Looking for a Housing Signal? Here are a Few of our Housing Indicators we Watch

Mortgage Delinquencies:

We have watched a steady increase that has mirrored unemployment for the last 5 years. It appears that things are finally beginning to taper off; at last! The number we would like to see the most for the upcoming year is a dip below 7%. That will get everyone excited and should signal a major slowdown in foreclosures.

Unemployment:

This is a key number for us and is something we talk about daily. I still cant find any history book that a full recovery and bullish home prices have occurred without job creation. This indicator has a direct correlation to almost every indicator we watch.

Household Income:

Once again, people need jobs and growth if we are going to see this indicator advance. However, the current levels need to see a turn up if we are going to work ourselves into a strong and meaningful advancement higher in home prices.

Absorption Rate:

We like to say we eat, sleep, and breathe absorption rate around our office. As a matter of fact, I cant for the life of me figure out why this is one of the least talked about indicators in a real estate office? This indicator tells us how long it is going to take to sell a property, what price is going to return the highest result in the quickest amount of time and overall tells us what the overall health is in any given market.

The factor you see on the right is done on an annual basis, however, we choose to focus on a six month analysis instead of the twelve month.

Overall Transactions:

Transactions is basically an indicator for activity. It also helps us determine whether or not there is any demand. What we like most about this number for 2011 is that we appear to have seen the brunt of the major decline and the wild swings and have now began to see some steady demand come in to the market. We are wildly optimistic on via this indicator.

Supply:

It appears that the massive supply that we saw hit the market in the middle of the 2010 season has been eliminated and we are sitting at a level that is what we call “Par”, meaning once we get to the 6 month level we will have a neutral market. Anything less than 6 months inventory is a sellers market and anything more is a buyers market. Our stance for now is that we are expecting the banks to hit us one more time with an influx of foreclosure property just before the spring selling season, which will put some pressure on the prices, but this is our buying signal and we believe will be the catalyst to a potential bounce in housing prices in late 2012.

Interest Rates:

We continue to see rates hover around the lows in hopes that it will keep buying demand from dissipating, however we see more refinancing than anything else. Our hope is rates will begin to tick up since that seams to bring in buyers that don’t want to miss the boat.

Housing Starts Vs. Unemployment:

This is a very interesting chart on the right. It is one that highlights our theory that we believe fits the current scenario. As unemployment begins to fall housing starts will rise. The question is whether or not the builders start building first or will they wait for better signs for more stability to come?

New Homes vs. U.S. Recessions:

Lastly, take a look at the chart on the right. Notice that for every recession we have encountered the result was a big dip in home sales. If we can begin to see the light at the end of the tunnel when it comes to the global economic catastrophes then I see a major snap back and a sudden surge in demand. Its time to start moving up in 2012!

Author: Britton Brown

I was sitting around last week thinking about the current housing market and reflecting on all the crazy news that the pessimist keep  rolling out, which seems to roll out almost on a daily basis. So I thought to myself, could they be right? Could the next flush in prices happen, capitulating with the end of the world? Probably not!

Recent data that has come out from Case-Shiller actually indicates a flattening out at the bottom of the price decline that we have seen over the last several years.

Couple that with the idea that home ownership has never been so cheap and we have a wonderful buying opportunity that is… if the banks would  actually get aggressive again and loan some dough. When you look at the actual retracement of the home prices and the cost of home ownership you will find that the Fibonacci number of 50% actually has this market supported.

Seriously, who would have ever thought that you would be getting an entire decade of pricing wiped out with a stamp that says; “do over!” My theory is that we have overdone it on the downside and will most likely overdo it to the upside. As a matter of fact, I am so convinced that this is going to take place that we are positioning ourselves for a a massive run up in home prices, one that we will hear in a few short years that that new problem is that home ownership is too expensive for middle America. Could you imagine that?

The simple indicator I think you want to watch is supply and demand. When inventory starts falling and demand keeps coming, the only direction for pricing is going to be up.

My simple point is that things are not that bad out there and in many areas of the country we are seeing the absorption rate get under 6 months, which ultimately means that the pendulum is beginning to swing to the seller and the buyers, is losing their edge. I am telling you, before the buyer even knows it, it’s going to be a race to see who owns and who misses out.

