Realtor Coaching & Training: S&P/Case
Home Sales INcrease!
Its been interesting reading all the conflicting reports regarding the economy and the ‘housing recovery’. It seems that the media is now (finally) figuring out what Harris Real Estate University students have known for well over a year..(we are in the eye of the ‘real estate storm’ and its realistic to believe that the real estate markets will get worse…in some cases MUCH worse…. before they get better)
Stocks of homebuilders have had an impressive run recently, thanks to a stream of improving macroeconomic data, including home sales and consumer confidence, climbing an average of 38% since March 9. But will the recovery last? Recent gains in long-dated U.S. Treasury yields augur rising mortgage rates, while the likelihood of increasing foreclosures could further bloat the housing supply in the months ahead.
New sales of single-family homes came in at a seasonally adjusted annual rate of 352,000 in April, down 0.3% from a downward-revised 351,000 in March, but 34% below the April 2008 estimate of 533,000, according to the U.S. Census Bureau and the Housing and Urban Development Dept.. But new home sales are down from 362,000 in February. The median sales price of new houses sold was $209,700, down almost 15% from a year ago.
One reason for the month-to-month improvement in the housing numbers for a couple of months earlier this year was the moratorium placed on foreclosures by many banks from November through February, says Robert Stevenson, an analyst at Fox-Pitt, Kelton Cochran Caronia Waller in New York. But since then, foreclosures have continued to rise, causing home sales to plateau.
Some of the positive data points have proved not to be sustainable, he says. “You haven’t seen as many sales as you would like coming out of the spring homebuying season and the very low mortgage rates and some of the tax stimulus,” he says. Still, homebuilders are feeling more optimistic. The National Association of Home Builders’ housing-market index, which measures both current and future sales conditions, climbed two points, to 16, in May after a five-point increase in April.
The “Better Areas” Are Going to Get Hit
Realtors, there are 2 kinds of agents…those who know how to easily list and sell short sales (and are making a fortune) and those who refuse to learn anything new…struggle to stay afloat…and will probably not be in real estate for much longer. What kind of agent are YOU? Watch the FREE Agent Short Sale Secrets video then download the FREE Agent Short Sale Secrets book. Don’t wait, don’t procrastinate….FINALLY take action and learn how to become one of the agents who is THRIVING in this market.
Economists would like to believe the recent data indicate that the housing market has touched bottom, but prices have further to drop to reach some analysts’ peak-to-trough estimates of 43%. John Burns, a real estate consultant who advises major homebuilders, believes the median home price will fall an additional 5% or 6% and that will be the end of it. “The worst areas have been hit very hard” since that’s where most of the distressed selling has been, he says. “It’s the better areas that are going to get hit over the next 12 months” as foreclosures mount in those areas.
In Phoenix, which has experienced one of the worst drops in home prices from their peak of any U.S. city, sales-office traffic jumped 55% in the three months through the end of April after 11 consecutive quarters of decline, according to Jim Belfiore, president of Belfiore Real Estate Consulting, a market research firm in Phoenix. Traffic is a leading indicator of where home sales are headed, he says.
Builders’ sales in that area have at least tripled in the past 30 days, due to a big drop in prices from January through early March that narrowed the premium over prices of foreclosure properties to just 15% in most local sub-markets, says Belfiore. Meanwhile, the latest S&P/Case-Schiller data show prices of foreclosures on Phoenix’s multiple listing service up an average of $5 per square foot over the past 30 to 40 days, with demand currently outstripping supply.
Phoenix is being looked at as an indicator of what the nationwide housing market could look like 12 to 18 months from now, he says. The land and lots that most of the publicly traded homebuilders own in and around Phoenix comprise a significant portion of their total holdings, he adds.
