.
Jan 30, 2008 01:03 PM #4
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Eric Kodner, Lake Minnetonka Homes & Madeline Island Real Estate   Well the other item I forgot to mention is that this has spilled over into many other sectors of the economy. 

If housing accounted for 60% of all GDP...then the drop in our sector will have an immediate impact on other sectors.  In economics the term used in a rising market for dollars creating multiple dollars is called a "multiplier effect!"  Ever dollar creates more money.  In a declining market there is a term for a contraction or a "reverse multiplier!"  Less money, contracts the flow of other money.  In our business that would apply to discretionary income, or equitable real estate wealth being used to purchase other real estate.

While real estate woes from bad loans now spill over to credit for other areas,  If a self employed business goes to a bank today to ask for a loan to update equipment in his firm he/she may be turned away.  That turn down in business also means that a manufacturer cannot sell their product, some one else will not deliver it.  All due to lack of credit caused in another market.

Jan 30, 2008 01:09 PM #5
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR
Karen Moorhead  That is incredibel news!  Has home inventory dropped or sales increased?
Jan 30, 2008 01:10 PM #6
Rainmaker
613,042
Sharon Simms
Coastal Properties Group International - Christie's International - Saint Petersburg, FL
St. Petersburg FL - CRS CIPS CLHMS RSPS
Yes, we're seeing more buyers out and buying, but prices are still dropping in our market. While I'd invest in real estate (selectively) now - for the long term, I wouldn't yet invest in the stock market - I think it's still the cat bouncing.
Jan 30, 2008 01:49 PM #7
Ambassador
1,879,520
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

I agree that real estate is local and even local by neighborhood. I also think the foreclosures will rise even more through the first half of 2008. In our area it is not as severe as the coastal areas, but I am concerned about who the buyers will be during the spring buying season. Will they mainly be relocations, mover uppers, mover downers, first time? Not sure yet.

The Feds interest rate cuts definitely think we are in trouble as an economy especially housing.

Many in our market are shifting focus to short sales.

Jan 30, 2008 02:23 PM #8
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Sharon Simms St Pete Florida CRS CIPS CLHMS   We are seeing a little more buyer activity, but no increase in sales nor contracts pending.  We are also seeing a lot more difficulty closing sales due to tighter credit, and appraisals!   So in spite of recent drops in interest rates it has not added sales.

I also agree, I would not invest anything in stocks right now.

Jan 30, 2008 03:12 PM #9
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Gary Woltal - REALTOR® Dallas Ft. Worth   I disagree with real estate being local.  I really think that is media and NAR spin!  When you can't sell in California, Chicago, Boston or Florida you cannot buy a home in Atlanta, or Dallas.  The numbers are too big for one market to hold.  The only major variable is that some markets soared through the stratosphere in prices.  They may feel more pain than others.  Also, when a buyer takes a bath in another market, they will come in for a really low offer in your market!  Guaranteed!  I've been doing this for too long.

Jan 30, 2008 03:17 PM #10
Rainmaker
1,251,881
Alan Kirkpatrick
Austin Texas Homes - Round Rock, TX
Alan in Austin

Jim:

Another great post. I don't know about you but the current circumstances and overall economy remind me of the late 70's. The only thing missing is price freezing and gas lines (knock on wood).

Personally. I am buying and holding. Looking to build up cash flow through rentals which are through the roof in this area. I may have to do some owner financing.

My concerns:

1. Increasing food costs

2. The banks are in real trouble and we are only seeing the tip of that iceberg.

3, The election. There is a frustration among small business that is alarming. The taxastion of small business is killing them and if we pile on manditory health care plans, say goodbye to the small business market. Why should we care? Big business depends on the small business man. Costco, Sams and a host of others cater to small business and help them with their market niche. Small business keeps larger business honest and competitive knowing if they gouge the market the small business man will under cut them and win a larger market share.

Jan 30, 2008 03:24 PM #11
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Alan Kirkpatrick  Thanks!  Oh I forgot about them!  Ouch!  I hear Texas is still doing pretty well!  I agree fully, inflation, banks in real trouble, and the election is our chance to correct course for the USA on every level!  We must get out an vote!  They take it for granted they have our party vote!  No more to that!  I am voting for the person, new ideas, and people that will make the difference count!

