Waynes Word ~ Winter 2008

Winter in Earnest, Early 2008

Last year during the first half of January (it’s hard to remember, but true), the grass was still green under a thin layer of frost, and the first significant snow did not fall until Martin Luther King Day. This season, by the time New Years Day rolled around, we had had 5 or 6 serious “snowfall events” already in upstate New York, and those of us born before the phrase “global warming” was in vogue are having flashbacks to the ten foot deep snowbanks of our youth, and the tunnels we used to dig, and the games of King of the Mountain we would play—heaving each other headfirst off the snowplow-piled peaks. I’m glad my kids and their cousins and friends will get to experience a winter like this, to create deep white memories of their own.

I’m a big Weather Channel/local weatherman fan, and note that on the day I write this, the record low for this date is twenty below zero in the Capital District, the year I was a freshman in high school. I must have been on my way to riding a long yellow bus like Daryn does now, trudging to the bus stop in the half-dark of a belated dawn, my breath making opaque clouds as I shivered forward. It sure didn’t seem like the polar bears were in any danger of having their ice floes melting from underneath them back then. We were probably more worried about a perpetual Ice Age at that point, and wondering if there would BE a spring three months hence. All I cared about was whether the gym
would have enough heat in it so that hoop practice would still be held at the end of the day, and it always was.

But warmth and cold and comfort, I now realize, are all relative.
My wife likes to turn down the heat to 62 degrees at night, and when I get moving before 6 a.m., the house seems chilly. But if I then proceed to go outside to shovel some snow or walk out back to feed the birds and get my blood pumping a little, the house seems overly warm when I return inside. Skiers who dress for the elements will tell you the same thing—most indoor temps seem way too high to them when they come in from the cold, no doubt.

The message? I guess I am reminding myself to get more active early every day. When you sit in an easy chair listening to the forecaster discuss sub-zero wind chills coming your way, even the phrase “wind chill” will make you shudder. But once you’re out the door and dressed for the weather, it’s kind of refreshing to have that fresh northern breeze snapping at your collar and bringing the blood to your exposed cheeks. It’s just a matter of being ready for it, and not remaining passive and fearful of the extremes.

Real Estate & Economic Corrolary #1…

In early 2008, many people seem ruled by their fears, much of it media-induced. Substitute the word recession for global warming or ice age, and see how it is used as a spring-board for panicking the masses. If all you did was read the news, scan the online comments on the news, or listen to “news-radio” it would drive you mad—all the negativity, slander, and nasty gossip about the way things are. I really crave staying above the fray.I have discovered there exists a serene stratosphere in which a lot of self-secure people live—people who go about their lives independently of the turbid verbal breezes of the day—and I am fortunate enough to have a host of clients who have taught me something on this subject. They go about their business in a mostly unflappable manner, and are not ruled by fear.

The reading I’ve done in the past year has helped me with this—
great teachers, writers, and texts that insist on asserting that the world is meant to be a joyful place, not a swamp of misery.

The Universe is Infinitely Abundant… The Lord will provide…
Love and Approve of Yourself… Give Thanks and Blessings for What You Have, and For What is Coming Your Way… To some cynics, these affirmations seem woefully naïve or simplistic, and I must admit I often fall into that sarcastic, self-doubting mode of thinking myself. But there are plenty of positive message-bearers out there these days—both religious and secular, saying largely the same thing—who can help correct our personal programming, and help us overcome, counteract, or just tune out the constant stream of negative buzz in the electronic airwaves of the world and local news.

         Of course if all you care about is how the stock markets are doing,
or what your return-on-investment is, then metaphysical well-being is not a huge concern of yours, and there will be plenty of reason to worry and indulge your short-term fears.

TELEVISION NEWS FUELS THE FEARS…

On the day after M.L. King’s Holiday was celebrated, when the Fed announced a .75% cut in the discount rate to stave off a stock market debacle simultaneously with a pre-scheduled official press announcement regarding the nation’s economic outlook, I happened to be home watching the early morning business channels as they reacted breathlessly to the news and analyzed what it would all mean. I found it both fascinating and ludicrous to see Treasury Secretary Paulson sounding a bit like a certain porcine cartoon character as he sweated and squirmed discussing President Bush’s “stimulus package” while he stammered with a straight face: “Th-th-th-That should be a CONFIDENCE BUILDER!”