Bottom-Fishing in Phoenix
Stevenson at Fox-Pitt characterizes most of those buying homes in Phoenix as “bottom-fishers” who are taking advantage of the supply glut that’s pushed prices to bargain levels. Other reasons the market has attracted buyers: Phoenix is likely to produce one of the higher levels of job growth over the next 10 years, and its climate makes it a preferred retirement destination, he says.
Belfiore concedes that a large percentage of the recent sales has been by investors rather than people planning to move in immediately, and most are resales of foreclosure properties. The majority of new-home sales have been by first-time home buyers, motivated by the federal tax credit of up to $8,000, which is set to expire in November.
The expected increase in foreclosures over the next few months will force homebuilders to lower prices on new homes to be able to compete. Builders who own the land end up building a house and selling it at a price that results in a negative margin just to get the money out of the land, says Stevenson. Normally, however, rather than build at a negative margin, companies will take an impairment charge, marking down the value of the land to where they can afford to sell the houses for less without killing their margins.
Generally, the bigger homebuilders are still reporting impairment charges between $100 million and $400 million per quarter this year, including the cost of walking away from options on land they don’t own and goodwill remaining from past acquisitions, he says.
more foreclosures than new homesMetrostudy, a national housing market research firm in Houston, is still projecting 490,000 U.S. housing starts for 2009, below the 520,000 to 550,000 forecast by many general economists. Brad Hunter, chief economist and national director of consulting at Metrostudy, recently cited three reasons for the low level of starts: the inventory overhang builders are trying to work off, denial of credit by some builders’ banks even if they’re current on their loans, and the depressed price levels that make it hard for some builders to sell homes profitably.
Housing inventory fell to 10.1 months of supply from 10.7 in March and was well below the peak 13 months of supply, After a couple of strong months, there was a lull in purchases of homes priced between $150,000 and $200,000, which had had the strongest growth, Goldman Sachs said in a May 28 research note. The key to further paring excessive housing supply is a slowdown in foreclosure filings, which Goldman doesn’t see as likely. In March, foreclosure filings were 15% higher than the total inventory of new homes for sale, Goldman said, citing RealtyTrac data.
Realtors, there are 2 kinds of agents…those who know how to easily list and sell short sales (and are making a fortune) and those who refuse to learn anything new…struggle to stay afloat…and will probably not be in real estate for much longer. What kind of agent are YOU? Watch the FREE Agent Short Sale Secrets video then download the FREE Agent Short Sale Secrets book. Don’t wait, don’t procrastinate….FINALLY take action and learn how to become one of the agents who is THRIVING in this market.
Do stock-market pros like any names in the battered industry? D.R. Horton (DHI) is one of the stocks favored by James Wilson, an analyst at JMP Securities in San Francisco, who rates it as outperform. He said he expects the company to be among the first to return to profitability starting in fiscal year 2010. “Over 50% of its customers are first-time home buyers, who will be the first, in our view, to enter the market as prices begin the bottoming process and sales start to pick up in certain markets,” he wrote in a May 6 research note.
D.R. Horton had $1.5 billion in cash at the beginning of May and said it was terminating a $275 million revolving credit line due to lack of anticipated need, and as a result saving $3 million in annual non-use fees. The company generated $161 million in operating cash flow in the second fiscal quarter and $978.6 million for the first six months of fiscal 2009. “This puts Horton in a very favorable position to capitalize on attractive land deals as banks and private builders begin to unload assets on the cheap,” Wilson said in his note.
While the company said it’s trying to work down current inventory and is not considering any joint-venture deals, at some point land will become too cheap to ignore, Wilson said. After two straight quarters of impairments below $60 million, the company is nearing the end of its impairments, he said. He expects an additional $65 million in impairments for the current fiscal year, which should bring Horton’s assets close to being in-line with current market values. However Credit Suisse analyst Daniel Oppenheim is less optimistic about the stock, which he rates as underperform, citing risk from mounting foreclosures.
