Nuts & Bolts For Real Estate Investors
Posted @ 9:15 pm - Filed under Real Estate Markets, Market Correction, Predictions, Buyer's Market
Alas, the pics for this post are random at best, and totally discombobulating at worst. I’m just sayin’.
Wanna know something helpful about this real estate market correction? There are folks, who after observing several diverse markets have concluded something’s up. Up you say? Is my property gonna start goin’ up? Not so fast rose colored glasses breath.
Something is up alright. As regular readers know, this ain’t my first time in the theatre. I’ve seen this movie, and its sequels. I know the ending. Don’t know when it’s comin’ or how it arrives, but I do know the ending. Oh, get to the punch line? Sure.
The ending is when those seeing this sequel, thinking it’s the first time in history real estate has taken a powder, begin to think the ‘arrow on the chart’ only heads downward. Of course, it’s the same folks who thought a few years ago the ‘arrow’ only went up. Go figure.
Before continuing, let me warn you in plain English. Any serious attempt to time a market is foolish at the least, and courting tragic and unintended consequences at the worst.
Because Brown and Brown does business around the country, we get insights from many different markets. Things are happenin’. Wanna hang yer hat on anecdotal ‘evidence’ of a changing market? Don’t. I did that once, and got knocked flat. Anecdotal evidence at best is an indicator of what may be happening — or not. It might not be evidence of any kind, empirical or anecdotal.
So here’s what I’m thinkin’.
The bottom feeders are out in big numbers, like piranas on a cow stuck in the creek’s mud. San Diego has been removed from the so called declining market list. ‘Course my hat is kinda sorta hangin’ on what’s happening in Phoenix. That poor region has been hit hard, kicked where nobody should be kicked, and set on fire. They’re still a long ride to Grandma’s house from recovering. But it’s what’s happening in their REO market that has my attention. It’s on fire, the cool kind.
A trend of sorts has made itself undeniably clear. REO’s are selling at a pace requiring a comma for the number every 30 days. That’s a lotta houses, Louise. Still, though impressive in numbers, we want more, don’t we?
I do.
How ’bout a large minority of them are sellin’ for more than the asking price, via multiple offers. The absorption rate is down below five months. So what? I’ll tellya so what. That’s what we in the real estate biz call a seller’s market. Now before ya go off half cocked tellin’ folks the BawldGuy said Phoenix is in a seller’s market, keep readin’ for a least another sentence or two, alright?
It’s a seller’s market for REO’s only. The rest of the market is still firmly ensconced in the buyer’s market column. FIRMLY. But as soon as the REO’s are gone — guess what? The next cheapest homes are gonna be the ones who’ve been stomped on and falling down the same stairs for nearly three years now. Suddenly, they’ll be the prettiest girls at the dance. They’ll begin to sell in ever increasing numbers.
And that’s when we’re gonna know this particular correction is beginning the maddeningly long U-Turn back to normalcy — whatever that is.
Sounds good, doesn’t it? Just remember, you’ll know this correction is on its way out when it becomes absolutely obvious in real time. Pinpointing the actual pivot point happens only with 20/20 hindsight.
What does all this mean to the serious real estate investor? Well, I’ll tellya, Pilgrim. It means staying under the radar is still a fact of life, but in definite danger of disappearing ’till the next time this movie comes to town. When The banks start sellin’ their junk faster than pancakes at a Boy Scout breakfast, it means more than a few folks are fallin’ off the fence, and voting with their cash.
Don’t make the common mistake of labeling this evidence as merely anecdotal, so of little or no value. Though anecdotal in nature, thousands of REO’s sold every month in a market like Phoenix might be, (NOT surely is) an indicator that several thousand buyers in Phoenix have decided to leave the safety of their perch on the fence of indecision.
Anecdotal or not — this is my third sequel. I know the ending. This is beginning to look like the last three times. It could be a false alarm, but it doesn’t feel like it. The last time I went to this movie I began to feel this way around 1996 — last quarter. 1997 was not a great year, but it was decent, all things considered.
I’ve not change my mind from the first of this year. 2009 could be 1997. I’m just sayin’.
Get hold of me and tell me your story. I need a fix. Today was relatively quiet. Call me. Email me. Use a carrier pigeon, or send a flare, but let’s talk. Find the Contact BawldGuy dolhickie and click it. You’ll know what to do next.
This entry was posted on Monday, June 16th, 2008 at 9:15 pm and is filed under Real Estate Markets, Market Correction, Predictions, Buyer's Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
