This week our listings saw an average of 1.6 showings each. The showing traffic has slowly started to improve over past weeks and I expect that trend to continue over the next month as parents send the kids back to school.
Wow, what a tremendous week for the gloom and doomers we call the media. In the past two days I have been bombarded with emails from clients asking if I’d seen some of the recent press saying that home sales were down significantly in July. Yesterday the reports focused on existing home sales and the July decrease of 27%. Today it was new sales being down 12%. Both are reported to have hit record lows. Yesterday the Dow Jones Industrial average plummeted as a result.
In the first half of 2010, buyers were incented to buy through tax incentives in the form of $8000 or $6500 cash back after closing. Those credits expired in April and buyers had until June to close. Those incentives were significant and it should come as no surprise that anyone thinking about buying a home earlier this year would take action sooner rather than later to take advantage. Those buyers crammed in their purchases before the end of June. The net effect was that a normally distributed demand for housing was disproportionately crammed into a few months with a hard deadline and subsequent drop-off. The first half of the year experienced a surge in sales. The peak of the surge occurred in May and June. Are our media experts really shocked that a month later the demand shows a drop in home sales?
During the holidays, retail sales surge right up until Christmas eve and then drop off, right? Demand drops after the deadline called Christmas day, right? The expiration of the tax credit had the same effect. This past spring there were plenty of reports showing that home sales were showing record improvements (while the tax credits were in play) and then only one month after the expiration the story changed. By the way, the same reports that highlighted the drop in home sales in July also subtly mentioned or altogether left out that home prices in the same month have actually shown increases, albeit small ones.
This is completely irrational and the media is preying on our fear right now. Stay tuned in to this blog for a truthful perspective from the front lines of real estate. Homes that are priced to market are selling and active buyers are much more confident than they were a year ago. Warren Buffet has been quoted saying that “when the masses get greedy, he gets fearful and when the masses get fearful, he gets greedy.” The masses are definitely fearful. Homes prices and interest rates are at records lows. Sounds like a good time to get greedy.