Remember to Take Your Crazy Pills

27 07 2010

Buckle up folks. Check the chin straps on your helmets too.  This is real estate. If you don’t keep taking your crazy pills you aren’t going to be able to keep up.

Real estate is all over the map these days – literally and figuratively. Terra firma here. And terra-a-lot-less-firma  there.  Or, as Groucho Marx said:  “You can get wood. You can get brick. You can get stucco. Boy, can you get stucco.”

Talk to an Agent who just closed a couple of escrows and the world is perfect. The market is back. Everything is coming up roses. Talk to another Agent short sale-ing his own upside-down beach house and the whole dream has suddenly been dragged under by the inexorable undertow of a rude awakening.  Just because we hype it, that doesn’t make it so.   We can kick the can down the road but we’re all still going to have to kick the bucket in one of the great reckonings that lies ahead. Maybe switching over to the Mayan Calendar isn’t such a bad idea after all.

Read about those local folks who thought they were getting an “amazing foreclosure deal” like the one’s late night infomercials have weaned us on and it  lends another perspective.  Amazing indeed. They ended up buying a worthless Wachovia 2nd  on the courthouse steps, putting in another $25,000 worth of worthless improvements, only to find out that parent company, Wells Fargo, was still holding the first.

Methinks the right hand knew exactly what the left hand was doing in this case.  The slight of the hands worked because they weren’t required by law to disclose the rules of the game to unwitting people.  Buyers beware and buyers be aware. A little due diligence is always worth your while.

But then, the great fix is in anyway, right?  The Financial Reform Bill was just signed into law as I write this, a mere 8 minutes ago. Once again, we’ve come to another intersection on the road to recovery or the other one leading to eternal damnation.  That mythical place on the flawed GPS System where Wall Street, Pennsylvania Avenue and Main Street are all supposed to meet in magical confluence.

Forgive me, if I’m not overly-optimistic. We’re already suffering the “new and unimproved” of HAMP, HAFA, HVCC,  HERA-MDIA and a whole hullabaloo of other H-ish acronyms. Lots of sound and fury signifying nothing but hassle. Business as usual made even harder than usual.  Sort of like rooting out the cancer by killing the patient.

Not that we should trust Alan Greenspan anymore – the man who knew too much who became the man who fell to earth by being the man who was the last to see it all coming, even when impending disaster was trick-or-treating through every neighborhood in America,  but… the former sage of finance cryptically says this about the new reform legislation: “There are unintended consequences in every page” of this 2,000 page bill.

And speaking of unintended consequences…how about our own little piece of pending local legislation relating to the regulation of rentals.  What happens if some unhinged landlord gets angry enough to set off a neutron bomb?  It would be easy to drive around town, log the addresses of hundreds of funky, illegal garage conversions and report them for code violations.

Forty years of growth by default rather than appropriate planning  – all coming home to roost in the over-crowded nests of small property owners who need that extra income to make their mortgage payments.  C’mon! Every Mayor and ex-Mayor living on the lower Westside has seen the extra units with the built-up bathroom floors to allow plumbing pipes to get to the sewer mains, electric feeds hanging precariously ten feet above ground waiting for unsuspecting kids to hit ‘em with sticks and gnarly carpet-seconds thrown over bare concrete slabs in the middle of an incredibly high water table?

But take heart.  Santa Cruz was just named one of the 25 best cities for the rich and the single by Money Magazine.  Apparently,  we are the place where “surf culture meets tech geek.”  We’re going on a scavenger hunt next Friday night, to look for some of those rich and single people hiding in our midst.  The winner will receive a free  Keep Santa Cruz Weirdly Rich and Single bumper sticker.

Share


Comments : Leave a Comment »
Tags: , , , , , ,
Categories : Real Estate Of Mind Articles

FRACTURING THE FAIRY TALE!

1 06 2010

We toss a lot of words around to describe the real estate market. Words that often come with an encrypted charge and a universe of silent subtext attached to them. Words that carry the weight of metaphor and chains of nuance extending far beyond what the sum of their individual letters are meant to imply.

Which is all to say… I’ve never believed in the fairy tale of a “good” real estate market and a “bad” real estate market. These terms never quite cut it no matter how you slice them. They are way too limited or lopsided in interpretation to do real realty justice. Good for who? Bad for who?

If prices are coming down, is that “bad” for everyone in the marketplace? Or just for some Sellers?  If prices are racing up 2% a month, is that “good” for everyone? What about first time buyers on the lowest rung of affordability watching their point of entry vanish upwards on the horizon?  Its not all so “good” for them.

