REAL ESTATE MARKET PROJECTIONS? FACT OR WISHFUL THINKING?

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

TAKE OFF THE ROSE COLORED GLASSES and PREPARE FOR REALITY.

John Mulkin provides another thoughtful analysis of the real estate industry in his accounting of his 2010 predictions.  As always, a worthy read for members who want to know the facts.  See:  Housing and Economic Predictions for 2011 and Beyond

John isn't projecting a positive financial picture for the real estate industry for 2011.  I agree and believe that it will be many years before the real estate industry will be positive. 

AGENTS MAY WANT TO TAKE JOHN'S thoughtful analysis and prepare.  For years now we have advocated using a business plan to help manage your business.  Now, we need a BUDGET PLAN to help manage our resources. 

agentThe RETRACTION evidenced by sales volume has it's foundation in the uncertainty and lack of confidence of the average consumer AND the RETRACTION in the numbers of home buyers in the market.  The old "rosy scenario syndrome" is misleading and could lead to financial ruin for many real estate agents and brokers. 

Agents and brokers plan their budgets for advertising and promotion based on projected sales and commission receipts.  By publishing positive sales and growth projections, we grunts in the real estate industry could be encouraged to dissipate our limited resources chasing business that doesn't and isn't Agentlikely to exist for some years to come.

If anyone is familiar with new construction sales, you know that builders are quite likely to raise base prices of their models after booking 1-3 sales contracts.  Do they seriously believe that a sale or two or three is hard evidence that the market is now roaring into positive territory??? 

Plan for no growth and your resources will last longer.  Real estate agents and brokers and the NAR need to learn to see what is and not what they believe will convince consumers that "it's a good time to buy."  Is it a good time to buy??  Sure it is.  THAT IS GOOD NEWS FOR THE CONSUMER.  However, when we publish market reports that show a modest gain in home prices, we don't always publish the concurrent reduction in sales volume. 

I believe we're in for tougher times than most expect because we're not getting the facts from NAR, which speaks for our industry. 

They have yet to publish a word addressing the percentage of would be home buying consumers with credit damaged by foreclosure, short sales, unemployment and bankruptcy.  Take those consumers OUT OF THE REAL ESTATE MARKET and what then would the sales projections be????

Many consumers will be OUT OF THE MARKET FOR 3-7 YEARS.  The NAR and the federal and state economists are using OLD and IRRELEVANT financial models to project future real estate market growth.  By using gross population numbers to future sales and growth, they have failed to account for the MILLIONS of consumers will will not be able to buy a home for some years to come.

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

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Donald Bradbury 09/23/2010 07:05 PM
  2. Jerry Morse 09/24/2010 12:10 AM
  3. Jerry Bronstrup 09/24/2010 12:12 PM
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Rainer
7,568
Tony Hedberg
V Realty Group - Madison, WI

Lenn,

I believe our situation is far more complex than anyone wants to acknowledge. We have been in a slow decline for 25 years, and anyone that thinks we are about to "bounce back" is naive. However, that is the BIG picture. Each of us is responsible for creating our own reality. We need to work hard, watch our spending, and most importantly add value to our clients and we will achieve our goals.

September 24, 2010 05:37 PM #70
Rainer
72,617
Carol Tunis
Florida Homes Realty & Mortgage - Saint Augustine, FL
Carol Tunis...a "HouseSold" name!

Good point, Tony and everyone else!  This downturn is not going away.  The banks are holding on to their foreclosure inventory and the buyers are waiting for the market to hit bottom before committing.   That is, if they're able to buy!  I know that I'm always thinking of different angles to approach my busines. Always, looking for "magic" that will take the market back to the way it was.  It keeps me sane (ish) while looking for gold at the end of the real estate rainbow.

September 24, 2010 06:39 PM #71
Ambassador
2,346,402
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Tony. Right you are. There are so many "forces" that affect the real estate industry it's hard to know the future. 

However, This is the first time that the the consumer has been so damaged that the buying pool has diminished to the point it has.  This is a new paradigm.

 

September 24, 2010 07:00 PM #72
Rainmaker
318,810
Jon Quist
LONG REALTY - Tucson, AZ
Tucson's BUYERS ONLY Realtor since 1996

I did a better job with my budget in 2009 and still did over double 2008 in volume, with far less expense, so it can be done.