         There were a host of interesting and sometimes contradictory phrases being thrown around which tested my memory of 11th grade Economics:
                  “Keynesian stimulus is being applied…”
                 “Monetary policy is on full alert.”
                  “Risk is re-pricing itself across markets.”
                  “There could be a deepening of the housing contraction…”
                  “Appreciable downside risks to growth remain…”

I was trying to decipher what all this techno-babble would do to
the upstate New York real estate market, which is all I really cared about at the moment. The one truly gloomy statistic I gleaned from all the talk that morning was that 2007 had shown “an average 7% drop in national real estate prices…” which translated to the worst such drop “since the 1930’s (!)”

Even though I had admittedly concurred that 2007 had been a rough year in a lot of ways, that statement was still something of a mind-blower. But after a brief moment of imagining the wind-swept and decrepit picture of Depression-era mid-America Woody Guthrie used to sing about, I saw the redeeming outlook of the electronic ticker across the bottom of the screen, saying:

“NABE SURVEY REPORTS ITS MEMBERS ARE GLOOMY ABOUT U.S. ECONOMIC PROSPECTS, BUT REMAIN UPBEAT ABOUT THEIR OWN…”

Well, there you go, I thought. What’s good enough for the National Association of Business Executives is good enough for ME, too,
in my humble real estate career. Survival comes down to microeconomics.

…VERSUS THE OPTIMISTIC ATTITUDE OF LOCAL NEWSPAPER REPORTING…

In early January both Saratoga-based newspapers saw fit to publish “competing” stories concerning how the local market was faring, relative to national trends, to counter the horror stories being related in places like AOL.News links and Nightly TV News.

The weekly paper, which permits and purveys nothing but cheerful, folksy, “everything’s swell!” kind of writing anyway, was predictable. Interviewing two of its key advertisers, they came up with insightful commentary on how Saratoga’s prices keep rising (?!) despite the nosedive of the national barometer. (This despite the relative glut of properties on the market, whose owners are being encouraged to reduce…) The daily paper also enlisted two prominent real estate agents, from the bigger companies, to assess the situation, and one of them breathlessly related how busy she was, even “showing houses on New Year’s Day…” The other one, a 3-decade veteran of the business whom I respect, indicated that in her long tenure in the business, prices in Saratoga has either “gone up, or stayed flat” for different periods, but had never gone down. Hmmm. What about those homes which were priced speculatively or in an overly-ambitious manner to begin with? She also insisted on the sage cliché that property must be “priced right” to sell—which begs the question—why have somelistings lingered on the market for interminable periods? To this agent’s credit, she did speak of statistics proving that properties were on the market these days a LOT longer before selling than they used to be a few years back. But “Days-on-Market” is one of those stats that is used selectively by Realtors to prepare Sellers for the waiting game in a market like this. The trouble is, only properties that actually SELL are included in the DOM category—which does not take into account all those properties that DO NOT sell the first or maybe even second time they are listed. No one wants to talk about the fact that some homes are being marketed for the second, third, or fourth time in a market like this, or that some Realtors are taking year-long listings, knowing that a home may take longer to sell than a pregnancy does to come to fruition.

What did these “print reporters” expect a Realtor worth his-or-her salt to say?? No one wants to be the first—or only one-- to admit that the market is difficult, credit is tightening, that buyers are slow to act and somewhat cautious. Of course no agent wants to discourage anyone from listing their home or trying to buy one—it would be self-defeating to offer any discouraging sentiments. But the consuming public should know the real story about the current market. Prices in Saratoga Springs are NOT going sky-high when everything else is stagnant: it’s just foolish to give people that impression. No one agent or company is immune to the difficulties of the current climate, though there ARE individual properties which might defy the odds and sell quickly.