Business as usual is dead!

Jan 30, 2008 03:32 PM #12
Rainmaker
1,251,881
Alan Kirkpatrick
Austin Texas Homes - Round Rock, TX
Alan in Austin

Thanks Jim:

As far as the election goes, I am voting for the person who's policy and actions are least like Jimmy Carter. Four years that took us 10 to get out of. Ha.

I agree with you, I am not voting party but for the invidividual who demonstrates integrity of leadership and believes that given a chance Americans can make America Great again.

Jan 30, 2008 03:39 PM #13
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR
Alan Kirkpatrick  LOL!  Remember him!  What a loser!  He is not even really liked here in GA!  I fully agree!  I have been betrayed by voting straight party!  I will vote with a magifying glass!
Jan 30, 2008 03:43 PM #14
Ambassador
251,062
Jesse & Kathy Clifton
Jesse Clifton & Associates, REALTORS® - Fairbanks, AK
Retired
The National Governors Association put out a report a few months ago that said there were more than $1.2 trillion in foreclosures that were due to hit the auction block in '08. That's a phenomenal number.  That alone will drive prices down despite low interest rates.  I think the financial markets are responding to the uncertainty and the frankly the short term future is bleak.  If it were roses, the market would have truly rebounded after the announcement of the stimulus package, the FED's rate reductions and multiple short term funds auctions.  Commodities are also on the rise, which generally happen when stocks tank.  Those issues and their impact will be felt nation wide - I believe it will have an impact on every market across the country; some worse than others.
Jan 30, 2008 05:20 PM #15
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Fairbanks, Alaska Realtors ~ Jesse & Kathy Clifton ~ Yes, it is a supply and demand issue.  More products = more choices = less price!  And yes you are right on the money, if the rate cuts were going to impact us...the phones would be ringing off the hook!  They are not!  It is interesting that I noticed on ActiveRain.Com if you talk about real estate news that is real, most do not want to comment on it.  They feel it is pessimistic.  It isn't!  You can be optimistic when they close the doors of your real estate office because they have closed your real estate office, but it doesn't change the fact that your broker isn't seeing enough deals coming in to pay the bills...or many of your associates are leaving the business because they are not making enough, or your buyer agent is losing their home in foreclosure.  Reality can bite.  But to the uniformed, they have no strategy in place to counteract it!  They just react an leave the business.

Jan 31, 2008 12:42 AM #16
Rainer
78,168
David Slavin
Keller Williams Premier - Katy, TX
CDPE, ABR, SRES Keller Williams Premier
Here's my take on the market in my area. http://activerain.com/blogsview/360665/The-Houston-Real-Estate
Jan 31, 2008 12:58 PM #17
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR
Thanks! I left a comment on your site and asked if sales are up or down compared to the same time period last year. Units sold is the key, not median price of homes.
Jan 31, 2008 01:39 PM #18
Ambassador
251,062
Jesse & Kathy Clifton
Jesse Clifton & Associates, REALTORS® - Fairbanks, AK
Retired
I agree... I've seen the same thing. The whole cheerleader mentality is just beyond me. There are times, such as the one we're in now, that the truth is grim. Reality can indeed bite. I would prefer to be armed with information so I can make informed choices... perhaps some really believe ignorance bliss. Good luck with that strategy is all I have to say.
Jan 31, 2008 02:03 PM #19
Ambassador
1,485,851
Jim Crawford
Crye-Leike REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

Fairbanks, Alaska Realtors ~ Jesse & Kathy Clifton ~  I have talked to a few of my firends to day across the country and in a few markets sales and showing seem to be picking up!  That will be incredible news if it s a trend!  We have seen a little increase in traffic in our listigns in the last week, but I will be more excited when I see some contracts, and buyers!

Jan 31, 2008 02:25 PM #20
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Ambassador
1,485,851

Jim Crawford

Jim Crawford Atlanta Best Listing Agents & REALTOR
Contact Me Now!
*
*
*
*
Spam prevention

Additional Information