SURVEY SAYS! THE HOUSING INDUSTRY IS IN RECESSION. WHAT ARE YOU GOING TO DO ABOUT IT?

By
Real Estate Agent with Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate 303829;0225082372

                                                   * * * *  HARD CORE REAL ESTATE TALK  * * * *

REAL ESTATE AGENTS AND BROKERS NEED TO GET A GRIP ON REALITY AND LEARN THE FACTS ABOUT THE HOUSING INDUSTRY IS IN RECESSION.  BY ALL LOCAL AND NATIONAL NEWS REPORTS, IT IS REAL. 

A recent opinion based survey conducted by INMAN on December 1st shows that I am not alone in my opinion that the recovery from this housing industry recession may take several years. 

However, I don't rely on opinions or platitudes.  I rely on FACTS.

My word means everything in the world to me.  I will not mislead the consumer. 

FACT OR FICTION?  It is not in my nature to harp, kick that dead horse, or be pessimistic.  However, when it comes to the housing market and the real estate industry, I rely on HARD CORE REAL ESTATE.   I RELY ON MY OWN RESEARCH of the FACTSNumbers do not lie. 

  • Property values are down.
  • Sales volume is down.
  • Consumer traffic is down. 
  • Unemployment is up.
  • The economy is in recession. 

Relating the above isn't pessimism.  It is the result of reality based observation of the facts of my market which is Maryland and Northern Virginia.  Thanks to ActiveRain, I also have a window into local markets across the country. 

OUR BROKERS CAN LEAD.  For the survival of agents in our business, it is critical that brokers come to grips with reality.  If the agents and brokers who interact with the public continue to present a rosy picture to the consumer, we will lose all credibility with the home buying and selling consumer.  We sold a lot of real estate when home prices were escalating faster than the contracts could close and buyers were realizing a 20% gain the next year.  We can also sell a lot of real estate today, if we accept the fact that the housing industry is in recession and use that information to formulate our personal business plans. 

TURN THIS HOUSING RECESSION INTO OPPORTUNITY TIME.

If we face reality and understand that the housing market is a reflection of the national economy, we will have some credibility throughout the recovery, when it comes, and it will come. 

FACT:  The economy is in recession. 

FACT:  The housing market is in recession.Foreclosure sign

FACT:  Foreclosures and short sales are an increasing percentage of active listings of homes for sale and and will continue to increase as home valuations continue to fall, unemployment continues to rise and the government continues to rescue the banks and Wall Street and leaves the average home owner to fend for themselves.   

FACT:  Americans are a home ownership society.  Paying rent on property owned by investors is not an attractive proposal to most consumers.  Even if home owners understand that they will not realize high equity gains for some years, owning a home offers a quality of life that Americans desire.  We're an independent society and having control of our home drives many home buyers. 

FACT:  Many home owners will be unable to sell their homes because the property will not appraise for more than market value which, in many cases, is far less than the mortgage balance.  The move-up market is non-existent for the vast majority of home owners.  Since the move-up market has historically been a large percentage of real estate sales, agents and brokers need to focus marketing dollars and energy on alternative market segments.  That fact will result in fewer sales and reducing sales dollar volume.  This will also probably result in a reduction in the numbers of licensees competing for the reduced number of home buyers. 

FACT:  Relief from the government will be targeted to segments of the market that are already in distress leaving millions of home owners hostage to a property with a mortgage balance higher than the market value of their home, making sale of the property impossible.     

ALL OF THE ABOVE CANNOT BE SUGAR COATED BY REAL ESTATE PRACTITIONERS. 

However, real estate agents and brokers can survive the market recession if we are smart and quick on our feet.  How?

1.  Sell those foreclosures.  First time home buyers and buyers looking for good prices are excited about the discounted prices offered by foreclosed properties.  Many of the foreclosures on the market today are in locations and communities popular with home buyers.  Learn how to prepare our buyers

2.  Sell short sales.  These properties are discounted and the appraisal are a guide to the bank's willingness to accept far less than present day market prices. 

3.  Sell financing.  Look for marketing opportunities with special financing for home buyers.  First time home buyer financing can make sales happen.  Research grant programs for lower income buyers and first time home buyers.  They are out there. 

4. Research loan officers.  Form relationships with lenders who are willing to offer special financing opportunities for your home buyers.  If a loan officer or mortgage company is not willing to help find more than the usual financing, find one that will. 

5.  Get a grip on your market.  Last year's market is gone.  Accept the fact that our average sale price is going to be reduced dramatically for the foreseeable future.  Homes that were selling for $450,000 3 years ago are now selling for $300,000.  Expect to have to work harder to maintain gross sales volume with the reduced sale prices.

6.  Examine your household budget.  It may be necessary to adapt a more modest life style to survive as a real estate sales person in this housing recession.

7.  Learn from the success of others.  Bryan Tutas has, in the two years I've known him, changed his broker model at least 3 times.  Broker Bryant's advice is hard work. 

WHAT IS YOUR JOB GOING TO BE IN 2010?  We, real estate agents and brokers, can survive and thrive this housing recession if we are smart, know the market and be willing to do what works, not necessarily do what we have always done. 

