How the toddlin' town can do better

The Illinois Association of Realtors released some first quarter 2009 statistics late last week. Like many other local and state realty associations, they released too many. It certainly is not the fault of the realty associations that the real estate market is so challenged, but I again stand by my opinion that their "half empty" approach is not helping matters any.

Borrowing from their just released statistics for the Chicago area, they announced that first quarter home sales dropped more than 26% when compared with a year ago. The median sales price just for the city also dropped more than 26% from last year to this. This information was prominent in the major newspapers and news sources throughout the Chicago area within hours of its being released.

How does this information stimulate activity in the market?

Frankly, it doesn't. Thousands of potential sellers in one of the most important local economies in the USA have just been told the large percentage of a sales reduction compared with a year ago, and could think that those that did manage to sell did so because they sold for a lot less than they had hoped. In most cases, potential sellers also become potential buyers. At least they could be if their motivation wasn't stripped by statistics.

If a news organization or an entity representing another form of large consumer investments (competing for dollars with the real estate market) were to discover and announce this, it would be understandable they would want to discourage people from investing in real estate. But this information, once again, comes from within the industry.

The Illinois Association of Realtors could and should have used their information more strategically than they did. That is their job, rather than pointing out negative statistics just as prominently.

Here is what the Association should have reported, since they have the official statistics to back this up:


"The latest Illinois Association of Realtors statistics, released on Friday, show that 10,306 single family homes and condos were sold in the immediate Chicago area during just the first quarter of 2009. With sales averaging more than 100 homes and condos per day during the January through March period, the median price within the city limits finished the quarter at $216,000. Yet, with suburban homes and condo sales factored in, the area's median price is now at $187,500. The median price is the price at which half of the homes sold for more and half sold for less."


Let me try this again. What the Association actually put out included their statistics about sales and prices dropping more than 26% compared with last year. Not only are those negative and not necessary statistics, but they compare with just over 1 year ago before the economy took its still current turn for the worse.

People looking to buy or sell a home or property don't always care about what happened over a year ago in terms of making decisions today.

Let me add that I am not picking on the Illinois Association of Realtors. Most if not all of the associations have been doing this month after month. Because of the size of the Chicago area, I am merely using this as still another prominent example.

If I were a realty agent, I would be screaming bloody murder to the association(s) I was a member of, demanding to know why negative information keeps getting put out there to a confused public.

Remember the saying - "Good news travels fast". If only the people leading the real estate industry would.

Carolina On My Mind

No, not the James Taylor song. At least in this instance.

This may serve as the most classic of examples regarding my point over the past few months about how the real estate brokers sometimes shoot themselves in the foot.

Keep in mind that I have seen all of these stories within this week. It's not like conditions have changed since one or the other was written. That is far from being the case.

First, a couple of the stories released within the past few days with help from the very real estate associations that agents pay dues to and support:

http://www.digtriad.com/news/local_state/article.aspx?storyid=119397

http://www.newsobserver.com/business/story/1409013.html

So after reading these, why would an out-of-area (or even local) real estate investor even think of buying there? Some might even put an X through that region on their map and be done with it. Again, those stories above include info provided by the realty association. No one is out to attack the local marketplace.

And then, a national builder's association announces its 15 "best" builders markets around the country. And can you guess which state appears more than once in their Top 15 list?

Very good - it's North Carolina, with the Raleigh area being its highest, showing the top 7. And top 2 nationwide other than the state of Texas:


http://www.builderonline.com/local-markets/the-healthiest-housing-markets-for-2009.aspx?page=10

Right now I wish I had a client that is a builder in any of those areas of North Carolina, but unfortunately I don't. I'd be on them hour after hour to start a campaign showing that the reason the home market is in shambles is because there is so much interest in (name of developments). And show their web site and phone number.

What's that saying? "If you build it, they will come"? Especially in North Carolina. Ouch.

Too many negative statistics.............

Those of you who have been following my blog for a while know how much I comment on the realty associations spending time and money to publish negative statistics about the local real estate market. Throwing more matches into the fire.

While I don't like seeing anyone put into this position, I will admit I found an element of humor while reading this story today:

http://www.naplesnews.com/news/2009/feb/10/home-resale-office-closes-miromar-outlets/?partner=RSS

Yes - it is true. The realty office of the President of the local Realty Association in Naples has shut down.

