Wednesday, October 3, 2007
Well, Duh! The sky is falling!
The national newscast last night carried the story below about the recent report from the National Association of Realtors (NAR) of falling pending homes sales. Of course it was breathless news around much of the country. Paraphrasing the NAR report, carried on MSNBC -
“The National Association of Realtors said Tuesday its seasonally adjusted index of pending sales for existing homes fell 6.5 percent from July and 21.5 percent from a year ago. August’s reading of 85.5 was below analysts’ expectations and the lowest ever for the index, which started in January 2001. Analysts surveyed by Briefing.com had predicted the index would fall by 2 percent from July.
Last week the group said that sales of existing single-family homes dropped by 4.3 percent in August to the lowest point in five years. Sales dropped to 5.5 million units that month, the slowest pace since August 2002.
The pending home sales index is designed to predict sales levels over the following two months. An index reading of 100 is equal to the average level of sales activity in 2001. With defaults rising among borrowers with weak credit, lenders in August backed off from all but the safest mortgages.”
The question is, was this news for us in the Detroit area? Not really. We’ve been leading the nation into this housing recession (as I've reported here many times and elsewhere for over a year now) and we'll likely lead it out when the economy improves in Michigan. The cycle that the rest of the country is just entering still has the wave of foreclosures ahead of it that we’ve been in for months now. We’re about to bottom out on that front, likely by mid next year and then can start climbing back up.
We recently had a group of visitors in our office who own and run brokerages in other parts of the country. Their main focus in the discussions that we had with them is how we are coping with the downturn as Realtors in Michigan. I think that they were surprised how upbeat and positive all of the people that they met in our office are about things turning around and about riding out the current situation. They told us as they left that we were the most positive group that they had encountered.
I don’t think what they saw was because we’re all just too dumb to be afraid or negative. Perhaps it’s because we’ve lived through most of the bad news already and have been focusing, as a group, on staying positive and getting creative in our marketing efforts. Of course, it also helps that the current real estate crisis has weeded out the faint of heart and many of the part-timers; so, what we're left with are mostly hard-core, full-time, professional Realtors.
So, maybe the sky is falling where you are; but, from where we are, it’s just raining pennies from heaven. Of course, I’m still trying to figure out how to live on pennies, but that’s another posting for another day.