Well that’s the scenario that banks love to make happen, so that only leaves one thing to do…get your fair share of the pie. As Jim Cramer  likes to say;”Buy! Buy! Buy!” Seriously what do you have to lose? There is never going to be a scenario where they are going to give away homes for free!

There will just be upset consumers that will have to pay up for the American dream.

Author: Britton Brown

By now it’s no shocker to you that I am writing on the pessimism of the current state of the real estate market. However, I think it’s  kind of exciting when you look at it from a different set of lenses.

I have contended all along that the current state of the real estate market really isn’t as bad as you might be lead to believe and that  this is the greatest opportunity that our generation will ever see when it comes to the low prices that we have experienced over the last 4 years of  decline, but is now the time to buy?

I sure think so, especially with all the panic or fear factor that has been setting in within the market place. The fear factor is has  always been an incredible gauge to use when determining whether the timing is right or of its wrong. I look at it like this…if you aren’t nervous then you aren’t there yet.

I know that probably sounds a little strange, but think about it for a second. How many times in your life have you been totally  positive that acting on a potential opportunity was going to work out exactly one way to only find out that you weren’t even close? You missed it entirely! Now, how many times did you make a decision based on a gut feeling that contradicted the general consensus and it ended up being a huge win?

Well, that’s how I think most people feel right now about real estate. They know it’s a good deal, but they are so freaked out that they
are stuck in zombie land scared to pull the trigger. The funny thing is…THIS IS YOUR SIGN TO BUY!!!

Now I do think that there is a lot of uncertainty when it comes to the local real estate agents out there and its here that I think could
either make or break the prices in the local market. That’s why I recently sent out a plea to the agents in the Kansas City area to relax and get to work. The emphasis was not to panic and instead of trying to force a market to react by simply lowering prices, they should be patient and let the market come to them. [See video]

My other point was that the market was great the last several months, but we should be anticipating a slowdown. The best way to
prepare for the decrease in transactions is to double your listings and activity and make sure they were only marketing homes that were priced
correctly and that were sellable. This lull in the market gives them a chance to cancel some of those listings that don’t have a shot which would help deplete the excess inventory and offset the decline in transactions. In essence, we can clean up the mess we have and by reducing supply, we create some much needed demand.

This doesn’t work if the agents just pound the pricing in order to get a deal; rather it creates market momentum and helps the homeowner  get top dollar for the home. So for the security and overall health of the real estate market, the REALTOR is going to have to take a hit along with the homeowner and do a little fall clean up in order to prepare for a great 2012.

So do I think they will listen? To be honest, NO! But we can pray that they do, the problem I see is they need to eat too and I have always said that most agents will do right by themselves before they will ever do right by the client.

Author: Britton Brown

If you live on planet earth, then you are well aware that the real estate market is going through many changes these days. We have not
only seen a 75 year cyclical move hit home prices, but we are also seeing an industry evolve all on its own.

Now it’s fair to say that all these growing pains we have experienced were bound to cause some things to change but to be honest with
you, it’s probably the most exciting times I can ever remember.

You see, 80%  of the licensed agents sell somewhere between 1-3 properties in a year or for most maybe none at all and it is my opinion that for the better of the industry and the home owner it’s time for the part-timer and unproductive agent to leave and go find another profession. I also see for the first time in over 25 years we are seeing the industry begin to make the necessary changes and start the process of raising the bar when it comes to not only the licensing process but in raising the costs of getting into the business.

However, in the meantime we here at AREA Real Estate Consultants dba Aggressive Real Estate Agents feel it is our duty to help educate the buyers and sellers that are entering the real estate market so that you the buyer and/or seller can put more money in their pockets while providing
them with a totally free service including direct access to our list of professional agents that rank in the top 5% in the industry in customer service, industry knowledge and most importantly successfully closing homes . Our agents have historically outsold and out negotiated the competition by an average of almost 8% or more on every transaction.