Naples thrives on those retiring and relocating from the cold weather cities up north, and here we are in the middle of February of one of the most brutal winters across the country in years. For this guy to have been elected President of the local realty Association, he has to have a great reputation and track record in the area.

But when people around the country, including the areas which have previously drawn home buyers to the Naples area, continue to be pounded with negative statistics, the carry over effect has had a direct impact.

Sure, I'm not going to deny that the economy has impacted many lives and that fewer people are looking at retiring and moving to Florida and/or buying a second home. But you can't tell me there isn't plenty of inventory to be had in south Florida, and probably at the best prices available in quite some time.

However, as people read about the decline in sales compared with previous years, it reflects poorly on the market - and not on the overall economy. My point continues to be that I could have just as easily read that "hundreds of homes sold in the Naples area in what many consider to be a down economy, with the most recent sales including an $800,000 home" or whatever it may have been. That would make someone get online or pick up a phone and seek more information. Reading that sales have dropped in a particular area is a negative reflection.

I don't know how many listings that realty office in Naples had, but now a large group of potential sellers is forced to relist their property simultaneously. While their association continues to pour out the negative statistics.

Who's to blame??

Here is an example of the much needed "positive spin" that should be used to generate some activity on specific homes for sale. A suburban Chicago agent managed to get a P.R. piece (or how it should be classified) in over the weekend giving the neighbors and upscale potential buyers a reason to take note of specific open houses. Even though this is not one of my clients, this is an example of what needs to be done on a larger scale:

http://www.dailyherald.com/story/?id=262942

But then, it's back to the more typical story. The "It's been a bad year" in the real estate market quote. The first words quoted from a realty association official:

http://www.theday.com/re.aspx?re=9594fe69-d6f3-477e-a534-9fc5d3164e2c

Yes - while hundreds of agents are paying dues to this association, its executive is quoted in the local paper about what is NOT selling and "bad year". In the marketing world, we refer to this as needing "damage control".

You can't blame the media. They do sometimes go too far in the positive way, such as the first story about the open houses and giveaways. My feeling is that they don't really go too far with the more common story where an industry spokesperson quotes about lower sales or a bad market. Nobody forced the person to give that quote, whether or not it was the first thing he or she says. It was the first quoted. Considering that a percentage of people only read the first couple of paragraphs vs. the entire article, that was a devastating story to agents in that area.

And, just maybe, you can't blame mortgage rates all of the time, either. I'm still not sure to what extent I agree with the point being made here, but this article does offer some interesting comparisons about home price trends in comparison with the mortgage rates.

http://seekingalpha.com/article/115338-the-mortgage-industry-housing-market-and-inflation?source=email

I would have to say it is a combination of both, depending upon the marketplace and the buyer's situation. An investor is going to look at the price of the property and the deal he/she/they can get at this time. A potential home buyer targeting a specific area and price range is likely to look closer at mortgage rates, realizing a drop of .75 could mean a couple hundred dollars less each month.

Whichever you think it is (between home prices and mortgage rates), the killer is often the collection of fees associated with the transaction, such as title fees and local taxes. These can add to the buyer's out-of-pocket at the worst possible time. Yet, there is little to no publicity about this nor any type of legislation or regulation proposed, to the best of my knowledge.

(And thanks to Ron H. for the tip on that association story.)

Stop the madness

I'll swear it is getting even worse. Realty professionals and mortgage lenders tell me every day how challenging the market is. Yet, the realty associations and boards seem to be leading the way in publishing the negative news.

The more they tell people about the decline in home sales, the more they help consumers to lose interest in buying. If this were "my" association, I'd be at every meeting asking questions.

Again, without trying, here are stories I have come across while checking the industry news within the past 24 hours:

http://www.2theadvocate.com/news/business/28403244.html
http://www.bizjournals.com/sacramento/stories/2008/09/15/daily28.html?ana=from_rss
http://www.fresnobee.com/updates/story/868334.html
http://www.bizjournals.com/columbus/stories/2008/09/15/focus1.html?ana=from_rss
http://news.rgj.com/apps/pbcs.dll/article?AID=/20080914/BIZ/809140326

So how do these stories make me want to contact a realty agent today?