Today’s the middle day of 2014, which means we now have enough distance from 2013 to step back and get a better overall picture of what happened in the real estate industry last year.
As Tom Iovenitti discusses in this installment of Realty News, the 2013 real estate market was driven by far more complicated factors than just basic supply and demand. Buyers responded to seller behavior. Sellers responded to buyer behavior. New home builders offered security to buyers that was less available in a resale market where the neighbors might have financial problems. And investors who were willing to pay more than asking price still managed to get excellent deals in a fluctuating marketplace.
It’s easier to observe the behavior of a flock of birds from on the ground, and it’s easier to observe the real estate market from several months later. The insights we gain by looking back can help us make wiser decisions moving forward, so take a few minutes to watch this video to gain a fresh perspective both on what happened last year, and what is going on now.
It’s great to be back creating interesting and area-specific articles about real estate agency economics, projections, optimism, disappointments, and failures. Yes. 2013 was much like fishing for those of you who understand the concept of hope, 2013 was a year of great expectations and countless disappointments. Bottom fishers and realists. But what really happened, and what were the positive aspects commonly overlooked when acting in unison with a flock of birds?
By that I mean is, as one leads the way and turns, the entire flock seemingly adjusts. I’m sure you all know this meaning. Did you ever hear “my neighbor said” “my accountant told us” “my financial advisor said”? This is what I mean by the flock following the lead bird. Our local real estate market in January 2013 began full of optimism and consumer excitement. Multiple opportunities, and, most importantly, media commitment to good news. This in conjunction with a consistent jobs report of positive hope was the basis of success in 2013. It appeared that the real estate business and other financial affiliated companies were on the road to recovery. Units were consistent, prices were seemingly adjusted upward, values and ranges of sales were above 300,000, and smart money was clearly showing enormous interest in the high end, $1 million dollar and above, residential properties.
Therefore, pending sales were both brisk in equity, and once-distressed sales were finally reaching equity positions. So what happened to the early momentum? What happened to the housing market? Well, beginning in April, the market slowed to the lack of inventory nationally, and buyers were waiting for the better deal. Buyers do not like the shift to the seller’s market, and begin to hold back. Sellers see this shift and dig in, I’m sure you’re all aware of this. Some savvy buyers understand the shift, and pay over list price even if it’s above market, which creates another issue with appraisal. All of these issues are normal shifts that we should be accustomed to but still we fight the consumer, trying to explain the circumstances, while the consumer just believes we want to sell them something. Again, this is normal throughout the United States in every metro. When shifts happen like this, there was simply no reason to engage the market, because no reason was publicized openly that anyone could report. And the flock followed the lead bird; that lead bird could have been fear to pull the trigger, or someone being the lead bird of advice. Why would new homes be so popular? Well, here’s the real truth that the question. Consider yourself the consumer, looking for a home. You search resale homes and find nothing of interest, always thinking in the back of your mind and listening to your fear, because nothing tangible creates confidence in your decision. We’ve all had these clients. You’re torn between something established but concerned that the neighbor in the area of interest may be having financial complications that could impact your value, and though your purchase has nothing to do with their financial issues. Therefore, you’re subject to the reality of circumstance that have no bearing on you, but could affect your equity. In addition, a new homes project provides a couple of things. It provides the security that all the purchasers have qualified. That each has money reserves for financial security. Also, that the prices in the new home divisions will establish a benchmark that has low risk of declining due to the neighborhood’s qualifying aspects for mortgage, never discounting, your neighbor paid cash. The risk has just been lowered, if not eliminated, in this purchase. This does not imply that the forego real estate resale community, but makes it comparable to determine if there’s truly a lack of interest by consumers or just a lack of confidence in some areas of this market that is different than the price. But more importantly, that people are doing to overcome these unknowns. Again, it’s a flock of bird mentality when one follows the other.
Your realtor, agent, friend who works very hard to connect clients to the right property which, in affluent areas, is more difficult due to the mix of neighborhoods and locations, is the person to talk to. Therefore the opportunities for purchase have to be scrutinized very closely, and with decisions being made for the long term, each consumer wants value. Remember that value. Consumers need to trust your representative. Local real estate agents have the knowledge to make informed decisions, rely on the professional, and reduce the risk.
On another note, why has smart money continued to research and buy higher in residential properties in 2013? Because they know that the price can never be judged at the bottom, and that the prices negotiated are those that may never be available again. Therefore, smart money is actively looking and taking opportunities. There are numerous examples of smart money winning in this market, and not all are mega-million dollar sales, but are in closed escrows of every denomination.
My last comment for this report is: Get yourself in the market, ride the wave of success, and remember to engage ReboGateway as your lead generation software. There are over 32,000 realtors using this system nationally. Many earning 25% more than their prior years’ income. Again, I’m Tom Iovenitti, from Benutech, Incorporated, wishing you great success in 2014. Stay tuned for more RepoReports from Benutech, Incorporated. Bye for now! Be brilliant!