Wilson reaffirmed his outperform rating on MDC Holdings (MDC) on May 11, citing the company’s strong balance sheet and much lower-than-expected impairments in the first quarter. With MDC perhaps $30 million away from the end of its impairments, he lowered his net loss forecast for fiscal 2009 to $2.25 from $2.75 a share, but reduced his estimate for fiscal 2010 from breakeven to a loss of 50¢ a share based on lower revenue from a lower-than-expected backlog plus higher corporate overhead costs.
Pressure on MarginsEven though MDC slashed it speculative sales by 173 units from the fourth quarter of 2008 to the first quarter of this year, its remaining 648 spec sales are too high compared with backlog of just 629 units, which will put pressure on margins, according to Credit Suisse (CS). In a May 8 note, Oppenheim rated MDC as underperform, saying that with sales, general, and administrative expenses at 29.3% of revenue, the builder needs significant further cuts or higher sales volumes to become profitable again.
Although he sees MDC as one of the best-managed home builders, Oppenheim said he expected weaker sales and lower prices due to greater competition from foreclosures in the short term to put pressure on the stock and also pointed to the risk associated with its premium valuation to its peers.
Oppenheim downgraded KB Home (KBH) to underperform from neutral in April, citing “risks from weak demand, falling home prices, and increased competition from other builders at the low end of the market where KB Home competes with its new lower-priced ‘Open Series’ product.” His $10 target price is based on a 10% premium to his adjusted book value estimate.
While a lot of the data suggest the housing market is close to bottoming out in some ways, there’s really no recovery on the horizon, says Burns. That’s because mortgage rates are being held artificially low for now and are going to trend up in the months ahead, which will prevent a strong recovery. Meanwhile, any pent-up demand from renters who want to become owners will be overwhelmed by the rising number of foreclosures. “It’s going to take a couple years to work our way through this [inventory],” he says.
Popularity: 1% [?]
HREU Students here is the promised city-by-city break down of the Case-Shiller home-price index.
The S&P/Case-Shiller home-price index, a closely watched gauge of U.S. home prices, continued to post declines in February but the pace stopped setting records after 16 consecutive months.
Click the image for an interactive map of home-price declines.In the 20-city index, no area experienced year-over-year price gains, the eleventh straight month that has happened. Further, none of the cities managed to avoid month-to-month declines for the fifth month in a row.
Phoenix, Las Vegas and San Francisco continued to lead year-over-year decliners, with drops over 30%. Cleveland posted a large month-to-month drop, as the rate of decline accelerated there. The rates of decline also accelerated in Charlotte, New York and Washington.
Realtors, clearly more sellers who will need the services of an agent who knows (really knows) how to list and sell short sales. Watch the Free Agent Short Sale Secrets video now…then download the FREE Agent Short Sale Secrets book.
Dallas, Denver, Cleveland, Boston and Charlotte managed to avoid double-digit year-over-year declines, while New York moved posted a year-to-year drop over 10% for the first time. Measuring from each market’s peak, Dallas has suffered the least, down 11.1% from its peak in June 2007; while Phoenix is down 50.8% from its peak in June of 2006. All of the 20 metro areas are in double digit declines from their peaks, with seven — Detroit, Las Vegas, Los Angeles, Miami, Phoenix, San Francisco and San Diego — in excess of 40%.
“We continue to believe that it is unlikely that we are anywhere near a bottom in nationwide home prices,” said economist Joshua Shapiro of MFR Inc. “After all, in the seven years leading up to the peak in July 2006, the national 20 city home price index jumped by 155% (126 index points). So far, this index has dropped by 31% (63 index points) in the 30 months since the peak. By our estimation, the composite 20 city index is perhaps two-thirds of the way through its ultimate total decline in this cycle.”