Is it appropriate for us real estate agents to switch our valences back and forth from side to side, becoming devoted advocates of the buy or the sell depending on whether we perceive it to be a great buyers or sellers market? Just to call it all “good”?

How about  a “move-up” buyer?  One that wants to sell a lower-priced house and purchase a bigger, higher-priced home? There’s an underlying logic that suggests a declining market might be the “best” time for this kind of seller/buyer to make his transition.

The theory is:  The lower the price of the house sold, the more demand there is in that niche of the market.  A lower-priced home should fall less than a higher-priced home in the same declining area. Even though he may sell for less than hoped for, a move-up buyer should make up his “loss” on the other end.  He should pay less for that better, more expensive house. Way less than if the market were going up like crazy.

It is the “relationship” between what move-up buyers sell for and buy for that counts. Not the actual, dollar amounts themselves. Specially, if they can lock-in a portion of their new purchase price at near record low interest rates (like now, with Greece greasing the way).  Nothing like cheap money to help make it all come out nice and tidy in the wash.

So what about this market? This time? How to describe it? Good and bad are particularly inept descriptions for the daily phenomena manifesting itself all around us.

Months ago I mused that there should be two multiple listing systems existing side-by-side. One for corporate-controlled distress properties – REOs and Short Sales. And one for those euphemistic “Organic Listings”  – properties being sold by real human beings going through all the normal life transitions that used to drive regular real estate sales – birth, death, divorce, aging, heath -all the biggies.

But now the fragile dynamic between these two markets occupying the same place at the same time is splitting the market apart even further.  The split has become a full-fledged fracture with prices being driven dramatically up on the low end, at the same time the glass bottom is falling out of the market on the higher end.

If you want to feel like Jeckyll and Hyde for a day – start out in the morning looking for properties with a buyer approved up to $500k. By noon you’ll think you’ve mistakenly wandered into a time warp, transported back to 2004-2005. Everything you look at has 4 or 5 offers and is selling for more than list price.

Get some lunch and boost your blood sugar. Shake it off in time to make your 2pm appointment. That’s the one with the Seller who’s $1.6 listing isn’t selling, hasn’t had any offers and is accumulating days on market faster than cobwebs on the sign out front. Be prepared to spend a couple of hours acting as grief counselor and looking for a sensitive window of opportunity to break the news about just how low their price could really go. A different twist in the wormhole has deposited you smack dab in the middle of 1992!

So what happens when energy in the lower chakras is rising too fast at the same time that movement at the top of  the spine is headed for some serious down time? Welcome to the compression zone. That’s the dense little pocket of  the market lodged between the vertebrae of $550,000 and $750,00. The space being pushed together tighter and tighter from both ends. Its the tiny window of choice that more and more sellers, buyers and listings are finding themselves in – with quite a bit of gnashing of teeth and fraying of nerves accompanying the process.

Sound familiar? Get your helmets on and brace yourselves. Next week we venture into the Compression Zone.

Share


Comments : Leave a Comment »
Tags: , , , , , , , , , , , ,
Categories : Real Estate Of Mind Articles

Number Wonking

21 05 2010

I’m never going to be a very good numbers wonk.  Or geeky statistics guy.   It’s not my nature.  I’m much more comfortable wandering off-leash in the obscure realms of tortured introspection, existential angst and abnormal psychology.

I can crunch a dozen zen koans at a time and make sense of them all. I can distill one single universal truth out of the hundreds of universes that populate 2,000 pages of the Urantia Book.  But when it comes to those sales figures the real estate market provides us each month, I’m not sure I can determine anything useful.  My perceptions just don’t seem to jibe with the rest of realty.

This week, I’m throwing caution to the wind. Going against my own grain. Undoubtedly rubbing some of you the wrong way in the process.   I’m foisting my own list of real estate stats on you – those that I personally find most interesting.

I’ll keep my editorial comments to myself and let the numbers speak for themselves. I invite you to log onto the blog. Register your opinions. Contradict my data with your data. Or tell me why I’m full of it.

But first…my all-purpose CYA disclaimer. The following information is not exact. There are many ways that info can be pulled off the MLS System. There are often mistakes Agents make inputting their listings that throw off the results.  Like all aggregate compilations these numbers may be subject to spin, the sins of (c)omission or errors in interpolation or extrapolation. You might not like what you see.  You may find the right side of your brain in vehement disagreement with your left.

I don’t speak for any group or officially represent any organization.  I have no particular allegiance to any thing other than my own thing . Proceed at your own risk. But if you do go forward, be advised that you might want to do so in the company of an experienced real estate attorney, a licensed CPA, a braniac cousin or a well-balanced idiot savant.  Feel free to enlist a priest, shrink, shaman or bartender or, of course, a real estate broker. Moi? I’ve really got no expertise in analyzing numbers. I only know what my gut tells me.