Of course now I owe our Uncle more bucks. I feel kinda dumb. I should have spent it on more and better advertising. Maybe I could have done ever more business???

September 24, 2010 07:35 PM #73
Rainer
112,835
Beverly Femia
Coldwell Banker Sea Coast Advantage - Hampstead, NC
Broker Realtor Stager - Greater Wilmington, NC Are

How can we be talking about forgiveness for bailing on mortgages when we are still neck deep in short sales and forelcosures.  ARGHHHHHHH!!!!!   It's pretty clear a lot of people who are in homes shouldn't have been able to get their hands on them in the first place.  I agree with Linn that the government and NAR are using obsolete models for home forecasting but then lenders are using obsolete models for qualifying Buyers.  When the cost of heath care and child care are factored in the picture is very different and let's not forget the missing calculation how likely a job is to last and whether it's easily replaced.  I nearly blanced at the thought of 2 minimum wage folks buying anything in Wilmington NC but the truth is our minimum wage is lower and our home prices 3 times higher.  At least minimum wage jobs are more plentiful than specialized ones and, yes, all real estate is local so I'm glad for Jackie that things are making sense in MI.  I actually think real estate professionals have seen the worst.  At least my phone is ringing.  Still, it's definitely going to be different.  I once ran all over 3 counties for twice today's average transaction price.  Real estate will be a business requiring real business skills for the foreseeable future.   

September 24, 2010 10:11 PM #74
Rainer
52,653
Manny Gonzalez
Negotiable Realty LLC - Chicago, IL

September 25, 2010 12:59 AM #75
Ambassador
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Beverly.  You wrote:  "It's pretty clear a lot of people who are in homes shouldn't have been able to get their hands on them in the first place."

The people who "shouldn't have been. . . . "  are such a MINISCULE percentage of the consumers who have lost their homes, their credit and everything for family stability, it demeans all real estate professionsls to blame them for the housing depression we are experiencing.

All that is doing is blaming the weakest link in the entire housing and financial industries and gives a PASS to the manipulation of the financial markets by the WALL STREET GANGS and politicians who benefited financial from the market manipulations and to the regulators who assisted them in their opportunistic and greedy actions. 

September 25, 2010 05:05 AM #76
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Jon. Just be glad you have the resources to work with

September 25, 2010 05:06 AM #77
Rainer
171,378
George P. Cruz Sr.
Galleon Realty of Treasure Coast - Port St Lucie, FL
PSL FL CDPE, TRC, CIPS

Great post and wishful thinking on our part..

George

September 25, 2010 08:35 AM #78
Rainmaker
332,875
Judy Greenberg
Coldwell Banker Buffalo Grove- 350 Half Day Road - Buffalo Grove, IL
Coldwell Banker - Buffalo Grove - Long Grove Homes

This is an excellent post.  I really haven't thought about the fact, that there will be less buyers in the buyer pool for many years because of damaged credit. 

September 25, 2010 08:53 AM #79
Rainer
130,286
Monica Atherton
Coldwell Banker~Residential Brokerage - Temecula, CA
Your Temecula Real Estate Gal

Great post.  Definitely our new reality.

September 25, 2010 11:13 AM #80
Rainer
112,835
Beverly Femia
Coldwell Banker Sea Coast Advantage - Hampstead, NC
Broker Realtor Stager - Greater Wilmington, NC Are

Lenn,

I regret your interpretation of my remarks but I gues it's true I believe no one get a free pass on this mess we're in today including the real estate industry.  We all played a part in where we find ourselves today from the public, who bought the over-priced homes, to the agent's who told them not to worry because it would keep going up forever.  It didn't make a lick of sense but there were lots of takers for nonsense.  We might be in some agreement reagrding the banks.  Greed feeds on desire and the banks greed still knows no bounds.  Wall street is hysterical over the idea there might be some restraints placed on their ability to suck the country dry.  I find it telling that the new commercial construction in our area seems to be mostly banks!  As for desire, most of us now are willing to settle for a few less things in order to have a lot more security. 

September 25, 2010 02:07 PM #81
Rainmaker
309,794
John DL Arendsen
TAG Real Estate Sales & Investments & ON THE LEVEL GC - Leucadia, CA
Real Estate Bkr, Factory Built home Dealer/Devlpr

I hate to sound so cynical but maybe what America does need is a cataclysmic event of some kind. It worked after Pearl Harbor on December 6, 1941, and in a very modest way in 1994 during one of the worse recessions prior to the one we're currently dealing with whence the Nortridge Earthquake woke up a sleeping giant in California and the longest Nationwide economic rebound and growth period in U.S. history unfolded. I'm not suggesting that the Northridge Earthquake was the driving force behind the recovery but it was certainly the tip of the iceberg.