Think about that for a second. That means our clients that use our free service not only close on their homes faster than the rest of the competition but we actually put as much as 8% or more back in their pocket when compared to the rest of the agents you may encounter. Truth is you really can’t afford to list or buy with anyone until you find out what we know about the agent or who we might suggest would be a better fit for you in order to give you the best service possible.

The Truth May Alarm You

Gone are the days that anyone who has a mother, brother, sister, friend, or cousin that is a licensed Realtor would actually just go ahead and use their services because of their relationship. Remember, as we just mentioned above; the fact is 80% of the Realtors out in the market make less than a part time wage and sell less than 3 properties a year. For these agents, they treat their real estate business like a part time hobby, hoping
that someone they know will actually use them so they can afford to pay their MLS board dues.

These “part-time” agents have absolutely no budget to help market your home and typically only rely on the MLS to market your home. They
also have little to no knowledge when it comes to knowing what to look for in a home when buying or selling that could detract from the value of a property or costs you valuable time in getting it sold.

Most importantly for those agents who are selling homes their “list-to-sell ratio” is the end all be all. We have found that the 80%’rs not only lack the budget to get the job done, but they lack the expertise to compete with the top 20%. Truth is, they take on average 90-120 days longer
than the top agent that is if they actually get the home sold at all. Even worse is when the “part-timer/80%’r” lists a home and successfully sells it,
their average sale price is less than 88% of the list price. That’s not all, when it comes to buying; they lack negotiating skills and therefore typically pay above 99.2% of the list price.

As you can see, simply handing over your real estate transaction to an unproductive agent whether you’re buying or selling is almost foolish. So unless you enjoy flushing thousands of dollars down the toilet, you really can’t afford to not contact AREA Real Estate Consultants dba-Aggressive
Real Estate Agents. By contacting one of our professional consultants you will have put yourself in the driver’s seat and given yourself the very best chance of ensuring yourself a successful transaction.

So what’s the most important piece to take away from this information?

• AREA Real Estate Consultants services are completely free for the home buyer or seller to use.
• AREA Real Estate Consultants Agents specializes in leveraging our contacts with the top agents in your area to help find you the top agent that fits your specific needs and that have the most successful track record of closing quickly on your transaction.
• You really can’t afford to use anyone on your own without knowing for sure that they can truly get the job done for you. That is our
  specialty!

Lastly, the ‘dirty little secret’ that every unproductive agent doesn’t want you to know and ask them is…”What is your list to sell ratio?” Truth is, if the agent pauses or actually doesn’t know, then you probably have an unproductive agent that is going to cost you a lot of time, heart ache and money.

Author: Britton Brown

The tug of war continues on whether the housing market has actually seen the bottom, double dipped or is continuing to gain strength and it appears that all are correct, depending on where they are talking about, of course.

With all the volatility that appears to be going on in almost every city in America, it appears to me that this is a good sign that
better times appear to be on the horizon for homeowners. It’s kind of like the housing market is experiencing birthing pains and as we go through this troubling time, it’s imperative that we see the good rather than the bad.

Is It A Boy or A Girl?

Much like an expecting mother who goes through the birthing process, when the birthing process is all over, the joy of the new life supersedes all the pain the mother went through and the good news is the housing market is in exactly the same position. Brighter days are ahead of us and you can bet that when they hit, we will quickly forget about all the pain we had to endure.

Who Knows How Long The Birthing Process Will Last?

Like everyone else, the shorter the better, but this appears to be more like the gestation of an elephant rather than your typical nine months we are all accustomed to.

Now we will be the first to admit that it was our opinion that we would see the housing market begin the stages of a massive run up in home prices that looked like we might actually see take place this summer, but that was before the GEO-Political issues exploded in our faces and the stock market began its phase of rewarding corporate America for not hiring and putting
the almighty dollar above people.

Think about the current environment right now; higher gas prices, higher food prices, higher costs of health insurance, higher cost of  living in general with less jobs available, lower wages, etc. and you have a recipe for disaster. The sad part is we continue to see layoffs for the most experienced professionals and hiring in the cheapest areas of inexperienced workers or those that are desperate enough to do the work 2 or 3 workers for the same or less wages. It truly is a sad day in America these days.

