Watching for the real estate market recovery is like chasing a mirage on the desert. You know that national economist are saying that the economy is improving. Unemployment rates are slowly dropping. Activity is increasing. But just when you think you can touch the improving real estate market it disappears before your eyes. This housing recession has gone on for so long you begin to wonder, "Is this the new normal?"
I saw the downturn begin in August of 2006. I was working alot in Fairview Plantation where buyers were coming through daily from all over the country, and my resale business was robust. July 2006 was the best month for closings that I had ever experienced, and the future "was so bright I had to wear shades."
Then in August something happened. Activity greatly diminished, as if cut off by an invisible faucet. There were talks of problems in California, Arizona and Florida, but no one seemed to think that our market was subject to the problems of these out of control appreciating markets. Every drywall subcontractor had turned into a builder, and new construction was continuing at a furious pace. Banks were giving out money like candy on Halloween. I started to watch closely the existing inventories of active listings, and they increased by over 5,000 in just three months.
The ugly truths of the market were beginning to sink in with the realtors and builders a year later in 2007 and early 2008. Then the hammer fell, almost taking out the entire banking system with it in the fall of 2008.
Since then we have languished in a market that has seen an end to speculative construction except for the lower end of the market. Excessively high inventories are chasing a small pool of buyers. Foreclosures have brought down values, and the process of closing a sale can feel like a root canal.
From time to time we see an improvement in sale statistics for a given month, but the numbers are based on sales that are at very low levels when compared to the excellent market of the past. A month of increase will often be followed by a month of declining comparative sales.
So is there "a new normal in real estate?" Probably not, but turning around this market is like turning around a cruse ship; it is going to take a long time.
I saw the downturn begin in August of 2006. I was working alot in Fairview Plantation where buyers were coming through daily from all over the country, and my resale business was robust. July 2006 was the best month for closings that I had ever experienced, and the future "was so bright I had to wear shades."
Then in August something happened. Activity greatly diminished, as if cut off by an invisible faucet. There were talks of problems in California, Arizona and Florida, but no one seemed to think that our market was subject to the problems of these out of control appreciating markets. Every drywall subcontractor had turned into a builder, and new construction was continuing at a furious pace. Banks were giving out money like candy on Halloween. I started to watch closely the existing inventories of active listings, and they increased by over 5,000 in just three months.
The ugly truths of the market were beginning to sink in with the realtors and builders a year later in 2007 and early 2008. Then the hammer fell, almost taking out the entire banking system with it in the fall of 2008.
Since then we have languished in a market that has seen an end to speculative construction except for the lower end of the market. Excessively high inventories are chasing a small pool of buyers. Foreclosures have brought down values, and the process of closing a sale can feel like a root canal.
From time to time we see an improvement in sale statistics for a given month, but the numbers are based on sales that are at very low levels when compared to the excellent market of the past. A month of increase will often be followed by a month of declining comparative sales.
So is there "a new normal in real estate?" Probably not, but turning around this market is like turning around a cruse ship; it is going to take a long time.
There have always been up and down cycles in real estate. I started my real estate career in the early 80's when stagflation and high interest rates depressed the markets. 1985 and 1986 were recovery years, and then the tax law changes started another downturn that persisted for four years and brought down the savings and loan institutions with it.
There have been other brief downturn in the 90's like the dot-com bubble and 2001 the 9/11 crisis, but none of these cycles have had the impact of this current housing recession.
I personally plan to continue to work productively in my real estate profession well after most people's retirement age. I enjoy my career and the stimulation it provides. I can only hope that I will work and live long enough to see a return to the good times again.
