[powayseller]

oops – how could I forget our fearless leader! Shame on me.

[powayseller]

The Soft Landing crowd isn’t as smart as you make them out to be. They think prices will go down 5%, and then plateau. After a few months or a year, they will rise again, at the historic level of 3-5%.

Remember that most Americans prefer watching Survivor (is that still on?) and going to the movies and standing in long lines for overpriced coffee drinks, over reading economics and figuring out the definition of baseline, upcycle, paradigm, permabull, and the other words you mentioned.

My sister is a surgeon, and she didn’t have a single class in med school about billing codes, marketing, setting up an office. Likewise, high school and college graduates can get out of school without ever understanding inflation, interest rates, central bank policies, and the fact that the prominent world economy shifts every several hundred years (Spain, France, England, US, China,…).

I know half the people are smarter than average, but they choose not to think about money/economy because it doesn’t occur to them that they should!

So they sit back at night, watch TV, and let their company HR department decide which mutual funds they should select for their retirement plan.

[powayseller]

It is happening: median price is slightly up, although each individual house is worth 5-10% less than last summer.

Yes, many people are talking about it, but check the newest topic Rich has on the main site. We’ve discussed that the word bubble, as used by the masses and the media, is thought by those groups to mean a slight pullback, followed by a small rise or even plateau of prices. The number of people who believe in the true bubble, a letting out of all their air of speculation, is probably less than 1/2% of the population. Look at how few of us are on this board! We are the forerunners in knowing about this housing bubble, and the recession.

Don’t even think that the bubble idea is widespread and accepted. It is not.

[powayseller]

That makes sense. There’s a house on Country Creek Drive in Poway, that is being auctioned on the Courthouse steps next week. The sellers just couldn’t bear to lower the price to a good selling point. It’s been on the market for many months. (For some reason, it’s not showing up on ZipRealty, so I can’t give more info on DOM, # of reductions.)

In their emotionally twisted souls, foreclosure was better than “giving it away”, aka selling at market price. What fools we people can be…

[powayseller]

Good point. We’ve been discussing this in the forums over the past month. Check out the topic “Bob Casagrand’s March 2006 Report”.

[powayseller]

The Fed doesn’t set bond yields, and he asked how inflation, the deficit, and bond yields are related.

[powayseller]

At least he’s confessing.

When he told folks in 2004 to get ARMs, he had the ideal solution for mopping up liquidity (via ARMs) and keeping the economy going, as folks would tap into equity to go on a spending spree. Consumer spending is 3/4 of our economy, and housing is the reason. AG had a temporary solution. Now he’s warning folks after the fact. It’s a little too late now Greenie!

I checked the Reuters article on AG’s speech, and here’s another excerpt (I’m just shaking my head!)

Asked whether he thought there was “irrational exuberance” in markets today, Greenspan said: “I would hesitate to use it in today’s context. Irrational exuberance, I think would be a stretch at this point.”

Here, AG, let me stretch you over my knee like a bad little boy and spank your little bottom for causing the bankruptcy and emotional pain for millions of Americans. That’s a stretch I could live with! I used to worship the guy, until I started reading about the economy…

[powayseller]

Dividend Capital Market Cycle Forecast. This forecast is rosy, but gives you the factors which drive REIT performance. For example, if they expect financial services companies to keep hiring because the mortgage industry is strong, they’ll see high demand for their office buildings. I don’t buy into their premises. It’s their job to be a RE bull. Never trust the advice of an economist or expert who benefits from his own forecast.

sdbear, why do you think the economy can keep growing when housing, which has been the main driver of the economy slows? Furthermore, how long can China keep propping up the dollar? Why is it that despite decades-low mortgage rates, low inflation, strong job growth, the US savings rate is negative; how will the glut of baby boomers fund their retirements? If they could save, they would. They’re counting on sales of their homes to be their retirement. Our economy is strong only as long as housing is strong.

[powayseller]

Great update! Those are huge and frequent reductions.