It’s May 22st.  Five more business days till the end of the month.  We’re rooting for you May. Real estate is cheering you on. You’ve got a long way to go in a short period of time if you want to boost our spirits and continue to shore-up our optimism. We draw hope and solace from the fact that a lot of closings often get crammed in right before the end of the month.

As of 11am yesterday, 98 homes had sold in the County during May.  Of those, 3 closed for a million dollars or more, 2 closed between 900 and 1 mill, 10 in the 800′s, 8 in the 700′s, 13 in the 600′s, 17 in the 500′s, 16  in the 400′s, 14 in the 300′s. And the rest…lower. All the way down to a $30,000 shack in the boonies.

Of the 98 properties sold 14 were short sales and 21 were REOs. Eighteen of the properties sold were listed above $800,000 at the time they went into contract. All but one of those 18 sold for less than what they were listed for, at the time of sale.  Most  sold for far less than what they were originally listed for.  Going back to the original listings of all 18 properties, the average property sold for  $316,961 less than what someone was hoping to get, in the beginning. These 18  properties had an average time on market of 254 days.

There are approximately 680 active single family listings (homes not in escrow) on the market – 212 are listed above a million dollars.  Let’s reiterate: 3  properties above a million have sold in May, 9 sold in April,  12  in March, 6 in February, 7 in January.

There are approximately 414 properties currently in one form of escrow or another – euphemistically known in the real estate world as Status 2, 3 or 4 (pending release, pending show, pending no show.) Of the 414 properties under contract, 16 are listed above a million, 11 are in the 900′s, 19 in the 800′s, 33 in the 700′s, 39 in the 600′s, 46 in the 500′s, 72 in the 400′s, 61 in the 300′s.

Of the 414 properties in escrow 216  are short sales and 56 of them are REOs.  Roughly 65% of all properties in escrow are officially – distress sales.

There’s my shorthand synopsis of the stats. What do you make of it all?  Time to roll up our sleeves and apply a little transactional analysis to the marketplace?

Share


Comments : Leave a Comment »
Tags: , , , , , , , , , , , , , , , ,
Categories : Real Estate Of Mind Articles

The Shadow Knows…

15 05 2010

Shhh. Sh-sh-shhhh. Oops. Sorry. Shhhhh. No, I’m not shushing you. Honest. This is an Advertorial. We’re here to talk about real estate – not keep it on the QT.

My recurring speech impediment has flared up again. Maybe it’s a mild form of Tourettes. Part of my brain is trying to stop another part of my brain from blurting out bad words that aren’t supposed to be heard in public. My inner Gallant is trying to shut up my inner Goofus before he acts out in front of polite company.

Shh-Sh.-Shhh. See, every time I attempt to get a word in edgewise on myself, I begin stuttering. The last time this happened was in 2005 when my lips started twitching every time I tried to talk real estate. A series of b-b-bu-bu-bubs issued forth involuntarily whenever I opened my mouth. It was like some invisible finger of fate was flicking itself across my lower lip. I sounded like I was b-b-busy making goofy b-b-baby noises while there was a really serious rogue elephant stampeding the marketplace.

What finally came stammering up out of my subconscious in a cathartic moment of release was the one word that no one wanted to hear at the time – bubble. By then, it was too late. And the rest is real estate history. History we are still trying to muck our way through in the present tenseness.

But now, I’ve got this sh-sh-sh thing going on. Thankfully all that therapy I had in the past is helping me get to the bottom of my speech pathology quicker this time. So everybody be quiet for real now, ok? Listen up. Shhhh.

I’ve got two important words to say to you. Actually it’s four words, but bear with me. Ready? Sh-sh-sh-shadow inventory. Sh-sh-sh-short sales. Whatever else I say and whatever else anyone tells you and whatever else you believe, these are two of the most important things you can pay attention to right now.

No one is talking about either of these things in a way that does them justice. Sure the words get tossed around. Casual catch-phrases floating through the open house ether. But truly meaningful conversation and analysis in the context of the big picture is conspicuously absent. The silence surrounding both is deafening. All I know, is that the growing size of the shadow inventory and the growing number of short sales are both exerting a huge gravitational pull on the marketplace, in ways we can’t quite grasp or comprehend yet.

