A nation hunkered down…

By
Real Estate Agent with Real Estate One

In today’s Bloomberg News there is a story about homebuyers “hunkering down” in today’s economy instead of buying homes. The story used the definition of hunkering down as hiding in fear. The reporter sited instances where buyers even pulled back offers, based upon the turmoil in the stock market and the resulting uncertainty overall with the economy. People are hunkering rather than buying.

 

I guess the news is bad. NAR reported that July sales fell to the lowest point this year and Karl Case of the Case-Shiller report even was quoted in the Bloomberg article as stating that another recession may happen if the housing segment continues its swoon.

 

Indications of the malaise included the fact that applications for mortgages to buy homes dropped to a 13-month low in the week ended Aug. 12, even with rates at historic low levels, according to the Mortgage Bankers Association. The article reported that Bloomberg Consumer Comfort Index sank to the lowest since the official recession. In addition the stock market has been down for 4-5 weeks, so many people have seen their down payment nest eggs disappear. Even with low mortgage rates there has also been a huge increase in cancelled deals due to low appraisals according to the story.

 

The result of all of this gloomy news is a nation hunkered down, doing nothing until this all blows over.  However, this is one of those chicken or egg situations. In the past, the economy has always been led out of recessions by the housing industry. Improvements n home buying led to increases in building which led to better employment and on and on. This time no one is buying, so few builders are building and the whole mess is feeding upon itself.

 

Even attempts by the government to encourage home buying by keeping rates low and promoting program after program to encourage lenders to loosen up have not worked. The encouraging news that foreclosures were down the last couple of months was driven as much as anything by the lenders’ reaction to the various robo-signing investigations into foreclosure irregularities, not by shifts in the fundamentals of the housing market.

 

So, what’s a Realtor to do in this hunkered down world? In my area at least, there are still sales happening – they are just low-end sales to investors and first time buyers. So I focus upon them. There are few move-up buyers (those in the move-up sweet spot in this market of $200-400K) out looking, but I do get an occasional one or two. They are usually very finicky and are really looking to steal a move-in ready house at “destroyed foreclosure” prices. It’s just the nature of the market.

 

Many of the buyers in the move-up price range in this area aren’t the classic move-up buyer with a house to sell or who just sold; they are the people who lost their own homes to foreclosure 3-4 years ago and now have repaired their credit enough to start looking top buy a home again. They have to be vetted carefully with a good mortgage person, so that I don’t waste a lot of time with wishful thinkers instead of real buyers. More than once my mortgage person has had to tell them that they still have work to do on their credit before they should be out looking.

 

I guess that Realtors need to use the other definition of “hunkered down” that I found on-line in the Urban Dictionary – “to get to work, to focus on the job at hand.” We have to hunker down to the basics and work harder at sales that return less in order to get through this mess. If there is any good news to come out of all of this it’s the exit from the real estate business of the marginal, would-be Realtors and part-timers. That has concentrated what little business there is out there to the Realtors who have hunkered down to ride this thing out. So, hunker down fellow Realtors and let’s work our way through this recession.

 

Posted by

 

 Norm Werner

Real Estate One

 

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Rainmaker
160,976
Howard and Susan Meyers
The Hudson Company Winnetka and North Shore - Winnetka, IL

Norm...it's important to always remember that all real estate is local.

 We're finding that there are many buyers out there who are able to take advantage of the considerably lower prices and the phenomenal mortgage rates today.  Whether we're at a bottom is impossible to say, but the synergy of prices and rates makes for a compelling situation for buyers who can take advantage of it. 

Aug 22, 2011 09:16 AM #1
Rainmaker
298,993
Charlie Dresen
Steamboat Sotheby's International Realty - Steamboat Springs, CO
Steamboat Springs, CO e-Pro

Great post Norm. It is tough being a realtor these days. We work harder and there's not a lot to show for it. But you are right, sitting around waiting for the phone to ring is not the answer.

Get busy realtors and make yourself better.  Improve your website, work on blogging, your SEO, connect with old clients, learn to take better pictures, buy a video camera, whatever, just be ready when things do get better. 

Aug 22, 2011 09:34 AM #2
Rainer
62,631
Scotti Jowers
CENTURY 21 Shackelford French, Search West Monroe Homes - West Monroe, LA
Realtor - West Monroe, Louisiana Homes for Sale

Norm,

The problem with this type of bad news is that it's a picture painted with broad brush strokes. Every market is different and many are not bad, but when the media heads start spinning out the doom and gloom, it causes even healthy markets to slow down unnecessarily.