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, E-Mail. 

Lenn's Blog

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Cheryl Willis 12/06/2008 03:02 AM
  2. Arina Hanciulescu 12/06/2008 08:45 AM
  3. D B 12/06/2008 09:09 AM
Topic:
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Ambassador
522,459
Tracy Santrock
Fonville Morisey/Santrock Realty Group, Inc. - Cary, NC
Raleigh - Cary Realtor/Broker In Charge

Hi Lenn,

The market is what it is. I, and other Realtors, choose to make Lemonade out of Lemons!

I wrote an offer today and went under contract on new construction.  No foreclosure, No short sale, just  a great price, great interest rate and terms.  I'm happy for my clients. 

Dec 06, 2008 11:52 AM #67
Rainmaker
468,350
Marcy Moyer
eXp Realty of California Silicon Valley Probate, Trust, and Investment Sales - Mountain View, CA
Probate, Trust, and Investment Specialist

Realestate 101  Adjust, Adjust, Adjust. There is a great book called "Who Moved the Cheese?" that is very helpful in attitude adjustments.

marcy Moyer Keller williams Realty Palo Alto, Ca.

Dec 06, 2008 11:56 AM #68
Ambassador
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Deb Brooks
Brooks Prime Properties Wichita Falls Texas - Wichita Falls, TX

Hello Lenn, what you say is very true. To remain and maintain a solid business through this down time, we as agents must remain flexible. I am finding myself listing foreclosures for the first time in my career but they are also selling quickly.

We must be flexible enough to deviate from our standard and think and "work outside the box." This is an excellent article and our economy just is what it is.

You're always a good read...happy holidays! Later in the rain~Deb

Dec 06, 2008 12:05 PM #69
Ambassador
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Lenn!  Now this is SOUND advice for all who wish to stay afloat, not only for the next 2-3 years but, for a lifetime in business.  We MUST roll with the punches and if changing our business plan is what it takes, then so be it.  It HAS to be done each and every year about this time when we're re-evaluating our buiness plan.  Why not think outside the box and be a step ahead of the game when you get a sense that times are changing? 

You're also right that we do have to work harder to keep the gross numbers up but, isn't that what re-modeling is all about?!  There will be times that we hit the jackpot and have an easy year by selling only luxury homes--sell 12 of those a year and we've worked far less than in the years (THIS one) that we're selling starter homes and having to sell 120 of them!  If you DON'T change your business model to accomodate the economical and industry changes, you'll be left in the dust!

Congrats on that little gold star too!

Debe in Charlotte

Dec 06, 2008 02:38 PM #70
Rainmaker
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Esko Kiuru
Bethesda, MD

Lenn,

The mortgage sector of course is having its own serious problems. There are lenders, though, that do offer a little better pricing, for instance, than most, or their service, turn times etc., is better, so it pays to form a reliable relationship with a competent loan officer.

Dec 06, 2008 03:44 PM #71
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Esko.  You are right.  I cultivate and treasure good loan officers who will bring value to our relationship. 

Debe.  If I had a nickel for each time I've had to revise my marketing plan.. . . . . .

Deb.  Right you are.  We can't control the market, but we can control how we work within it.

Marcy.  Adjust is the key word these days.

Tracy.  Indeed, the market is . . . . .  I am writing on a new home today.  New homes have been my sole focus for my personal sales for two years now. 

Ryan.  Good.  We need to see fewer agents in all markets.  Agents and brokers must spend so much time, energy and resources competing with each other, it diminishes our net considerably.  I have nothing against competition.  However, our market is simply flooded with agents, not experienced or performing agent, just agents.  The sheer numbers is astounding. 

IMO, the NAR made a stragegic mistake in striving for number of members rather than skill level of members.  The NAR could have used it's considerable resources to lobby for higher entry standards in the states.  But, I lost that argument a long time ago. 

 

Dec 06, 2008 10:05 PM #72
Rainmaker
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Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

It's good to see many agents that have moved past the denial stage. 

I really don't look at the big macro picture when it comes to my business.  Even in a depression, there's stuff happening.  There are people with cash.  There are people who bought their home 20 years ago.  I try to look at the micro angle and just sieze the opportunities as they present themselves.

Dec 07, 2008 12:47 AM #73
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Tim.  That's the advantage that agents who hae been around for a while have.  We have a roster of old clients and can relate the present circumstances to similar markets in our past.

 

Dec 07, 2008 01:05 AM #74
Rainmaker
362,468
Lynn Pineda
eXp Realty - Boca Raton, FL
Real Estate Promises delivered in SE Florida

Lenn, I absoluteley agree with you. I doesn't do anybody any good to paint a picture that isn't accurate. As you say, simply look at the facts and the real estate picture is very clear to me too.  This is why a year ago I decided to turn my attention to Short Sales.  It is a tough time no doubt and life will always throw us changes as life and circumstances aren't constant. Right now Agents must work hard or hang up there hat.