Home Prices, by Metro Area
Metro Area February 2009 Change from January Year-over-year change Atlanta 106.65 -2.50% -15.30% Boston 148.77 -1.30% -7.20% Charlotte 118.94 -1.60% -9.40% Chicago 126.3 -3.40% -17.60% Cleveland 97.76 -5.00% -8.50% Dallas 112.39 -0.30% -4.50% Denver 120.22 -1.70% -5.70% Detroit 74.6 -3.80% -23.60% Las Vegas 121.06 -3.60% -31.70% Los Angeles 163.16 -2.00% -24.10% Miami 154.28 -3.00% -29.50% Minneapolis 116.39 -3.10% -20.30% New York 178.16 -1.60% -10.20% Phoenix 111.89 -4.50% -35.20% Portland 150.88 -1.90% -14.40% San Diego 146.82 -1.00% -22.90% San Francisco 120.39 -3.30% -31.00% Seattle 152.12 -1.50% -15.40% Tampa 145.25 -2.70% -23.00% Washington 168.02 -2.30% -19.20%
Popularity: 1% [?]
S&P Case Shiller Home Price Index
Harris Real Estate University students (and future students) here is the most recent Case-Shiller Home Price index information.
Read this and then share your comments with us…Do you think housing has reached bottom? (If not, when will it?)
After deteriorating relentlessly for nearly three years, the much-watched S&P/Case-Shiller Index showed a brief glimmer that plummeting home prices are at least slowing their fall.
Prices are still plunging: Home prices in 20 major cities across the country have fallen 18.6% between February of this year and last, according to the index released Tuesday. That painful drop, however, is an improvement from January, when prices fell an unprecedented 19%.
“This is the first month since October 2007 where the 10- and 20-city composites did not post a record annual decline,” says David Blitzer, the Chairman of the Index Committee at Standard & Poor’s, in a statement with the release. “We will certainly need a few more months of data before we can determine if home prices are finally turning around,” he cautioned.
Realtors, learn now how to become a REO listing agent. Watch the FREE Agent REO Secrets video now…then, download the FREE Agent REO Secrets book. Become a REO Listing Agent NOW!
The Case-Shiller Index paints a particularly brutal portrait of the housing bubble in American cities. All 20 cities in the index have seen home prices decline by more than 10% since their bubbles burst. In Phoenix, a market particularly flooded with foreclosures, home prices have fallen 51% since June 2006.
Six other American cities have seen declines of more than 40% since their peaks: Detroit, Las Vegas, Los Angeles, Miami, San Francisco and San Diego.
Home prices are still falling in every city tracked by the index. But in 16 of the index’s 20 cities, home prices are no longer falling as quickly. Historical data from the Case-Shiller Index show home prices beginning to charge up a mountain in the mid ’90s; by 2004, home prices were posting record improvements, with the 10-city index showing annual price increases of 20%.
Then, in 2004, the size of the increase began to slow (in mathematical terms, the second derivative became negative). By 2006, prices were falling, and by 2007, the fall accelerated to the highest rates the 20-year-old index had ever recorded.
It is at least a glimmer of good news for the battered housing market, even if it does not mean price recovery has begun. The plummeting housing market is a key barrier to economic recovery.
Falling home prices have decimated consumer confidence. Economist Robert Shiller of Yale University, one of the designers of the Case-Shiller Index, told Forbes earlier this month that, despite tentative evidence that confidence is stabilizing, “I do think it is too soon to draw any conclusions that confidence has bottomed out, especially since home price indices have been continuing to fall, and if this continues it will continue to damage balance sheets.” Not knowing when home prices would stop falling has hindered banks in pricing mortgage-related assets.
The housing report is also good news for the “stress tests” the Federal Reserve is administering to the country’s 19 biggest banks to determine how well they can weather a deep recession. The tests evaluated whether or not the banks could survive a 22% annual decrease in home prices.
Many economists feared this assumption was not pessimistic enough–that banks could survive the stress test, but still perish when the economy proved even worse. Today’s index provided a glimmer of hope that the economy could at least outperform the adverse stress test.
Source: Forbes.com
Popularity: 1% [?]