Aug 22, 2011 10:00 AM #3
Rainmaker
1,374,063
Richie Alan Naggar Author PEARLS SERIES of books
People first then business! Ran Right Realty Riverside, Ca - Riverside, CA
on LIFE and LOVE plus Real Estate too!

Norm..too true and it my neck of the woods, we are in the midst of a serious issue that may be around for some time. People are reluctant to discuss the long term applications and suffer in silence. Those that are suffering fear the next phase which is agony...none of it pleasant and all of it very real...sobering post thank you

Aug 22, 2011 10:02 AM #4
Rainmaker
195,930
Sarah & John Rummage
Benchmark Realty LLC, Brentwood, Nashville TN 615.516.5233 - Nashville, TN
BPOR, ePro, Realtor

I notice a hunkering down, when I search for inventory, and it appears that it has shrunk dramatically.

I do believe that those who don't need to sell, aren't putting their homes on the market as readily.

Sarah

Aug 22, 2011 11:09 AM #5
Rainer
232,628
Mike Yeo
3:16 team REALTY - Frisco, TX
We still have people moving to our city and home sales for us still happening. It is local and some parts of the country might see this while others don't.
Aug 22, 2011 11:18 AM #6
Rainmaker
683,647
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Our area is very spotty.  Some markets are very competitive - other markets not so much.  The difficulty is  that it is very difficult to work your way into markets that are moving.  As for maginal agents and part-timers leaving the field.  I WISH that would happen.  We had 7000 agents in our county when the mess started and we have 7000 agents now.  They are hanging in and the result is that they are taking badly need volume from even the most productive agents.   One of the reasons - NO JOBS....

Aug 22, 2011 11:32 AM #7
Rainmaker
732,559
Gene Mundt, Chicago-area Mortgage Lender - www.genemundt.com
NMLS #216987 - New Lenox, IL
708.921.6331 - 37 yrs experience

Norm:  Excellent re-cap of the present housing market and financial situation.  I'm a lender in the Chicagoland market ... and I'm seeing micro-markets within more regional markets, just in our area.  The mantra is definitely becoming "real estate is micro-local".  There IS good news in some areas out there.  Not enough of it though ... and it doesn't get the publicity it deserves and WE need.  Hunkering down can be a good thing, as you point out ... as long as we make it serve a bigger purpose.

  Gene

Aug 22, 2011 11:33 AM #8
Rainmaker
191,418
Gregory Bain
Mezzina Real Estate & Insurance - Little Egg Harbor, NJ
For Homes on the Jersey Shore

I'm sorry to rain on your parade, but do you have anything to back up your statement: " In the past, the economy has always been led out of recessions by the housing industry. "?

It seems to me any boom in housing was created by investors building some sort of manufacturing facility that would create jobs that in turn give the citizens income to buy real estate and other goods and services. Since the 1970's the investors in creating new jobs was shifted to the "service industry" such as gambling, insurance, finance, health care, etc. We create little that can be exported to balance our "consumer driven" economy. You remember "shop or the terrorist win" crap was being sung ten years ago, don't you?

Today there are no Rockefeller's, Chase, or Morgans (we are stuck with the likes of Gates and Buffett) that are going to drop there money here. Everything is done by Wall Street stock and we the people that buy stock (you and me) in companies that have all but left our soil. Sure, there are still US flag ship companies that are here and tied into our war machine, but that will never be enough to snap us out of a recession or even change the course of the downward spiral that has been laid before us.

Housing must be affordable by the wages paid in an area (In My Humble Opinion). Some even call it a living wage, while others attack such a phrase as being socialistic. And, maybe it is when the CEO has the right to make so much more than the rest of the workers and labor unions are blamed for all the ills of society. Long live the company store. Besides, we can still send our children off to the all "volunteer Army" for a job protecting Wall Street.

Aug 22, 2011 11:39 AM #9
Rainmaker
263,180
Bruce Kunz
Bruce Kunz @ Veltri & Associates, 866-483-5874 x464 - Howell, NJ
REALTOR®, Howell NJ Homes for Sale

Interesting post, Norm. On top of the points you make about why it is a difficult time for REALTORS®, Internet access to listing information has made many sellers and buyers decide they can do our "easy" jobs even better without us.
Also, instead of causing "the exit from the real estate business of the marginal, would-be Realtors and part-timers" I believe it is causing some full time agents to become part time just to survive.
Thanks for sharing,
Bruce

Aug 22, 2011 12:55 PM #11
Rainer
97,317
Glenn Freezman
Nucazza LLP & Home Buying Evolution, & Family Abstract, Inc - Fort Washington, PA

Norm, I shudder when I hear that existing home sales are up, to me that signals that 1 in 4 homes are bank sold, meaning the property valuesmin the neighborhood just dropped again.  It's a true double edge sword.