Add to that the fearsome foursome hurricanes that hit Florida and our darling of all darlings "Katrina". These disasters have all spawned economic revival to otherwise socio-economically troubled if not out right depressed areas. It helped lead to a Renascence in some respects i.e. new homes, new infrastructures, new construction technologies, communications, (cell phones became of tanamount importance during these disasters) a major advancement in the hi tech arena and a timely revival of employment for the construction and manufacturing sectors which are two of the most critical components of our economy.

Sure I understand that insurance companies (easily the most rich, profitable and capable driving forces in our economy) and our good ole tax dollars (complements of our Uncle Sam) were the driving forces behind it all. But it created growth and upward mobility that lasted for years. I'm no economic genious but it just might take something like this to jump start us into a new era of growth.

With things heating up in the Middle East the way we are and other major challenges that are unfolding daily I wouldn't hold your breath. But as the old addage goes "In Times of Crisis Great Leaders Emerge" One thing the world must and will come to terms with is American Resolve. Push us into a corner and we come out swinging with all fours. Not hoping for the worse but if it should happen I think America will be ready.

September 26, 2010 08:57 PM #82
Rainmaker
309,794
John DL Arendsen
TAG Real Estate Sales & Investments & ON THE LEVEL GC - Leucadia, CA
Real Estate Bkr, Factory Built home Dealer/Devlpr

Oops!! Sorry Lenn, the previous comment was meant for the link   Housing and Economic Predictions for 2011 and Beyond. I found it very interesting and revealing. Please feel free to delete it if you feel it inappropriate to your post.

September 26, 2010 09:03 PM #83
Rainmaker
309,794
John DL Arendsen
TAG Real Estate Sales & Investments & ON THE LEVEL GC - Leucadia, CA
Real Estate Bkr, Factory Built home Dealer/Devlpr

Lenn, ever thought about a new NAR or a rendition thereof? Active Rain is gaining momentum and power across the board. There's a lot of powerful leaders involved. "The only constant in life is chage" Doncha think it's time?

September 26, 2010 10:24 PM #84
Ambassador
2,346,402
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

George.  Thanks.

Judy.  I've thought of little else since the buying pool began to shrink and I got so many calls from wishful home buyers who went through a bankruptcy, foreclosure or short sale in the past 2-3 years wanting to know what they could do. 

Monica. A reality that the government has yet to notice.

Beverly.  They are your words.  I cringe each and every time I read a comment from anyone that begins or includes the American home buyer in this catastrophe which simply gives cover to the real perps.

John A.  Dec. 6????  As to the final post, I believe we're seeing that in the public today with the Tea Party Movement.  Ground up forces involving millions calling the politicians to account.

The NAR is institutionalized and in terms of managing the Association systems doing a good job.  It's when they fail to alert the membership about reality of market forces that they fail.   My opinion.

September 27, 2010 06:16 AM #85
Rainmaker
309,794
John DL Arendsen
TAG Real Estate Sales & Investments & ON THE LEVEL GC - Leucadia, CA
Real Estate Bkr, Factory Built home Dealer/Devlpr

Sorry about the date. I knew it was Dec 7th but my brother's b-day is o the 6th so it's a force of habit.

There's other points we could discuss re: NAR but I'll save that for anoher conversation. Maybe even a post.

September 27, 2010 10:17 AM #86
Ambassador
2,346,402
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

John.  I assumed it was a typo.  I'll watch for your post.

September 27, 2010 10:37 AM #87
Rainer
24,450
Debra V. Edwards
edwards builders and realty, inc. - Cashiers, NC
Realtor/Builder, Cashiers, NC., Highlands, NC., Glenville

Yeah and Lenn, those honest, hard-working, patriotic Americans find themselves with poor credit scores....just because of job loss....Sad!  debra

November 29, 2010 01:29 PM #88
Ambassador
2,346,402
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Debra.  Noone in a position of "should know" understands the damage to the economy by consumers whose credit is ruined.  They aren't buying homes or much else.

 

November 29, 2010 01:32 PM #89
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Lenn Harley

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