Home Value Losses Increasing
Interesting Analysis of Case-Shiller Home Price Index Data
(This post is from The Affordable Mortgage. Read it and share your comments)
An analysis of the publicly available data which constitutes the S&P/Case-Shiller Home Price Index produces some interesting conclusions.
Introduction
During the mid-1990s the Government proactively pursued the goal of increased homeownership for the poor, the credit-challenged, minorities and inner-cities.
Many tools were employed but the primary incremental policies used to achieve this goal were:
- Revisions to the Community Reinvestment Act which directed lenders to make loans to people who could not otherwise qualify for them based on merit
- The reallocation of Fannie Mae’s/Freddie Mac’s expenditures towards subprime loans which constituted a large and recurring supply of capital to fund subprime loans and a huge potential profit opportunity for the fee-based mortgage industry
- Pressure brought to bear on lenders by the GSEs to meet subprime lending goals
- Regulatory influence over the lending industry
Increased access to credit with generous terms caused demand for houses to expand, transaction volumes to rise and inventories of for-sale properties to tighten. As a result, home prices began to rise nationally at an unsustainable pace in 1997.
Framework for Analyzing Case-Shiller Data
Since home prices began to decouple from the fundamentals of value in 1997 it makes sense to analyze current home values relative to the sustainable levels which existed before the Housing Bubble distortion. Analyzing what these values would be today adjusted for inflation provides an interesting perspective on where home prices should be and potentially allows us to project where they are heading.
Realtors, clearly to survive…and thrive in this market you must know how to easily list and sell short sales. Watch the FREE Agent Short Sale Secrets video now.
Housing prices are expected to generally track inflation because it is logical that they should do so (as the cost of inputs including materials, labor and land rise with inflation and excess price appreciation will lead profit-seeking builders to increase supply) and because several hundred years of housing price data clearly establishes this trend.
Analyzing the Data
Looking at the Case-Shiller figures since January 1997 proves interesting.
While the 10 City Price Index has fallen 30.2% from its peak value in June 2006, the index needs to fall an additional 34.4% from current values to reach inflation equilibrium with January 1997.
Eight of the 19 markets analyzed need to fall by in excess of 25% to reach inflation-adjusted, pre-bubble valuations and 10 markets need to decline by more than 20%.
The most overvalued markets continue to be New York and Los Angeles which need to fall an additional 41% from current levels.
Some may draw comfort from the observation that many markets analyzed are approaching inflation-adjusted equilibrium, but this perspective may prove to be optimistic. Most of the factors which determine market prices are far less favorable today than they were in 1997. The supply of houses is excessive, inventories are higher, credit is tighter, expectations for current/future price performance is negative, subprime loans no longer exist, and the primary mechanism which propelled prices to unsustainable heights (affordable mortgages) are no longer available.
Clearly one of the best opportunities to make money now is being a REO Listing Agent. Watch the FREE Agent REO Secrets video now and download your FREE Agent REO Secrets book.
Potentially of even greater concern though are those markets which are not currently overvalued relative to 1997.
Detroit and Cleveland are actually trading in real terms at less than prices twelve years ago. These cities have been impacted by rust-belt and auto industry issues and are unique cases. But they may provide insight into what happens to housing prices in economic downturns. Slumping economic activity and high unemployment have depressed housing values. But which one of the remaining 17 markets analyzed isn’t experiencing an economic slowdown and rising unemployment?
Even more shocking are the markets of Las Vegas and Phoenix. Each has effectively reached equilibrium but both are experiencing rapid price declines which are accelerating. In fact these two were the worst performing markets year-over-year for January with Phoenix down 35.0% and Las Vegas down 32.5%. It seems likely that both markets will trade at substantial discounts to real 1997 prices in the near future. This is amazing as each was a recent boom town, in states with growing populations and without the macro-economic challenges of Ohio and Michigan.
This should scare anyone who hopes that price declines will cease once we return to pre-bubble prices. It appears that the fundamentals which influence value, not the protestations of Washington DC, determine asset prices.
