Blog :: 01-2009

A Buyer's Market?

I came across this interesting article by Gary Keller. I am definitely feeling this same way. Because we are in a real estate market where wall street weekenders make up a large proportion of our buyers, I have come to the conslusion, that things will not really start selling until the stock market has stabilized. It doens;t have to go back to the highs, but it needs to be clear that we have made the lows. Then I expect that there will be a real rush to get in. There are plenty of buyers around, looking and looking, just fearful to act.

"A buyers' market should be just that---a buyers' market. It's not a fence-sitting, waiting, loitering, delaying, dawdling, postponing, vacillating, hesitating, wavering, faltering, pausing, foot-shuffling market. It's a buyers' market. By its very name it means buyers should be doing one thing and one thing only buying. So where are the buyers, and why aren't they buying?

The great irony of a buyers' market is that even though the opportunity to buy is high, buyer urgency tends to hit an all-time low. The media becomes the excited purveyor of negative news and uninformed advice, and buyers buy it all. Actually, it feels like the only thing they're buying.

Their reluctance is ironic since not so long ago buyers were incredibly excited about buying and it was a sellers' market. Prices were escalating and it was perhaps one of the most difficult times to buy value and yet people were buying like there was no tomorrow. Buyers were afraid of losing out by not buying, even though the advantage was all to the seller.

Now a shift has occurred. Fear is still in the driver's seat but the tables are turned the fear of paying too much seems to stop most in their tracks and immobilizes them. When they should have been afraid of paying too much they weren't, and now that they shouldn't be afraid of paying too much they are.

It's one of the great paradoxical moments of any market and the herd instinct at its most pure. Reluctance in the face of great opportunity becomes an agonizingly defining characteristic of a shift. But those who do not follow the herd and take action are the winners in this market."

During the three years of the boom (2003-2006) they said it would never stop. And it did ..now three years into the decline they say it will never stop . But it will ..

Upbeat Letter From our Local Mortgage Broker

I always enjoy Craig Cooper's perspective in his monthly letters, so I decided to pass this along:

Dear Colleagues,

On January 10th, I was invited to Rumsey Hall School to see the Rumsey Hall Blue Dogs play the Taft School Rhinos in the inaugural game in the Lufkin Rink. It was a great game with a lot of cheering from 200 spirited fans, and Rumsey won 5-3.

What was really striking to me about the game was this . . . I have not seen that many happy people gathered together in a good long time. It was just a totally upbeat scene. And the feeling was contagious; I had a great time at the game, and walked out of it feeling . . . optimistic.

Perhaps you are not feeling optimistic today. You may say, What is there to feel optimistic about? I will respond with two quotes. The first is from Theodore Roosevelt, who said in 1894: We Americans have many grave problems to solve, many threatening evils to fight, and many deeds to do, if, as we hope and believe , we have the wisdom, the strength, the courage, and the virtue to do them. But we must face facts as they are. We must neither surrender ourselves to a foolish optimism, nor succumb to a timid and ignoble pessimism. And I will also quote Winston Churchill, who lived in even more challenging times and said For myself I am an optimist it does not seem to be much use being anything else.

I choose to be an optimist because it is better than the alternative choice. And here is what I find to be optimistic about:

  1. When the going gets really tough, so do Americans.
  2. Adversity breeds creativity. The most recent issue of Forbes lists ten great companies started in rotten times, including General Electric (1892, one year prior to the panic of 1893), Disney (recession of 1923-24), Hewlett-Packard (1939), Microsoft (1975), Apple (1976), and Genentech (1976).
  3. I have never in my lifetime seen better buying opportunities in the real estate and stock markets. I dont say that we have reached the bottom I do not make any pretensions to be able to time markets with precision but I am putting my own money into the stock market.
  4. Interest rates are low.

With respect to the mortgage markets, I noted in my last letter than todays mortgage markets are tricky, in that they are both inefficient and volatile. If you or your clients are looking for mortgage financing, I encourage you to call me. Hourglass can guide you and your clients past the shoals of this market. There are safe harbors with truly good deals, including some of the best mortgage rates that we have seen in years.