AREA’s Current View

AREA is settling back at this point and focusing on our business strategies around the market environment that we saw back in the late 80’s and early 90’s. We also see several other issues that aren’t going to go away for some time, which is more foreclosures and a ton more short sales hitting the market in the next 2-3 years with the current economic scenario
being extended into 2013.

In order to make sense of the dynamics behind the national and/or regional strength in the housing market, AREA uses the concept of the National Diamond, which is made up of four forces.

1. Factor Conditions: Labor, Productivity, Savings, Growth, GDP, Industry, Retail Sales, New Home Builds,
   Lending Practices, Home Sales, Foreclosures, Supply & Demand, etc.
2. Demand Conditions: Is there strong demand for resale or new homes in a particular area or across the
   country for which we could see the start of the rebound we are looking for?
3. Related and Supporting Industries: Industries that are strong in certain parts of the country are typically
   surrounded by successful related industries.
4. Government Strategy, Structure, and Industry Rivalry: Competition fuels growth and competitive strength.

Together, with these four factors we can determine whether the housing market has the right
fuel to get the industry moving in the right direction.

AREA’s Current Grade for the Housing Market

1. Factor Conditions: D
2. Demand Conditions: C
3. Related & Supporting Industries: C +
4. Government Strategy: D

Total Accumulative Grade: C-

As senior consultant Brad Korn recently stated; “flat is the new up”, meaning if you can keep the housing market from panicking and remain steady in today’s conditions, then you are doing incredibly well in this market.

Has Capitalism Finally Run its Course?

It sure seems like we are going through some interesting times these days, that’s for sure. It’s almost like capitalism has run its course and is now cannibalizing itself. Is it just me, or does it seem like everyone is stealing from everyone?

We have forgotten that its productivity that is the prime determinant in the long run of a nations standard of living and I just don’t see that happening right now. At this point it sure feels like we are robbing both Peter and Paul and the only one who is winning is Wall Street. If you ask me, something is going to give and I think it’s going to be the stock market, rather than the
housing market unless they can figure out how to add jobs, build wealth and figure out a way to get the housing market back on its feet.

Author: Britton Brown

The market is definately swinging towards the seller with only 1 in 5 respondents indicating they have a high degree of urgency to sell. So if you are buying you probably need to be aware that you will find fewer concessions, buy-downs, or price reductions in the buying season of 2011, especially when sellers have lower levels of urgency.

Lets take a look at a recent survey on the top 9 reasons why sellers are selling in 2011:

1. 20% of the sellers are selling to upgrade their home.
2. 18% are relocating to new cities (job search).
3. 16% are undergoing family changes (divorce).
4. 13% are relocating due to job transfers.
5. 11% are selling because they are retiring and looking to move for easier living and more amenities.
6. 9% are selling because of financial difficulties (unemployment).
7. 8% are selling to downsize their living expenses.
8. 4% are selling because they do not like their location (usually schools or taxes).
9. 1% are selling because they believe home prices are going to continue to fall further.

Author: Britton Brown

Getting the Most Money Out of Your Home

Most sellers don’t have a clue how to get top dollar for their home especially in this market, so I thought it was high time we covered some basics to help everyone do their part and turn this thing around.

Contrary to popular opinion sellers can still get the highest possible lit-to-sell ratio and sell their homes as quickly as possible if they are willing to put their trust in two-time-tested principals of real estate: condition and price.

These are the only two factors sellers have any control over, and they are the two that buyers care the most about.

How do you achieve this? Well, simply really; change the way you look at things and the things you look at change. If sellers would start viewing their house not necessarily as their home but rather as the future home of the buyer they need to attract I believe they would see a whole new perspective when it comes to preparing their home for a sale.

So let’s look at things from the perspective of a buyer. There are roughly 15 key features that attract buyers, so lest use these features to help you grade your home and get it ready for a top dollar fast sale.

