Yes, it's official. It's been a "buyer's" market since late 2005. How do we know we are in a depreciating market? Well, besides hearing it all over the media and learning from friends and colleagues that they have not been able to sell their homes, there is a more accurate way of measuring what the market is doing.
By tracking inventory of homes for sale, one can accurately predict a trend which indicates an appreciating or depreciating market. The determining factor for either of these markets is INVENTORY. When there are three consecutive months with more homes coming on the market than going off, it is a depreciating market and prices have to come down. When there are three consecutive months with more homes coming off the market and than coming on, it is an appreciating market and prices have to go up. It's all about supply and demand. It's the supply that controls the demand and not the demand that controls the supply.
How did we get into this situation anyway? There are numerous contributing factors, but at some point, inventory hit a "tipping point", where new listings began out-pacing sold listings. We certainly couldn't expect 10-12 % yearly appreciation in real estate forever, could we? What does a person do with an asset that is losing value? They unload it. What does a person do with an asset that is gaining in value? They hold onto it. With news everywhere we turn telling us over and over about the "bubble", inventory sitting longer and longer on the market while new listings are constantly joining them and the correct perception among property owners that their most important asset is losing value or about to lose value, more and more homeowners figured they would cash out now rather than face getting less for their homes later on. Problem is...those sellers just assumed that they could still get the inflated price that their home would have commanded two years ago and they were prepared to sit tight until they got that price.
In an appreciating market, it's ok to price your home slightly higher than "market value" and then just wait because eventually market prices do catch up to that price. However, in a depreciating market with so much competition out there, pricing your property above market value can be the death nail. Why? The longer one's property sits unsold in a depreciating market the more value it loses. Sellers are told by their agents to lower the price but they always seem to be one step behind the market slide and the property becomes "stale".
A real estate professional should know exactly what the market is doing. He or she must be aware of all factors that may adversely affect the sale of property. An excellent real estate agent should not tell you what your home is worth but rather help you find out what your property is worth. So, that is all well and good, but exactly how is this done?
In my next blog, I will explain step by step how to create the energy and excitement to drive buyer traffic through your property and to help create the perception of value necessary in order to lead to one or more offers from the interested parties. Myself and two of my colleagues will be offering a class in our office at 601 Central Ave in Dover, NH on Nov 7th from 7-8pm to attempt to educate the public on the process as well. It is a bold move as no one else in real estate in this area besides our company has agents willing to tell their sellers the truth about the market and what they need to do to sell their home now and for full price plus 10%. Stay tuned.
Monday, October 29, 2007
Friday, October 19, 2007
There aren't any buyers out there!
This common expression can be heard day after day in many local real estate offices including ours. "I need some buyers to work with" "Do you have any buyers?" "Where are all the buyers?" In "good markets", there is the perception that there are lots of buyers out there and conversely, in "bad markets", the perception is that there are no or few buyers in the market.
My real estate company, Coldwell Banker Residential Brokerage, owned by NRT, Inc, has been pro-active enough to offer training to all its agents on the most effective approach in a depreciating market. This seminar was presented by Jay Schweppe who owned his own company in Montclair, NJ and sold to NRT. He made lots of money selling in down markets as well as up markets using the approach that he presents in his seminars. Many agents will say that this particular approach would not work in their area, but the fact is that this method works in every market in every location without fail.
The reality is that the "Buyer Pool" remains relatively constant in all markets. The variable is whether or not the buyers are perceiving value. When there is a perception of value, buyers act. Without this perception, buyers will wait. They are still buyers but not prepared to act until someone creates that perception. Of course, interest rates can alter the size of the buyer pool somewhat, and job losses can shift the buyer pool from one area of the country to another. Often times, buyer pools will shift to areas of the country where real estate is deemed a value causing that particular local market to appreciate. In actuality, almost anyone could be a potential buyer at any time.
If I stood on a very busy street corner with my newer MacBook and shouted out or held a sign up asking anyone to give me $1,000 for my laptop, chances are, I would not have any interested parties because most would know full well that they could buy a brand new one for just slightly over my asking price. There would be no perception of value amongst those buyers. However, if I stood on the same corner with the same MacBook and asked if there were someone willing to give me $100 for my fully functional laptop, chances are that several if not many people would step up to buy. When there is more than one interested buyer, that interest and perception of value, will cause those buyers to increase their offer up to a certain point (what they feel it is truly worth).
The same is true for real estate. Buyers determine what a property is worth and the seller either sells or doesn't sell to them. One's property is only worth what a qualified buyer will pay for it on the open market. I have been tracking the local real estate market very closely for the past 12 months in order to ensure that I am current on what is happening in the market. Compiling data from the MLS on new listings and pending listings by month and then entering that data into graph form, one can see very clearly what is happening in our area. Data derived from the NNEREN MLS:
The light blue bars indicate new listings. Except for the holiday months of Nov and Dec, one can see that the trend has been growing inventory month by month. Inventory is what drives the prices upward or downward. It's all about supply and demand. The darker blue bars are pending sales. Those numbers have remained pretty constant over the past year. What doe this mean? The buyers are out there and they are buying property. The problem is that there is so much inventory to choose from. When there are more properties coming on the market than are going off, prices have to go down.
Historically, times of "crisis" in real estate have turned out to be fabulous times of opportunity for buyers. There are some incredible deals to be had out there right now and I am hoping to get in on a few of them myself. I guess you might say that this buyer has perceived the value. Don't miss out because you might be kicking yourself 5 years from now, saying "Jeez, I should have bought in 07 when the prices were hitting rock bottom."