Aug 22, 2011 12:55 PM #12
Rainer
58,089
David A. Weaver
Buckeye, AZ
20 years helping folks finance their homes.

Unfortunately Norm, it's not just the Realtor's who are feeling the pressure, escrow and title companies, appraisers and mortgage loan originators are also having a hard time making a living.  I speak with all segments of the industry on a daily basis and without variation, survival is the buzz word.

Having to adjust to the overreaction by Congress's passing of new laws and the increase in regulation created by then, combined with shrinking profit margins and reduced volume all contributes to an ever stressful business environment.  When the FED announces that they are going to keep rates low for the next several years.  And the latest survey says house prices are down again. 

Where is the motivation to buy?  I had a couple state to me recently, "Why should I buy a home today when next month it will be down in price again and the mortgage rates are still low?" 

 

Aug 22, 2011 01:12 PM #13
Rainmaker
217,151
Bob Zorechak - ABR, GRI, e-PRO
Keller Williams Realty Metropolitan - Morristown, NJ
Sells Homes in Morris/Somerset/Hunterdon Cos., NJ

In my experience, the only people who really understand the severity of the current housing crisis are those who have their homes on the market for more than 2 or 3 months.

Aug 22, 2011 01:21 PM #14
Rainmaker
718,387
Pamela Seley, REALTOR®
REALTY EXECUTIVES OTF - Temecula, CA
Seals the Deals in Temecula Valley California

Hunker down is right. Jobs, housing prices, ability to get mortgage loans because many buyers are out of the market now because they've lost their homes to foreclosure in the last few years. In my area we've got a ways to go. I've seen some part-timers leave, but many agents are hanging on because there are no jobs. It will be a test to those that can hunker down for the next several years to stay in the business.

Aug 22, 2011 01:23 PM #15
Rainmaker
342,776
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley R since 1976;408-565-8177

Agreed Norm,

We must hunker down, work smarter, harder and with less compensation and try to get through the mess.  We must also support governmental policy that builds a solid fiscal and monetary base. 

Aug 22, 2011 04:04 PM #16
Rainer
7,373
Jonas Soder
Paradise Mortgage Mexico - International, INT

The US is falling off a cliff with obama at the helm "in his bus" and "congress on vacation"...               Hmm, would like to see those fools trying to work in private sector, guess wouldnt be long before they heard YOU ARE FIRED!

Its insane, yes there are pockets surviving ok. But we are fortunate to be on both sides of the border and when back in california we see a whole different view than when watching international news stations in Mexico.  

Good part for us is we are seeing more Americans looking for rentals and purchases. Not so much condos on the beach as small houses etc. Looking for lower cost of living climate health care international schools for kids etc quality of life. Like man from Arizona had 3 ups stores he just sold getting out of the rat race..

Interesting and somewhat scary times.

 

Aug 22, 2011 05:29 PM #17
Rainmaker
215,971
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Specializing in Brookside, Waldo, Prairie Village

Shrink the unemployment rate...housing sales will rebound. Everything in this lame economy depends on more jobs and more consumer confidence. Those who are buying now are empty nesters with excellent pension benefits and young professionals with secure jobs.

Aug 23, 2011 06:45 PM #18
Rainmaker
242,438
Norm Werner
Real Estate One - Milford, MI
Helping the first time and every time

Thanks everyone for your comments. Sorry I didn't respond sooner - I was hunkered down working my two jobs and trying to stay afloat in my micro market, which is still fairly bad.

One thing that this current tough time has reinforced for me is the incredible importance of business networking. I'm currently not a member of any of the paid business networking groups (BNI and LBN) in my area, but I do participate actively in two local Chamber of Commerce networking groups and in Chamber events and activities in general. Just getting together with other local business people once or twice a week has lead to several deals for me and I intend to continue and even increase my involvement with those groups and other volunteer and service groups in the community.

I won't get started on how frustrating it is to see the clowns that we have in Washington on both sides of the aisle right now holding up the important things that need to be done to satisfy small partisan groups on the left and right.

For Greg (#9 above) I have to cop a plea that I blindly repeated something that I heard on a newscast recently to the affect that improvements in housing was always a leading economic stimulous to breaking out of past recessions. There have been one than one commentator mouthing the phrase that housing got us into this mess and improvements in housing starts and sales will have to lead us out. Personally, I believe as many others have stated, that the uncertainly about employment is our biggest obstacle to making progress right now.

Aug 23, 2011 09:06 PM #19
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Rainmaker
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Norm Werner

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