Dec 07, 2008 03:15 AM #75
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Lynn.  We sell short sales routinely.  To us they are just inventory.  We understand how it works and prepare our buyers.  Agents who don't sell short sales are losing some good buys for their buyer/clents.

 

Dec 07, 2008 03:36 AM #76
Rainer
42,621
Craig W. Barrett
RE/MAX 100 - Hughesville, MD
Hughesville MD Real Estate

I had an opportunity very recently to publicly explain my local market conditions. Inventory is up, prices are down (and I think they will continue to slide), short sales and foreclosures will continue to hit market. Told it like I saw it. However, there are opportunities and it's our job as professionals to seize the opportunity for our clients.

Dec 07, 2008 04:02 AM #77
Rainer
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Olena Osipov
Maple Ridge, BC

Like I have mentioned somewhere before, you can still make it in this market if you adjust and work hard. I think I am somewhat lucky because I just started and don't have to adjust. This is the time when true real estate professionals are working, and others are leaving. Before anybody could do it.

Dec 07, 2008 04:07 AM #78
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Craig.  Right you are.  Knowing opportunities when we can find them for our buyers brings value.

Olena.  Agent who enter this business and can survive this will thrive in a couple of years. 

 

Dec 07, 2008 04:12 AM #79
Rainmaker
487,190
TIM MONCRIEF
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

Recessions have never and will never affect the entire country the same as there are so many submarkets in the US.  Austin was in its recession while the country was thriving in 2002 to 2004.  I think you are going to be a bit shocked that we will not suffer as bad as you think in Austin, as we hit bottom and had yet to recover before this hit.  I had 4 offer this weekend on 4 homes.  That is not to brag....that is to say that the world is not coming to an end in Austin....and this is December.  Check back on this comment in 6 months........

Dec 07, 2008 09:48 AM #80
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Tim.  Good for you.  However, I suspect that you have not been sitting in the corner contemplating your navel, but have been working hard. 

Me too.  We've been selling homes on a regular, albeit slower than usual, basis.  As you say, it is December.

Our market is very slow as is confirmed by the hard sales stats.  Numbers don't lie.

 

Dec 07, 2008 08:49 PM #81
Rainmaker
472,275
Janice Roosevelt
Keller Williams Brandywine Valley - West Chester, PA
OICP ABR, ePRO,Ecobroker

If He leads you to it, He can lead you through  - we just all have to know how to use the shovel.

Dec 07, 2008 09:48 PM #82
Rainer
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Patty Luther
RE/MAX Rock-n-Roll Realty - Lewiston, ID
Lewiston ID Real Estate, Idaho-Washington

Wow Lenn...you are one smart lady...did you want to move to the Lewis Clark Valley and work with me?  I have definatley subscribed to your Blogs...you will be GREAT to learn from.

Patty of Rock-n-Roll Realty

Dec 08, 2008 10:03 AM #83
Rainmaker
760,955
Thom Abbott
MyMidtownMojo.com |770.713.1505 | Intown Atlanta GA Condo Living - Atlanta, GA
Midtown Atlanta GA Condos For Sale

Lenn...indeed good advise. I'm trying to target first time buyers and get them in when prices are down are interest rates are down. But, then they hear these stories about 4.5% Interest, and BAM, back on the fence they go.

I've got to get a handle on what's going on and get my ship sailing in the right direction!

Dec 08, 2008 01:00 PM #84
Rainer
3,955
Doug Jordan
Pacific Mortgage Group - Honolulu, HI

Lenn.. great post and no the numbers don't lie. But on a positive note, to survive and thrive in this market people are going to have to develop a better sense of marketing. And hopefully this developed sense of marketing carries over to the better days to come, making us all a little better than we were before.

Dec 08, 2008 02:05 PM #85
Rainmaker
656,967
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

Lenn - I'm a little frightened to write this, being some good news about our local market and all.  But I am a bit of a statistics geek - so here goes.  Colorado went into the dumps before the rest of the country.  We struggled with the highest foreclosure rates in the country and we've been doing short sales for about 6 years around here.  I do a lot of research for both sellers and buyers, especially investors.  And I'm seeing over and over, when I look at some parts of our area, things are in fact already turning around.  I work mostly the northern part of the Denver area and suburbs, and we are seeing fewer days on market, less inventory, a lower absorption rate, more homes sold, and in many cases buyers are having a hard time buying because of bidding wars.  (The ones who 'don't want to play that game' lose out over and over again.)

I do a three year sales history by neighborhood for my clients, and I've seen many neighborhoods where prices are rising.  We are still suffering from lots of foreclosures and that will keep the prices down. But the question is for how long?  I don't make promises, but people who've been playing around with the idea of buying or selling are seeing the trend - prices are sluggishly moving upward.  I wonder how much difference it would make, if they didn't hear anything but gloom and doom about the national market and paid attention to the local facts.

I just listed a house for the second time.  Last year, it would have to be priced at $100,000 to sell, but she didn't want to come down that low and took it off the market.  Last Thursday we listed it for $120,000 and it was under contract on Sunday. What if I had told her, the turnaround is years away, you must drop your price?  That would have been very bad advice!

Dec 09, 2008 01:51 AM #86
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