Are They Sure It's "A Good Time to Buy"?

We've been hearing a constant stream of propoganda from the NAR, NAHB and unscrupulous agents that it's a good time to buy. I submit it is time for them to put their money where their mouths are.

We've seen the ads in the paper and on TV and also heard them on the radio where those who benefit to profit from housing transactions are claiming it's "a good time to buy." You've seen me write about how absurd and unethical I believe their claims are, but yet the assault on our sensibilities continues. Go figure.

Clearly these salespeople must know something we don't. Maybe huge amounts of inventory, increasing defaults and foreclosures, historic credit-tightening and affordability actually don't matter and all those years of studying finance and economics have be, in fact, for naught. Apparently, these guys are on to some big secret that they aren't willing to articulate outright, but that feeds their certainty that real estate is still an excellent investment. But they aren't sharing, are they? Must be some kind of, ultra-pervasive, iron-clad non-disclosure agreement they all must have signed. It must be very frustrating to have this secret knowledge and not be able to share it with buyers.

I feel their pain. But I think I have come up with a way that they can convince us that is indeed a good time to buy; it's called a price guarantee and it works like this:

A buyer makes an offer that is accepted by the seller, the house goes through escrow and the buyer takes possession of the property. At the end of five years, the buyer is required to hire a professional appraiser who will determine the market value of the home. If the appraisal for the home comes in below the price the buyer paid, the agent/Realtor/clerk who sold the house would be required to reimburse the buyer for the difference. If the appraisal is above the sales price, the agent/Realtor/clerk who sold the house is off the hook and is under no further obligation.

Can you see the beauty of this? Realtors can now demonstrate their certitude that they believe it's a good time to buy by guaranteeing the price themselves! Now, the price guarantees would have to be collateralized in some way, preferably with some non-real estate asset; so, the NAR may have to place a few billion into a restricted use account to keep the RE clerks liquid. Of course, the clerks/NAR may want to spread the risk a little; so, maybe the could ping Lloyd's of London to see if they want to get in on the action. They're clever folks, they'll figure it out.

Now, it's going to take some time for this idea to spread, but I think if there's enough buyer demand for the program, it'll get legs. So, the next time you're looking at a house, ask the agent about a price guarantee. You will probably have to explain them, (clapping out the big words might help) but if you're patient, I am sure they will understand. Under the unlikely circumstance that they aren't willing to offer a price guarantee, ask them if they'd consider an offer of 20-25% under asking instead. It's got the same net-effect and doesn't have the burden of being a little difficult to understand.

I'm going to go try it out a couple of open houses today and encourage you to do the same.

Vivo los Osos!

Mission Viejo Breaks 1,000 Inventory Units

Congratulations to the newest member of the One Thousand Club, Mission Viejo!

According to ZIP Realty, Mission Viejo joined the infamous ranks of inventory-laden cities this morning at 1,007 units of inventory for sale. If you're shopping for a home in that city, be sure to whack an extra 10 or 15% off of your offer.

Mission Viejo sellers, gird your loins, you officially have lost ALL leverage in any price negotiations. Good luck.

Vivo los Osos!

OC Inventory Passes 18,000!

ZipRealty shows that there are more than 18,000 units for sale in OC.

We all have already heard that cities like Anaheim, Santa Ana and Irvine has more than 1,000 units for sale, but did you realize that there are other OC cities getting ready to join the 1,000 Club?

Leading the pack are Mission Viejo at 993 units and Huntington Beach at 930 units; that these cities will pass 1,000 units for sale this year, is a foregone conclusion.

At over 650 units for sale each, I would say that Garden Grove (732), Fullerton (681), Orange (753) and San Clemente (692) have a better than even money chance of passing 1,000 units this summer.

20,000+ units and unrestrained seller panic, here we come!

Everyone Selling a House in OC, Raise Their Hand!

According to ZIPRealty, the total number of properties for sale in Orange County is 17,779 which is already higher than the peak amount seen last year of 17,758. Not bad, considering it's only May16th and last year's peak happened at the end of August. Looks like it is going to be a long summer for sellers.

All of this is great news for buyers. Though it's still far from a good time to buy, things are lining up for some real bargains, maybe as early as next summer. Be patient, you will be rewarded.

Vivo los Osos!

A Modest Proposal for the NAR Marketing Team

This is one of my favorite posts from the past. I enjoyed writing it so much and the response to it was so positive, I thought I'd throw it up to the top of the list. If the NAHB keeps up with their nonsense, they may be next. Enjoy!