Based on my understanding of the primary causes of the Housing Bubble, my expectations for the Affordable Mortgage Depression and my interpretation of the Case-Shiller data, I expect every market analyzed to see home price index values fall below inflation-adjusted, January 1997 levels.
Popularity: 1% [?]
Unless we see a recovery in the housing market, we won’t really see a recovery in the economy. But is the housing market approaching a bottom? Or does it still have a ways to go?
The answer is critical to understanding the current economic depression.
This is a chart of the S&P/Case-Shiller Home Price Index.
As you can see, it’s plummeted over the last 18 months or so. It shows that U.S. house prices have been spanked hard. And, unfortunately, it shows no sign of bottoming anytime soon.
This makes sense considering the flood of foreclosures hitting the market. In Fort Lauderdale, Florida, homes that were selling for $250,000 during the peak are now going for $70,000 in foreclosure. Repeat this scenario across the country, and you’ll see that home prices still have further to go.
Making matters worse is the 8.1% U.S. unemployment rate and the fact that nobody can find credit to buy a home with. (Less credit means fewer mortgages.)
As the year drags on and foreclosures keep hammering house prices, this trend will continue to drain cash from homebuilders. That means homebuilders such Lennar Corporation (LEN) should continue to see lower share prices as the year wears on.
Thanks to our friends at SeekingAlpha.com for this article.
Popularity: 1% [?]
Home Values Going Down The Drain.
Great article from Rolfe Winkler CFA.
Now that unemployment has kicked into a higher gear, more folks will be defaulting on mortgages, meaning house prices are likely to continue their slide in coming months. As they do, household and bank balance sheets will continue to deteriorate. Said another way, their leverage ratios will continue to increase as the falling value of their assets wipes out their equity.
Its clear that if Realtors are going to be relevant in the real estate industry they must know how to list and sell short sales. Short sales are one of the best opportunities for Realtors to help others and make money in this market. Watch the FREE Agent Short Sale Secrets Video now. Download the FREE Agent Short Sale Secrets crash course NOW.
The first chart includes data through Dec ‘08., which, if you look closely, extends to the right of the “Oct 08? label (Click on charts to enlarge):
The WSJ discusses the data:
Home prices continued their multiyear slide in December, according to the S&P/Case-Shiller home-price indexes, as both the 10-city and 20-city index posted record declines, making 2008 the second-straight full year of declining home prices.
The Sun Belt continues to be hit hardest, and nationally, home prices are at levels similar to late 2003…
Both composite indexes and 13 of the 20 metropolitan areas have reported consecutive record year-over-year declines since December 2007.
As of December, average home prices are down 27% from their mid-2006 peak. The 10-city and 20-city indexes have fallen every month since August 2006, 29 straight.
Both the 10-city and 20-city indexes fell 19% in 2008. December’s drop marks the 10-city index’s 15th-straight monthly report of a record decline.
The indexes showed prices in 10 major metropolitan areas fell 2.3% from November, while home prices in 20 major metropolitan areas fell 2.5% from November.
Yet again, none of the regions could stave off a decline from November to December. Month-to-month decliners were led by Phoenix and Las Vegas, which fell 5.1% and 4.8%, respectively, and Minneapolis, which dropped 4.6%.
And for the ninth straight month, no region was able to avoid a year-over-year decline. Phoenix and Las Vegas were again the worst performers, with drops of 34% and 33%, respectively, from a year earlier. San Francisco followed, with a decline of 31%. Phoenix is down 46% from its peak in June 2006.
Compared with a year earlier, Denver and Dallas again had the best relative performance, with annual declines of 4% and 4.3%, respectively.
The data in the charts is published by S&P Case Shiller here.
Popularity: 1% [?]
Realtor Coaching students….you need to develop a thick skin this year. The negative stories about housing will easily outpace and positive stories 20:1.