Have you got any data on reductions by home builders?

[powayseller]

I just finished reading a REIT forecast, and as they went through each sector: hotel, retail, commercial, rental, industrial, I realized that a recession is going to sock it to all the sectors. For example, they attributed high demand of financial services companies to the high demand for commercial buildings; as mortgage brokers, title companies, escrow companies, lay off thousands of workers, that office will sit empty. Of course, the report painted a rosy forecast for REITs. But then, who ever gives a gloomy forecast for anything economic?

[powayseller]

You’ll get some comments from people who know more than me, but I’d like to add this:
When housing crashes, it’s the value of the land that is going down. That is the speculative component. Construction costs might pull back a little bit as demand eases, but the land will take a hit.

Thus, no matter what the land holds, that property will take a hit too. Apartments, houses, vacant land, commercial and industrial sites will all be worth less because the land underneath is worth less.

A second factor: Lender money will tighten, as foreclosures take down many banks, and others get scared to lend too much. This makes it harder for anyone to get a commercial loan, affecting that market too.

Third, from your comments it’s not clear if REIT properties are overvalued or not. You said “Apart from increased valuation due to psychological factors…” It sounds like REIT holdings did experience a bubble run-up; they are overvalued. Then you say “REITs are not exposed to the malaise of the recent runup in the real-estate values.” This is a contradiction of the first phrase.

Last, are you positive they are cash-flow positive on the rents?

Don’t REITs follow the direction of the residential RE market, or are they subject to different forces?

[powayseller]

Every business loses money marketing to clients who end up not buying. My husband’s company has spent tens of thousands of dollars on marketing proposals and presentations, just to see the job go to another company. It’a part of the business.

My preferred solution would be to pay my realtor an hourly rate. Then, I pay for all the time I use up, and the realtor charges a higher hourly rate if he’s good. So a realtor is a consultant, like a lawyer. This is how I would like to do it. however, I have not seen a model like that. Being an honest person, I would not do what you suggested: pump someone for info, and then ditch that person and go low-cost.

Personally, I do NOT go to Best Buy to have the sales guy walk me through all the stereo options just to order it online or at Costco. If I consult a salesperson in a brick-mortar store, I buy from that store. I’ve told my kids often why I do this, and that we need to reimburse Best Buy (or whatever store it is) for their expenses to provide the education.

[powayseller]

Money CNN.com article.

Oops – Thanks, Farls.

Signed,
Poway-school-district-seller, aka Lakeside seller, aka Poway Renter

[powayseller]

Bob C. does sell houses. His approach is unique, due to his business background. Instead of the used car salesman technique that has been commented on in previous posts (including the current Pigpourr), he works as an advisor, a consultant. Digging into the data to understand the story behind the numbers, putting the data into an Excel spreadsheet, and sending those reports to his potential clients is a unique approach. Not too many realtors have the inclination or knowledge to do that.

As consumers become more sophisticated, his approach may well appeal to more people.

[powayseller]

MoneyCNN has an article today about BuySide, titled A Fresh Attack on the 6% Commission”.

BuySide agents rebate 3/4 of the buyer commission to the buyer. So on a 6% commission, where the buyer’s agent gets 3%, BuySide keeps only .75%.

On an $800K house, the 6% commission would be paid as follows:
$ 24,000 to listing agent
$ 18,000 back to buyer
$ 6,000 to BuySide agent.

The BuySide agent controls costs by never leaving the office. Buyers find and look at homes on their own, without being hand-held by their agent. Eliminating the taxi service is what drives down the cost. Amazing! I didn’t know we were paying so much just for the agent’s time in meeting us at homes.

As fellow forum participant hs stated before, she doesn’t need a buyers’ agent. She and others like her are fully capable of looking at houses themselves, and negotiating directly with the seller. An independent educated buyer like she only need an attorney to assist with paperwork, but can negotiate without a realtor.

I wonder if BuySide’s fees are similar to those of an attorney who draws up RE transaction paperwork.

[Author]

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