My real estate company, Coldwell Banker Residential Brokerage, owned by NRT, Inc, has been pro-active enough to offer training to all its agents on the most effective approach in a depreciating market. This seminar was presented by Jay Schweppe who owned his own company in Montclair, NJ and sold to NRT. He made lots of money selling in down markets as well as up markets using the approach that he presents in his seminars. Many agents will say that this particular approach would not work in their area, but the fact is that this method works in every market in every location without fail.
The reality is that the "Buyer Pool" remains relatively constant in all markets. The variable is whether or not the buyers are perceiving value. When there is a perception of value, buyers act. Without this perception, buyers will wait. They are still buyers but not prepared to act until someone creates that perception. Of course, interest rates can alter the size of the buyer pool somewhat, and job losses can shift the buyer pool from one area of the country to another. Often times, buyer pools will shift to areas of the country where real estate is deemed a value causing that particular local market to appreciate. In actuality, almost anyone could be a potential buyer at any time.
If I stood on a very busy street corner with my newer MacBook and shouted out or held a sign up asking anyone to give me $1,000 for my laptop, chances are, I would not have any interested parties because most would know full well that they could buy a brand new one for just slightly over my asking price. There would be no perception of value amongst those buyers. However, if I stood on the same corner with the same MacBook and asked if there were someone willing to give me $100 for my fully functional laptop, chances are that several if not many people would step up to buy. When there is more than one interested buyer, that interest and perception of value, will cause those buyers to increase their offer up to a certain point (what they feel it is truly worth).
The same is true for real estate. Buyers determine what a property is worth and the seller either sells or doesn't sell to them. One's property is only worth what a qualified buyer will pay for it on the open market. I have been tracking the local real estate market very closely for the past 12 months in order to ensure that I am current on what is happening in the market. Compiling data from the MLS on new listings and pending listings by month and then entering that data into graph form, one can see very clearly what is happening in our area. Data derived from the NNEREN MLS:
The light blue bars indicate new listings. Except for the holiday months of Nov and Dec, one can see that the trend has been growing inventory month by month. Inventory is what drives the prices upward or downward. It's all about supply and demand. The darker blue bars are pending sales. Those numbers have remained pretty constant over the past year. What doe this mean? The buyers are out there and they are buying property. The problem is that there is so much inventory to choose from. When there are more properties coming on the market than are going off, prices have to go down.Historically, times of "crisis" in real estate have turned out to be fabulous times of opportunity for buyers. There are some incredible deals to be had out there right now and I am hoping to get in on a few of them myself. I guess you might say that this buyer has perceived the value. Don't miss out because you might be kicking yourself 5 years from now, saying "Jeez, I should have bought in 07 when the prices were hitting rock bottom."
Thursday, October 04, 2007
Absence
Wow, where I have been all this time? It's been over a year since I first had the inkling that I wanted to begin blogging about Real Estate in NH. Although my intentions were good, at the time, I was teaching full time in the evenings and practicing real estate full time the rest of my free hours. Now that I have put teaching on the back burner, I have been able to recommit myself to just working on real estate and boy have I been busy. I know that all I read about and all that I hear about from others, is "The market is terrible." However, I have had my most productive year thus far and I wasn't even selling when the market was "good". I have been talking to my husband about taking the course and getting in on the action, because I really need his help.
All of this has required me to work some pretty long days and basically going 7 days a week right now. It will all pay off in the end, though. I like the analogy that Brian Tracy provides on one of his motivational sales audio discs: It goes something like this but I paraphrase of course.....
"Becoming successful in any sales field is very much like flying an airplane. Before you can fly the plane, you have to begin by taxiing down the tarmac. Once in position, you have to really rev the engines and give the engine full throttle in order to gather enough speed to become airborne. The throttle must remain wide open with the engines roaring in order to attain proper altitude and speed. Once aloft however, you can cut back on the engines and allow the plane to cruise and sometimes glide because of all the power used at the take off. Just like in sales when first starting out, you have to give it all you have so that like the airplane you can achieve that cruising altitude of contacts, prospects and referrals.
I am loving this business and for the most part have had the opportunity to meet some great people with whom I have been able to develop very good friendships. I will write about some of those encounters here as well as what is currently going on in our local market.
Despite all of the doom and gloom that you hear, this is a very opportunistic market for investors. Property is most likely very near the bottom of the tub and if not at the bottom, then it is definitely circling the drain. More and more of my clients are investors, who sense it as well and are positioned to begin buying up real estate again. Every day, just in our area, there are 2-3 new bank owned properties new to the market. One person's misfortune can be another's gold mine.
All of this has required me to work some pretty long days and basically going 7 days a week right now. It will all pay off in the end, though. I like the analogy that Brian Tracy provides on one of his motivational sales audio discs: It goes something like this but I paraphrase of course.....
"Becoming successful in any sales field is very much like flying an airplane. Before you can fly the plane, you have to begin by taxiing down the tarmac. Once in position, you have to really rev the engines and give the engine full throttle in order to gather enough speed to become airborne. The throttle must remain wide open with the engines roaring in order to attain proper altitude and speed. Once aloft however, you can cut back on the engines and allow the plane to cruise and sometimes glide because of all the power used at the take off. Just like in sales when first starting out, you have to give it all you have so that like the airplane you can achieve that cruising altitude of contacts, prospects and referrals.
I am loving this business and for the most part have had the opportunity to meet some great people with whom I have been able to develop very good friendships. I will write about some of those encounters here as well as what is currently going on in our local market.
Despite all of the doom and gloom that you hear, this is a very opportunistic market for investors. Property is most likely very near the bottom of the tub and if not at the bottom, then it is definitely circling the drain. More and more of my clients are investors, who sense it as well and are positioned to begin buying up real estate again. Every day, just in our area, there are 2-3 new bank owned properties new to the market. One person's misfortune can be another's gold mine.
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