Shadow inventory is the name for that the hidden underground vault full of foreclosed properties the banks are hoarding. For reasons we can only guess at, they aren’t ready to recycle their REOs back through the marketplace. They’ve been dribbling a few out here and there but the vast majority haven’t seen the light of day since they fell off the court house steps into the abyss. In fact, apocryphal stories from local REO Agents suggest that the tiny flow of post-foreclosure listings has grown even more constricted these last few months. The drip of damned-up inventory has stalled below a snails pace. Why? Inquiring minds want to know.

At the same time the number of REOs coming on is decreasing, the number of short sales is increasing exponentially. Short sale has to be the dumbest term anyone ever invented for anything having to do with real estate (other than the word “real” itself.) Short sales aren’t short. And to date, not a lot of what we sorta, kinda, wanna think of as short sales as in actual “sales” – have really turned out to be sales at all.

The whole concept of the short sale is fuzzy at best. A clustered FUBAR at worst. A Seller is nominally the Seller, but in the end, after hiring an Agent and marketing the property and negotiating an offer, it is the bank(s) that decides whether a property sells or not. Once a possible sale disappears into the bowels of short sale negotiation anything can happen – including nothing. How do things get decided? How long is it going to take? Who knows? Everything is open- ended. A hope and a prayer with Jiminy Cricket as escrow officer.

Short sales are really just a shadowier kind of inventory than the other kind of shadow inventory. Add them to the huge supply of homes already residing in the limbo of bank land. Sitting on the sidelines. Twiddling their thumbs. Collecting cobwebs. Waiting to be released and unleashed upon the market someday when something or someone decides it’s the right time to let ‘em rip right through the tender balance between supply and demand.

As conventional wisdom says Sh-t Happens. As these unconventional times also suggest… a lot of ShSh is going to happen too.

Share


Comments : Leave a Comment »
Tags: , , , , , , , , ,
Categories : Real Estate Of Mind Articles

THE DICKENS YOU SAY?

13 03 2010

“It was the best of times. It was the worst of times.” Or, if I was the Great Decider-er, maybe I would say it is the better-er of times and it is the worser-er of times. Either way, it’s still the Tale of Two Markets here, in the decidedly surreal world of real estate.

Dickens has the story right. The words ring true: “…it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way…”

Two things happened this past week, that brought my angst-inducing astigmatism into sharper focus.

The first: On Wednesday, I wrote an offer for a client on a new listing in Soquel. Bank-owned. Seven quick offers. Two short days on market. Competition. Overbids. Client’s adrenalin pumping. Racing to write the offer. Racing to get the pre-approval letter. A familiar flashback. Shades of 2005!

The fears and doubts of the multiple offer game. What can we do to please the Seller? Make our offer look more attractive? Did we offer enough? Now, we wait for the mysterious ‘asset manager’ to render a decision from on high. Might take 3 or 4 days. Or a week. That helpless feeling. Something you have absolutely no control over welling up and washing over. And so we wait. Doesn’t feel much like a buyer’s market, like it’s supposed to be.

The second thing: On Thursday I met with the Seller of a listing I put on a month ago. It hasn’t sold. A few tire-kickers. No offers. He’s worried about the growing no-shows. Should we have put it on the market earlier? Are we going to have to lower the price? He is freaking out a little more each day as another drip of Chinese water torture hits him in the head and kicks him in the ass.

We thought we had it right. We looked at the comps and knocked the list price down another $25k to make it even more desirable. And yet.. Nada. No hint of adrenalin in the air. Just a few Agents calling to ask why the seller is selling. Or wondering what his “motivation” is. Or whether there is “flexibility” in the price. Doesn’t feel much like a market on the way up, like it’s supposed to be.

Small moments in the larger scheme of things. But representative of the mixed messages the meta-market is sending. Are we really gaining traction on what still feels like mighty thin ice? Are we (pick one): At the bottom? Near the bottom? Past the bottom. On the way up? Or just getting set up for the next big dip?

I finally figured out why this is all so hard to figure out. We don’t have one real, real estate market anymore. We have two. And both happen to share the same MLS circulatory system just like Jekyll and Hyde co-existed in the same brain. Our two markets are like parallel dimensions occupying the same space and time. They look similar at first glance. They overlap in some ways. But they are wormholes apart in other ways. And the spit confuses the hell out of us, because we keep getting them mixed up. Mistaking them for each other. Or wanting one to become the other. Or fearing one is becoming the other whether we want it to or not.

There is the Distressed Real Estate Market. And there is the “Regular” Real Estate Market that keeps saying it isn’t distressed.

Bank-owned Properties, Short Sales and any number of other situations lumped under the umbrella of pre-foreclosures made up more than 40% of the sales last year. Almost half.

Spring has arrived (a little early) for all those Real People who own those non-distressed properties and see themselves as being the Real, Real Estate Market.
Time for the real buying to begin. Any day now. Those real sellers are waiting for you real buyers.