What this means is that you must have a clear plan for your business in 2009. Lets do a little be honest, its going to get far worse before it gets better.The news will get worse, peoples attitudes will get worse, the housing sales will get worse….you get the idea. Have you created your 2009 Business Plan Yet…watch this free video that will show you how-to now.
Expect the word ‘Recession’ to be soon replaced with the word ‘Depression’. Here is the thing you should know..there is no real definition of the word ‘Depression’. I searched all over the net and found no real definition. In other words, the word ‘Depression’ will be used because its more powerful vs. ‘recession’. Newspapers will sell more copies, TV news shows will have more viewers…drama+hype = money for the media. Don’t kid yourself about that. (I am guilty of this as well….read the title of this blog post!)
With that said, its tough out there. No doubt. No of us can question we are living in historic times. Everything about our industry is changing.
Answer these questions…how many homes sold (according to the MLS) in your market last month? Hundreds….probably thousands…? Who were the agents who sold those homes? Were those home sales foreclosures and short sales? What do you need to do NOW to learn how to become the agent with those sales?
HINT: You need to understand that there MILLIONS of homes being sold….matter of fact in 2009 the NAR is estimating there will be over 5,000,000 home sales nationwide….ready for this next point….its estimated that HALF…2,500,000 of those sales will be FORECLOSURES AND SHORT SALES! Did you catch that….there are agents who are making a fortune in THIS market…because they simply learned what this market required….
Whenever the end of this protracted housing downturn is reached we will see an entirely different real estate industry. At the peak of the housing market there were more than 2.5 million members of the NAR. Now (its rumored) that there are only 850,000 members.
Our industry has many things in common with the Big 3 Detroit automakers. They were drunk on low interest rates, cheap gas and high margin SUVs…..the real estate industry was drunk on…..low interest rates, easy access to credit and a housing consumer addicted to ‘moving up’.
Now all of that has changed. If there are less than half the agents it makes sense that there will be… less than half the brokers, title companies, mortgage companies, home inspectors, moving companies….you get the idea. Massive retraction and giving back the gains made over the Booming 2000s housing bubble.
Where does that leave you? Chance are you will be one of the survivors….you will succeed despite the massive wholesale shift in our industry. You have made it through the past 2 years you will make it through the rest of this housing mess. Whatever you have been doing for the last 24 months…continue doing it but, get better at it. AND, don’t stop learning.
Understand this. Working your past clients, calling FSBOs and Expireds, direct mail (etc)…none of those lead generation methods will work exclusively in this kind of market. You already know what I am about to tell you…
You must learn how to offer the housing market…… what the housing market wants.
Simple concept. Ask the market what it wants…then learn how to offer it.
What kind of agent are you….and big lumbering SUV or a high tech in-demand Hybrid?
The Big 3 Automakers waited too long…..they acted exactly like most Realtors. They were hoping and praying that the clouds would magically clear and it would be 2005 all over again. Think about it….are you like the Big 3..trying to sell SUVs in a world that wants smaller, fuel efficient cars? You see, knowing how to prospect FSBOs and Expireds is a great way to generate leads…but, in this market it can’t be your only way. If it is, then you are just like the Big 3 trying to sell SUVs in a world that wants Hybrids.
This point merits repeating….Ask The Market What It Wants….then, Learn How To Offer It.
Don’t know what the market is asking for? Ok, I will make it easy for you. In the US its estimated that nearly 50% of the homeowners will be upside down in their homes. In other words, they owe too much. (YOU probably owe too much.) In states like California over 50% of ALL sales are foreclosures and short sales. AGENTS..did you catch that….50%! That IS what the market wants you to offer it…you must learn how to list and sell short sales…and you will want to learn how to list REOs. We will make it easy for you…watch this Free video about how to easily list and sell short sales. This market demands that you know how to list and sell short sales. (Don’t be GM)
Please understand, not every upside down homeowner has to sell their home. In states like Ohio families have been living in homes worth less than their mortgage amounts for years. It just makes sense that in this market you learn how to offer mortgage loan modifications. Forget what you think you know about loan mods for a second. Think about this…in 41 of the 50 states you need no license to do mods. No license at all…not even a real estate license. Practically everyone you know would love to have you modify their mortgage loan. Help them to save hundreds per month and thousands per year. (By the way..start by lowering your own house payment.) The average mortgage loan mod specialist charges $1,000….$2000….$30000 per loan. Talk about a great way to help others and make money now!