1. Location- Location is the #1 biggest features accounting for roughly 69% of a buyers decision making process. On a scale of 1-10, how do you rank your homes location?
2. Neighborhood- A homes neighborhood accounts for 55% of a buyers decision making process. Think about the neighborhoods that surround yours within a 3-5 mile radius, now rank yours on a scale of 1-10. How does it come out?
3. Floor Plan- Yes, contrary to most people’s opinions, a home’s floor plan still ranks #3 in a buyer’s wish list. Where do you stand in your area when you think about your floor plan? Rank it on a scale of 1-10 and remember, unusual is typically not a good thing. A good floor plan accounts for 37% of a buyer’s decision making.
4. Updates in Home- Have you kept up with the updates that are the recent trend or have you let your home go and it still looks like it did back in the mid 1990’s? A word to the wise for those who put a lot of updates in, just because you put $30,000.00 in updates, does not mean you will get a $30,000.00+ return, so don’t be alarmed when you hear an agent tell you that the market is not rewarding you at this point and time. Now rank your home once again on a scale of 1-10. How did you come out? Updates obviously still matter and account for roughly 36% of all buyers decision making process.
5. Curb Appeal- This accounts for 30% of all buyers decision making and the cool part is this is an area that if you put a little elbow grease into the work you can get a great return on just a little bit of cost. Curb appeal accounts for 30% of a buyers decision making capabilities. Rank your curb appeal on a scale of 1-10.
6. Square Footage- Yes, I know that they have been trying to get everyone to downsize but seriously, living in a small home that doesn’t fit your needs is not cool. Square footage still rules the day accounting for 28% of a buyers decision making. Rank your square footage on a scale of 1-10 and make sure you think about how it relates to other homes in the neighborhood.
7. Back Yard- Back yards still rank high in a buyers mind, as much as 25% of all buyers look at this as their resting place and a place to entertain. You do not get credit for being a visionary here, so rank your back yard on a scale of 1-10 compared to others in your neighborhood.
8. Kitchen- I bet you thought this would be much higher on the scale didn’t you? Well kitchens do matter and most spend the majority f their money on this one location, but what you will find is that the max return you will probably get is about a 15% return, yet it accounts for 23% of a buyer’s decision making and comes in at #8 on what really matters. Go ahead and rank your kitchen on a scale of 1-10.
9. Schools- This is a big one that most buyers have already researched before they ever go out and look at houses. Schools account for 22% of a buyer’s decision making. So how does your school rank when compared to the surrounding schools and towns? Rank it on a scale of 1-10.
10. Lot Size- Lot sizes have its advantages and disadvantages. Too big and they are thinking tractor, yet too small and they think its granny time. How would you rank your property size? Rank it on a scale of 1-10.
11. Age of Home- The age of the home can make a difference, especially when it comes to fitting in with the rest of the homes. You can have charming and sophisticated while being historical while there is cheap and new. Where do you fit in? Rank it on a scale of 1-10.
12. Garage- Is it deep? Is it clean? Does it have electric garage door openers? New doors? Work bench? Shelving? How many cars? How do you rank your garage on a scale of 1-10? FYI- This is usually a good one for your husband or male neighbor to help you out with. A good garage accounts for 16% of a buyer’s decision making.
13. Style- Do you conform to the other homes or is there something special about the style of our home that stands out? Grade it on a scale of 1-10.
14. Floors- Tile vs. linoleum or carpet vs. wood floors? These can make a big difference in what a buyer would perceive as being charming or just a fixer upper. Floors account for roughly 15% of a buyer’s decision making. Rank this on a scale of 1-10.
15. Commute- Although this is ranked #15, I personally think with the gas prices being the way they are, this could easily jump several spots in the next several months, however for now this is affecting a buyer’s decision making process by roughly 14%. Grade your location on a scale of 1-10.

Go ahead and total your points up. Your max possible points come to 150. If you ranked above 110 chances are very high that your home will sell very quickly and for top dollar. If you came in around 75-109, then you have a little work to do, but I would expect you will fetch around 90-94% of your asking price and will probably sell within 90 days of your original list date. If you are below 75 points then you need to have a reality check or get to work since you will more than likely take 6 months or more to sell and you are probably asking way too much.

Aggressive Real Estate Agents specializes in working with top rated realtors that no how to sell homes and are more than happy to help you grade your home in order to get you ready for a fast and top dollar sale.

Author: Britton Brown

How Do We Recover?