For those basketball afficionados out there, old enough to remember when there was both an NBA and a separate ABA, this feels like then. There were two different leagues playing the same game but also playing slightly different games. What was clear to all who could read the writing on the wall, was, sooner or later they were going to have to merge. There wasn’t room for both.

Well sports fans, these real estate markets are going to have to merge too. I’ve already accepted the three point shot. I just hope we don’t get stuck playing with a red, white and blue ball.

Share


Comments : Leave a Comment »
Tags: , , , , , , , , , , , , , , , , , , ,
Categories : Real Estate Of Mind Articles

Bridging Bardo

13 11 2009

bardo-pond-set-and-settingWhen the going gets weird and the path suddenly isn’t lined with bright lights and beacons to illuminate the future anymore, what choice do we have, but to reach into our secret stash and try to coax a little clarity out of all that sage advice we’ve been hoarding?

My opening gambit on this week’s chessboard, is to invoke the simple Wisdom of the Bard.  “All the World’s a Stage. And the men and women are merely players.”

It sets the tone for this moment in history. An experiential “aha” moment that brings a fuller appreciation for the proverbial old Chinese curse: “May you live in interesting times.”

And I’m  adding a little Wisdom of the Bardo to the mix as well.  Bardo refers to the Tibetan realm of the afterlife. The transitional state that lies between two different incarnations.  Not surprisingly the Wisdom of the Bardo  is exactly the same as that of the Bard:  “All the World’s a Stage.”    This place, this market, this time are all just a stage we are moving through.  Or as  George Malley put it after his flash of inspiration in the movie Phenomenon:  “Everything is on its way to somewhere.”

So we continue our lay-over between real estate lifetimes. Our intermezzo. The interesting interlude after the end of the third act.  Hopefully,  we’ll use the opportunity to assess the karmic debt we’ve accrued and make good choices about how we are going to pay it down when real estate finally gets to wherever it is going.

But in the meantime, in the slow here and now of  Bardo, I admit, I’ve been a sorry soul – much too sad and much too troubled. Even though I know in my heart of hearts that this too shall pass.  I finally figured out why I’ve been in such a deep funk lately. It is simple:  I miss the people.  I miss the players.

I miss the Appraisers who are dropping out of the business. The one’s who remember what properties sold for 10, 20, 30 years ago. The one’s who know the difference between 3 blocks to the beach and 6 blocks to the beach. The one’s who intrinsically understand why Meder Street and Cherryvale Avenue have always been greatly appreciated. The one’s who are at home in this marketplace – rather than in San Jose or Hollister.

I miss all the Title People downsized into the efficiency compartments on corporate cube farms.  Parceled out of  Santa Cruz.  Nominally, still there, but tucked under that invisible cloaking device called a voice mail system.  Available by e mail but who might just as well be sending us google earth maps from Mumbai. Software upgrades just can’t explain a set of complicated easements to a real buyer with real questions about real, real estate.

I miss the helping hands of the cadre of caring local escrow officers.  I hate to see them being co-opted on a regular basis by their distant Southern California cousins who have no business doing business here  simply because they have offices close to so many of the troubled financial institutions peddling their toxic assets in Santa Cruz.  Yes, in theory, escrow officers should all be perfectly interchangeable. One size should fit all situations. But escrow-speak in SoCal is a different business dialect than we speak here in NorCal and no one can convince me that clients are getting the same quality of service and a “neutral” fair shake from escrow personnel who don’t have any real stake in our community.

I miss a market that used to revolve around organic sellers – the euphemism that’s now used to describe real people going through real transitions with real-life concerns motivating them and informing their decisions. I miss a market that should by all rights be rife with opportunities for excited first time and move-up, organic buyers.  Instead they are getting bludgeoned into submission by the mind-numbing machinations and jackass pranks of institutions that control both the selling side and lending side of so many would-be, could-be, should-be transactions.

I miss my local Realtor colleagues who in so many cases have given way to a strange and motley cast of nameless characters who don’t seem to be able to return a phone call or muster up a hint of concern about others.  Temporal apparitions who have ridden into town on the coattails of  REO clunkers and who will soon disappear back into the outlying woodwork whenever the foreclosure inventory finally sunsets.

Yes, I miss the people.   All those warm dedicated souls biding their time in limbo right now, waiting in Bardo for rebirth.  witnessing  the last gasps of a dying market paradigm  being run into the ground by the ghosts  in the machine.

 

Share


Comments : Leave a Comment »
Tags: , , , , , , , , , , , , , ,
Categories : Real Estate Of Mind Articles