–from San Diego’s premier luxury real estate broker, who also spends a lot of time in the trenches:
Bob Dyson, Broker-Owner of Villa Sotheby’s International Realty in San Diego and Dyson & Dyson Sotheby’s International Realty in the desert. Bob speaks with the voice of experience, and has never been one to mince words.
And Dyson’s most recent column, sent via email this morning, is no exception.
Insight from a Real Estate Insider
CURRENT REAL ESTATE MARKET CONDITIONS
by Bob Dyson
I have been asked again to render an opinion on current real estate market conditions as a lot has changed since our last forecast dated March 27th, 2008.
Over the past few months I have been in most of our Southern California offices on a weekly basis working with individual groups of agents, discussing the market from their perspective and experimenting with new and innovative ways to define and approach this “moving target market”.
In addition, I personally have been “in the trench” in the development business in San Diego and Riverside Counties and the San Diego real estate sales and listing market working directly with Sellers and Buyers and gathering my own opinion of the market.
AGENTS:
Our focus, as an industry, has (for the most part) been spent on satisfying our selling clients or finding the traditional buyers of real estate….
We have been advertising to satisfy sellers (in general) as well as attempting to promote ourselves as professional agents in our communities.
We have been placating many people who just do not understand that this market has changed dramatically and that property values are being affected on a daily basis by many external forces beyond our control.
This market cries out for innovation, a different focus and a clearly defined direction of effort.
SELLERS OF REAL ESTATE:
I divide these people in to six categories:
1. Sellers that are financially upside down as to the values of their property vs. their loan balances.
2. Those that are on the market with equity and do not have a strong desire to move.
3. Bulk Sale Sellers (Hedge Funds as they call themselves)
4. Clients that are on the market, have equity and a strong desire and need to move.
5. Those that are bank owned.
6. High End Sellers
How you invest your time, as an agent, in these 6 categories tells you who is making a living in today’s market.
Many of us have spent way too much time in categories one, two and three. As agents, all we have to sell is our time and wisdom of the market. To invest it incorrectly is not our highest and best use of time and energy, plus, it is very stressful.
People in these first 3 categories have another agenda, foreign from what we have been used to.
If they are threatened with losing their home or a changing lifestyle they react differently and often don’t disclose their real concerns and agendas.
Category three clients (Bulk Buyers) have wasted so much time of agents on the bet that the agent will be “Written in” their transactions and that there is a big commission ahead that will solve everything only to find out that the client had no intention of paying you a big “Traditional” fee for your services in a bulk sale. Most of them are not pulling the trigger anyway.
Conversely, I have spent a lot of time with smiling agents who are working the “Strong Desire Client” and focusing on where and why they are moving and assisting them in getting to that goal while understanding proper pricing of their current home to get to that goal.
Agents working the foreclosure listing markets and being very successful and consistent.
This market will be with us for years to come.
Most of these “Bank” Sellers lower their property prices weekly until the properties sell….best kind of seller with whom to have a relationship.
I am also working with many agents specializing in the high end…the least effected market. These agents are smart and are working the needs of their clients.
THE REAL ESTATE BUYING PUBLIC:
Where are the buyers????…Oh, they are out there….in droves…good credit…lots of cash and ready to take advantage of these market conditions.
For the past several months buyers and investors have been looking for the bottom. Although none of us can predict exactly when this market begins to shift to a demand market we can certainly agree that we are somewhere near the bottom in many real estate market places.
The lending market, in its own way, is making corrections and write-offs necessary to return to traditional lending with some assistance from the federal government.
One of our biggest problems is that Wall Streets continued denial that we are in a recession along with their amazing ability to mask huge financial issues on a daily basis.
Wall Street, as well as the Feds, continues to work off of 60 and 90 day old data as exampled by the most recent report of unemployment and a drop of some 400 points in the DOW the week of June 7th. Those were based on April numbers!!!!
In addition, the Fed continues to amend reports downward at a later date as if to diminish the one time sting of a negative announcement. On Wall Street, adjustments in reporting are never given the same impact as initial reports…. that’s why they “Estimate” and then tell us the truth later.
Because of these deceptive practices I predict one more big drop in the stock market…somewhere in the 2000-point range. This is necessary, in my opinion, to re focus investors on both the historic overall stability of real estate and the unbelievable opportunities in today’s market.
In a recent discussion with Roger Hedgecock (San Diego Talk Radio Host) and New York Mike (Talk Show Host and Business Owner of San Diego Harley Davidson) I am amazed at how excited they are about this market.
They believe that “Even if we are not at the bottom and if you intend to hold for at least two years, a property that you buy at great value today you will hit an absolute homerun.”
This type of excitement will “make a market” and before you know it ….many people will return to real estate with an entirely different mission and attitude.
THE RESULT OF ALL THIS:
1. Reduced agent and broker overhead will quickly lead to early profits and future investment capital.
2. Focused attention on who you spend your time with will reward you well.
3. Prepare for an onslaught of real estate investors followed by first time homebuyers and second homebuyers never before seen in the market.
I don’t think any of us can comprehend the pent up demand waiting for the return of measurable and stable real estate markets and lending practices. The best times are ahead for those that really focus in the right areas of our business.
And That’s How I See It
Bob Dyson
(San Diego luxury real estate broker)