Here are a few more interesting facts that will hopefully motivate you to accept the fact that you may be suffering from SUV thinking in a Hybrid world….
Housing starts dropped to about 441,000 in 2008, their lowest total since 1945 and down from nearly 1.8 million in 2006. Builders are reducing prices and adding optional features at no cost.
Interest rates are at 40-year lows and housing affordability is at its highest level since the 1970s.
None of that matters when people fear for their jobs and are afraid to commit to a major purchase such as a car or a house, Crowe said.
“We have consumer confidence at or near a historic low,” the economist said Tuesday at the building industry trade show, “and it will probably deteriorate in 2009.”
The S&P/Case-Shiller Home Price Index fell 25.3 percent from March 2006 to October 2008.
Crowe said he expects prices to fall another 29 percent this year and new home sales to decline 14 percent.
Delinquency rates on home mortgages have risen significantly and are expected to go higher in 2009, said Frank Nothaft, chief economist for Freddie Mac. Rising unemployment is the “trigger event” for foreclosures, he said.
If you are a ‘SUV Realtor’ then the idea of more foreclosures will cause you fear….But, you are becoming part of the NEW Breed of Hybrid Realtors. Watch this free video now how to cash in on the massive explosion of REOs. The greatest opportunites working with Bank Owned Homes (REOs) is still ahead of us. Watch the free video now.
Credit is ample for borrowers who have equity and a good credit score, can make a down payment and can qualify for a full-documentation conforming loan, Nothaft said.
“The credit box for home mortgages and commercial mortgages has tightened over and over in the face of mounting defaults,” he said.
The Federal Reserve has taken aggressive steps to keep interest rates low and has purchased $125 billion in mortgage-backed securities debt from Fannie Mae and Freddie Mac.
The basic premise behind what’s happening with housing is an imbalance between supply and demand, Crowe said. The nation has an excess “overhang” of 6.2 million homes for sale, about 1.5 million too many, he said.
Portland Cement Association chief economist Ed Sullivan said any recovery probably will not materialize until 2012. The nation lost 2.6 million jobs in 2008 and Sullivan projects another 5.8 million jobs will disappear in the next two years.
Obama’s proposed $775 billion economic stimulus package might not be enough to pull the country from the depths of recession, Sullivan said. He estimates the plan would require $1.2 trillion to restore employment to January 2008 levels.
Stabilizing labor markets and job creation by way of increased infrastructure spending is a “critical ingredient” of that stimulus plan, Sullivan said.
An estimated $65 billion to $70 billion in “shovel-ready” construction projects could begin within 90 to 180 days, he said. Shovel-ready projects are those that have already been designed and engineered and only await funding.
The Council of Mayors has identified 76 shovel-ready projects in Nevada valued at $586 million, including roads, schools and airport construction. They would create 7,200 direct construction jobs and another 19,445 “downstream” jobs and consume 108,000 metric tons of cement, Sullivan said.
Las Vegas shows a 90 percent probability — highest in the nation — that home prices will be lower in two years than they are today because of the overhang of homes for sale, said David Berson, chief economist of PMI. The risk is greater than 50 percent in more than half of all metropolitan statistical areas that prices will be lower in two years.
Mortgage default rates are going to be a problem for a while, he said.
“The primary reason people default is not because they’re under water, but because they can’t make the payment,” Berson said.
Popularity: 1% [?]
