"It's the End of the World As We Know It..." or is it?

By
Real Estate Agent with Realtor / Owner - RE/MAX Access

REM sang it and now we are singing it too. "It's the end of the world as we know it." Of course, we are talking about the end of the Real Estate market. But hasn't that been the hit song sung by CNBC and the news headliners for the last 2 years? So what is the reason for the end of the world this time? Let's recap.

It's the end of the world as we know itOn August 24th it certainly seemed as if the housing market was falling apart at the seams when the National Association of Realtors (NAR) announced the sales forecast for the 2010 year fell short. Sales of previously owned homes fell 27.2% in July as compared to June.  That is like saying if 200 homes sold in the month of June then only 146 home sold in July. So why was that such a shocker to the analysts? Did they forget that the 8,000 Tax incentive's Rule #1 was that Buyers had to settle by June 30th. (That was extended by the way at the 11th hour.)  Hello people, of course June sales would be higher than July sales. Of course the tax credit would artificially stimulate the number of settlements in June and create a bit of a "hangover" in July.

The Wall Street Journal stated that NAR announced the seasonally adjusted annual rate of sales is 3.83 million and it was at the lowest level since the industry group started its tally in 1999.  Immediately, the pundits were on the air saying how incredible this drop was, how far below analyst expectations this was, what a surprise this was and so on.  I recall an analyst caught up in the hysteria blindly saying that renting is always the best option for anyone considering buying a home right now. This is a perfect example of the media playing up the doom and gloom card. Remember folks, high ratings are what keeps them on the news and admit it, if they do not sensationalize, we won't listen or watch.

Of course on our end, we have been blogging about the "tax credit hangover" endlessly for months.  This dip comes as no surprise for us and if you have been reading our blog and newsletter, this is not a surprise to you either.  So much demand was created and condensed in the months of April, May, and June 2010, it only makes sense that there would be a huge falloff in July.  Is there cause for concern?  Sure there is, in regards to the economy and primarily unemployment.  Is it the end of the world as we know it?  Of course not!  Do we think REM is great? Yes! But we do not like the way the pundits sing their song and we disapprove of the way the media is spinning NAR's calculations. It is quite frankly dampening whatever remains of consumer confidence.

That being said, we are not blind to the negatives either. Let's look at the bad stuff a little closer. With the the home inventory increasing to a supply of 12.5 months (meaning it will take a year and a half to sell what we have for sale right now) and with the increased amount of bank owned properties entering the housing market, and short sales continuing to pop up on the market, there is more risk of price declines in the markets that are already suffering across the nation. More importantly, here in Philadelphia, we see a more stable market with smaller declines across the board particularly for homes priced under $400,000.  The luxury home market will feel the sting of somewhat greater price declines due to the buyer pool being smaller.

What does this all mean to you?  

Sellers - Price and condition are paramount.  Thus, to get your home sold in this market, you need to be priced below your competition AND have a better product.  Your house needs to show like a dream.  Marketing and exposure are never as important as there are today which is why you really cannot hire your the part-time agent or go FSBO, but hire that agent who excels in Internet Marketing and has a strong presence in the area.

Buyers - Turn the TV off.  There is substantial opportunity out there for you.  This may be the single best opportunity in your lifetime in that the combination of prices being where they are, the amount of properties to choose from, AND mortgage rates being SO low offers you incredible purchasing power.  "But what if prices go lower? "  Good question.... But what if mortgage rates go higher??  Even if prices fall $10,000 on that average sales price, that does not even come close to the amount of extra money you will be spending if mortgage rates went up even one point.   And I can tell you, sooner or later, this is going to happen.   

On the investment side, there are more opportunities out there for investors as well since it is harder for buyers to get loans.  In putting my money where my mouth is on opportunity in the Philadelphia real estate market, I have bought two properties in the last couple of months, one in East Passyunk and one in Northwood.   More to come on these in our next newsletter!

It's the end of the world as we know it. And I feel Fine!

 

 

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the scissors to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Location:
Pennsylvania Philadelphia County Philadelphia
Groups:
Philadelphia PA - Philly Investing - Real Estate in Pennsylvania
Posts to Localism
RE/MAX Active Rain Bloggers
Tags:
philadelphia real estate market
tax credit hangover
housing market
selling your home
buying a home
investing in real estate

Comments 49 New Comment

Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the clock to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Rainmaker
545,631
Susan Mangigian
Chester & Delaware County Homes, Delaware and Ches
RE/MAX Preferred, West Chester, PA, RS152252A

I think this is a superb post!  I certainly could not have said it better myself!  Sellers have got to realize they need to be priced more competitively and be the best house out there in amenities and condition.  It's not easy but it's the truth.  Things are still selling and it's only natural that things slowed down after the deadline and in the summer, when historically, we are always a bit slower.  I would remind #31 that's it's bad form to cut and post their own blog post into the comment stream of another blogger.  I also disagree with comment number 4.  It was clear to me that you were recapping as you stated in your first paragraph, not trumpeting doom and gloom.  This article was a pick me up for me.  I'd like to send the link to my sellers.  

September 02, 2010 10:16 AM
Ambassador
715,839
Christopher and Stephanie Somers - Realtors - Philadelphia Real Estate
Realtor / Owner - RE/MAX Access

Susan, Thanks and thanks to the rest of you guys. We wrote this post for consumers. It is difficult to make sense of the statistics. We had to do a bit of research to make sure we got it right. It is too easy to mislead. My (Steph) favrite part of the post is the REM song personally : ) Like Gary said above... I wonder what will end the world next month?

Don't be too hard on #4 or on Vincent's attempt to share : ) At least they did not put a link in there spamming Viagra or FL Swamp Land . We rarely edit but those comments, we do get rid of.

September 02, 2010 12:59 PM
Rainmaker
92,395
Mindy Sylvester
Naples Fl Real Estate
MVP Realty

NAR figures are a single statistic. Nobody's proclaiming "Doom and Gloom" now, here in 2012, because of the July numbers -- there's a LOT of other metrics involved, especially unemployment and months of (inventory) supply. This crisis cannot be reduced to a soundbite.

September 03, 2010 11:56 AM
Rainmaker
1,381,923
Laura Cerrano
Authentic Feng Shui Expert
Feng Shui Manhattan Long Island

Hey Chris and Steph, congrats on your featured post! I to love the "turn off the TV" there is wayyy to much drama and reports on the negative aspects of the market or information in general. What about all the good that is going on, no wonder people are so down, all they be fed is "sadness" stop the madness and keep it positive :)

September 09, 2010 07:47 AM
Rainmaker
1,381,923
Laura Cerrano
Authentic Feng Shui Expert
Feng Shui Manhattan Long Island

ooo and great visual haha

September 09, 2010 07:48 AM
Anonymous
Post a Comment
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the umbrella to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Ambassador
715,839

Christopher and Stephanie Somers - Realtors - Philadelphia Real Estate

Ask me a question
*
*
*
Spam prevention

Accessibility option: listen to a question and answer it!

To submit the form,
drag the umbrella to the circle on the side.

Type below the answer to what you hear. Numbers or words, lowercase:

Additional Information

For Email Marketing you can trust


The Philadelphia Real Estate market - our experiences, thoughts and insights. Philadelphia Realtor, RE/MAX, Top Realtor, thesomersteam, Philadelphia Living, Philly, title, mortgage, team leader, investor, Philadelphia investment properties, center city, condominiums, new construction, developer, real estate investor, tax abatement, Philadelphia arts, artist, Philadelphia dining.



Norris Point in Fishtown will 10 New Construction Town Homes with ground breaking underway. Here's a Sneek Peak:



Christopher Somers