There I was, sitting on the couch, feet up on the ottoman, relaxing with a nice glass of single-malt, watching a little Letterman before bed and then it happened...a commercial from the NAR came on.

There were attractive families from an inclusive range of demographic groups, touring well-staged houses with up-beat music and some fairly good production values. The families all appeared happy and ready to sign on the dotted line for a home. The voice over for the ad among other things said that "When you have a family it is always a great time to buy", "prices are favorable" and "interest are at historic lows", but thankfully I'd only had the one Scotch and was able to resist the temptation to phone up the local 24-hour broker and place a bid on a home.

This bit of theatre was brought to us by the National Association of Realtors as part of their public awareness campaign titled: "Good Time to Buy." This multi-million dollar print, radio, outdoor, web and television campaign is designed to convince the public that buying now the smart thing to do. They even have banner ads for local agents to put on their sites, with my favorite banner being:


Now, don't get me wrong. I'd like to have a fence of my own some day, too. I'm not sure how proud I will be of my fence, but I think it were a good fence and it played nicely with the other neighborhood fences, I might be able to well up with pride like this fella in the ad. There's also a print version of the ad, that does a little better job of conveying the message, but only a little.

These ads are all target at we "fence-sitters" and are designed to compel us to join the fray and buy a fence (and possibly a home as well) of our own.

(Which I think raises a very important question. If we're fence-sitters, but we don't yet own our own fence, exactly whose fence is it that we're sitting on? Is it okay with that person that we sit on her fence? Is it considered a trespass to sit on another's fence? What if that fence borders a common area or is subject to an easement, are we okay then?)

The ads try to speak to the heart, playing on emotions, using messages and images of pride, choice and family security so we feel good about buying a home. They also address the head, telling us rates are low, prices are favorable (for whom, they don't say) and that there are a lot of choices (read: a lot inventory) so that buying at this point is the rational thing to do. But the ads fail on both counts and won't end up compelling a single person off the proverbial fence and into the real estate office.

It's not that we bubble-sitters don't understand all the social, emotional, status and (at some point in the future) economic benefits of home ownership--we do and we don't need to be sold on them and trying to do so is simply a waste of money. What they NAR needs to understand is that, while we appreciate the benefits of ownership, we aren't willing to pay today's price for those benefits. In other words, the cost/benefit ratio is out of whack and until it's corrected, we fence-sitters are not buying.

This may mean a redirection of their advertising dollar from the buyer to the seller.

I've heard many a realtor bemoan the fact that their sellers are unrealistic in their pricing expectations. Based on what I've seen on the market and the lengthening DOM for properties, I have every reason to believe that the Realtors are right. If the NAR were to spend as much time, energy and money educating owners on pricing and the benefits of pricing their homes correctly as they did reselling buyers on home ownership benefits, I think they could really impact sales volumes. With the price benefits ratio in alignment with buyer's expectations, home would start to sell and the commissions would start rolling in once again.

Now, I realize that our friends at the NAR have thrown down a lot of scratch on the "Good Time to Buy" campaign and that they might be a little tapped at the moment. So being the populist humanitarian that I am (we all need to make a living, right?), I thought I'd come up with some ideas, at no charge, to get things rolling. Below you will find some print ad examples for my pro bono seller campaign, "Discuss it with a Realtor."

This first piece is directed at a new seller (click on it for a larger image):

While this piece is directed toward price-stubborn sellers:


And this last piece is to motivate sellers in distress:

I'd like to invite our friends at the NAR to use these pieces, in any way they see fit, to help bring some life back to the real estate market. As I said before, I'm not looking for any payment for these ideas, I'm just trying to do my part.

Sorry So Long

Dear Readers,

As I write this from Terminal 'K' at Chicago Ohare Airport, I want to apologize for the long absence, but the day job has me on planes, trains and automobiles frequently. With that, and trying to be a good dad and husband and the desire to have a modicum of a social life, I just haven't had the time post lately. Hopefully soon I will find the time to catch up on the market and post a little analysis and commentary.

I have to be honest as well that I've lost a little of the steam behind my motivations for posting. You see, I started this blog to debunk the idea that housing prices were going to continue to rise in LA/OC. Now that I consider it a foregone conclusion that prices are set to drop and the bulls have been acting more like geldings, some of the passion's gone. But don't lose heart. I am certain that some some bovine idiot will say something stupid in the days to come and that will stoke my ire, causing me to make the time for the odd posting now and again.

In the mean time, keep the faith, offer bulls percussive maintenance when they need it and for crying out loud, wear sunscreen.