The big question that continues to be asked among the players in the real estate industry has to do with whether or not we are actually seeing a recovery or not. I contend that when we see an environment such as we are in today, we have to get back to the basics. What I have found is that in every market and in every economy you will in essence always go through four stages of recovery. 

It always starts with surviving before you can move into thriving and right now it feels like we are just starting the process of stepping out of the survival mode. So to simplify the stages, I thought I would just bullet point the blueprint on how to run a government and keep the housing economy moving to give everyone a measuring stick to help them see where we are and help everyone in making the right decisions at the right time.

Step 1- Stabilize Home Prices

• Home prices are the foundation of any recovery.

Step 2- Stabilize Banking System

• Once home prices are stabilized, the banking system can be stabilized.

Step 3- Create Jobs

• Once the banking system is stabilized, then jobs can be created.

Step 4- Stimulate The Economy

• Ultimately, by creating jobs through stabilizing home prices, the government stimulates the economy.

It seems a little silly to me, but if I am right, then we have some things out of order and somewhat backwards right now, which is why I think it’s taking a little longer than expected to pull ourselves out of this rut. However, I do think it is all coming together now and we are beginning to move forward, but I do think we all need to exercise great caution at this point. Simply put, make your decisions count!

I was told a long time ago that most often it’s really about timing and not necessarily about the actually investment itself that wins the day and I believe this to be very true, especially for today’s market.

Author: Britton Brown

Just this week, the U.S. Census Department released its monthly New Residential Home Sales Report for January showing significant declines on a month-to-month and year-over-year basis resulting in a new home sales level that is far lower than the temporary low seen last year in advance of the government sponsored housing bounce, and in fact, is the lowest level seen in at least 47 years.

However, that was then and this is now. Over the last few months we have seen significant advances in home purchases within certain pockets of the United States and a trend that seems to be developing in the real estate market is the mindset of buyers is changing from looking for the best deal via a torn up home to shifting into a retail mindset looking for value with luxury.

Have we gotten to the point where we are now seeing buyers splurge on big ticket items? I just recently read an article about how the rich are now making home purchases and most are actually writing a check for them. In a country that has always been about upstaging your neighbors and being the smartest investor in your circle of friends, I contend that the tide is turning and we will be hearing about how now is the time to buy.

Yes indeed we are still predicting we will see better numbers for new home sales along with the very real idea that we are heading into a new home shortage that will indeed push prices much higher.

Author: Britton Brown

You know what I like about this spring housing market? It just feels good!

Think about it for a second; last year the only buying spree we saw was when the federal government gave all the qualified buyers a free loan of $6500-$8000 tax credit to try and stimulate the real estate market. At the same time all the banks jumped on the opportunity to take advantage of unsuspecting consumers by pushing interest rates up to 5.5%, and once again the only real winners that emerged was the banks, however this year is much different.  Why? This year we are doing it without the aid from the federal government and we have lower interest rates than we did 12 months ago. Really if you think about it we are sucking up the inventory all by ourselves and that is a very healthy sign.

Real Estate has gone through its cycle of being the poorest investment in the ball game, but it now feels like it’s all getting ready to change. The funny thing is it really can happen that fast. One minute real estate is the red headed step-child and then without a warning, it’s the golden child. I love this game!

There is opportunity galore right now in the real estate market. Whether you are getting ready to make your first home purchase with these incredibly low interest rates or maybe moving up to more square footage at a 25-30% discount from 2007 or maybe it’s simply time to pick up some rental property from the banks REO list, my point is there are deals everywhere!

I told my son a story to teach him about opportunity and returns on investments just the other day. I explained to him that I was recently at an auction and because I was able to spot a deal, I was in a position to pick up a couple of things at 50% off the actual cost and turn around and sell them for 35% more for almost an instant profit. Now my point in telling him the story was to explain to him that there is opportunity everywhere and that getting 2-4% returns with high risk from banks and investment firms was a joke. Now don’t get me wrong, being diversified is key and long term low risk investments is probably a good thing to have in your portfolio, but if you open your eyes and your ears, you will find incredibly deals everywhere and to be quite frank, its exactly that way in real estate today.

Happy bargain hunting!