Sincerely,

Craig M. Cooper

President, Hourglass Mortgage

4 Titus Road, P.O. Box 566

Washington

Depot, CT 06794

Telephone 860.868.2810

Fax 860.868.2610

What Buyers Want

Today I received an email from a client who has been looking to buy for over a year now. She said she has been going to my website regularly and loves it . (thanks!) But she was wondering why she didn't see new price reductions in this market. Since I have recently done many, this made me realize I was not marketing my price reductions well enough. So I'm changing things, thanks for the feedback J.J.! From nowon I will put the original offering price of the property on the main page as well as highlight any recent price reductions in red.I will be the only area website to show the original offering price of a property, so buyers can get a better idea of what is going on. This comment from my client is important asit indicates what buyers are looking for. Theyare shopping by price reductions only.

I received another email from a buyer this week wondering if there is something wrong with a house as it has not sold in 2 years. This particular house is fantastic. However, the owner spent a lot of time offering it at $3.3mil and was too slowto lower it. Its nowdown to $2.3mil and its agreat deal!They have turned down several offers on the way down.So keep in mind, that just because something has not sold quickly does not mean there is something wrong with it.In this area, it can often take a year or more to sell a house. Houses are unique in this area and it takes some time to match up the right buyer with the right house.

If you are a serious buyer, you need not sit around looking at websites and wait for prices to be lowered. Come up and look, make an offer, and you may very well get hit! Keep in mind that sellers have egos too, and don't want to keep lowering prices in a vacuum. Show some interest, and in most cases, they will respond. Give me a call if you would like to discuss area houses that are likely to sell for good discounts off their asking prices. 860-868-9066

If you have comments on my website, or can think of some info you would like to see there, please let me know!

Fondly,

Stacey

THE GOOD NEWS

Well, I guess by now you have all heard the bad news, so with 2009 coming up, I've decided to focus on THE GOOD NEWS.Here are 10 reasonswhy I think 2009 will be a good time to buy Real Estate in Litchfield County.

1) Little Speculative Building. The really devastated real estate markets are in areas where there was rampant speculative over development. We do not have that problem here. There has been very little speculative building in the last year. This will serve to lower theinventory of new construction comingon the market as we work through the current inventory.

2) Conservation. There is so much conserved land int his area, that the possibility of major subdivision or excessive inventory build up of new homes, is always lower than in other more developed areas. In addition to the land officially owned by the land trusts, there are thousands more in conservation easements. See my website for more info on conservation easements http://www.staceymatthews.com/AreaInfo/conservation.html

3) Tough Zoning Laws. Bridgewater, Roxbury and Washington have very tough zoning. There are virtually no subdivisionsin the traditional sense of a large cul de sac with homes all built by the same builder. If you are a builder of these homes, I feel safe to say that you should stay away. These towns will not welcome you.

4) Proximity to the City. We remain the only premium weekend area that you can get to in 1 1/2 - 2 hours from the city with virtually no traffic (once you get to the GW bridge). We are the only place that is close and yet has that completely country feel.

5) Low taxes. CT has very low real estate taxes compared to other areas(like anywhere in New York State especially the Hamptons). Washington and Roxbury have two of the lowestMill rates in the state!

6) Economic Stimulus Plans: The amount of money our government is pumping into this economy is staggering, and if that doesn't fix it, Obama seems set on putting in more. Much of this money is aimed directly at the housing market. Today's news is that Obama is considering a corporate tax cut aimed at getting corporations to invest and begin to hire again.

7) Interest Rates Fall Sharply. Interest rates are near 50 year lows. Do I need to say more?? Applications to buy and refinance homes doubled and tripled respectively last month. People are going to be saving a lot of money after refinancing at these rates.

8) Cheap Oil. This is also putting a lot more money into consumers pockets. Hopefully as this stock market stabilizes, consumers will start spending again.

9) Deals. There are GREAT deals to be had, and they won't last forever. We will never know the bottom until we are way above it. I believe the brave who step forward in the next few months will be quite happy with themselves a year from now. When the springstarts to bloom, my experience tells me that sellers get LESS negotiable. The depths of winter is usually the best time to get a deal.

10) Real Estate is Local. While many markets in California and Florida have been killed, this is due to rampant speculative over building. We do not have this kind of problem in this area, and therefore, I do not anticipate our markets will ever godown as much as thoseother areas have. We will remain the preeminent country destination for New Yorkers and many of those who come here will move here full time. I anticipate that as the stock market stabilizes and volatilitydeclines, the buyers who have been looking for the last year will be coming in with offers. To most we are still an undiscovered area, and there is plenty of room for upside as more people tire of the Hamptons.