In a Greenfield neighborhood there is a home I had listed which was purchased at the height of the market in 2005, sold to the owner by another out-of-town agent, not me. When he got transferred, he attempted a sale at a higher price than he paid, and though the home was in great, almost new condition, the showings were few and far between. When the owner decided to take it off the market (WITHDRAWN, not yet EXPIRED in the MLS), he was sent a Promotional Postcard (in violation of MLS ethics) by one of the more cocky agents in upstate New York with the headline: THERE’S NO EXCUSE! This agent then proceeded to outline his various accomplishments in the business, which were many. But what he failed to point out was that it was common knowledge that this agent had had a home by the same builder listed ON THE SAME STREET, FOR LESS MONEY, FOR ALMOST TWO YEARS RUNNING, WHICH HAD NOT SOLD YET! He was right about one thing, which is that There Is No Excuse… for hubris (look it up, dude) or over-confidence, in this market. Agents who exhibit shiny smiles and puffed-up promo material should be regarded as suspiciously as politicians, as my friendly client pointed out to me. The more listings such egos acquire, the more people are going to be angry with them over time if and when they fail to gain the results that were promised.

The true answer to “How’s the market doing?” can only be answered on a case-by-case basis, and the answer is usually somewhere in between the stated extremes: “IT’S GREAT!” and/or “IT’S VERY DIFFICULT.”

BUYERS, ON THE OTHER HAND, WANT BARGAINS

My area of expertise has always been in working on the side of the Buyers, and I have many who believe in me, a backlog of clients I’ve built up over time. I noted there is a lawsuit pending in California now in which a couple is suing their Buyer’s agent—a RE/MAX representative, as it turns out-- over a sale that occurred two or three years ago. They allege that he convinced them to buy a home at a price that was roughly $150,000. higher than market value for the neighborhood they were in, and he counseled them that “it was a good buy” at the time. Now, without getting into the merits and details of their claim, I can honestly look back and recall that I probably “lost” roughly 5 or 6 deals each year in the hottest part of the market between 2003 and 2005 because I was intent on erring on the side of caution when my own Buyers were faced with competing offers and potential bidding wars. I frequently (and sometimes reluctantly) had to tell my Buyers that I was more interested in their long-term trust than in a short-term sale, if I thought the price on the home they were considering was escalating to an unreasonable point.

One reason was that I often took into account how difficult it would be to attempt to sell the home in question for MORE than they had paid, if the market ever dipped, which it has. I also relied on sales comps for each neighborhood or general area being considered, so that my clients wouldn’t ever be setting all-time high benchmarks with their purchase. A market analysis is just as important for a buyer as a seller, and should be standard procedure for a good Buyer’s agent.

WHY PEOPLE KEEP MOVING HERE…

Fortunately, one thing is still true about the uniqueness of our market as a whole. The influx of new residents continues in our direction. Without that population flow coming our way, our market might be in worse shape than it is. Although local people moving up or down in home size, or acquiring investment properties or land, will always be the core of our business, it is the “new blood” which provides the chance for serendipitous growth.

Lately, the Buyers I’ve attracted from out-of-town places have several different themes which recur in their rationale for house-hunting at this time:

*They grew up here, or went to college here, recalling it fondly;
*They have family in the area, and want to be closer to them;
*They have a prospective job in the area they are pursuing;
*The economy here is better than where they were before;
*The quality of life is better here (healthier, less crime, more greenery);
*It seems a better area to raise families than the more congested cities;
*It’s closer to recreation: Adirondack Mountains, & Vermont skiing,
    Lake George or other northern lakes,
  The Saratoga Performing Arts Center,
    The Saratoga Racetrack,
    Several great golf courses,
    Saratoga’s downtown scene & arts culture.

Even for people moving within 20, 30, or 40 miles of Saratoga,
I hear those rationales given. What is pleasantly surprising to me is that
many people are choosing to RETIRE to this area, instead of heading to more traditional southern climates. Many people miss the snow, and the experience of the four seasons, and as I document on these pages, the weather in these parts is endlessly variable, and never boring.

On the other hand, the cold weather of late has inhibited some people from wanting to look at properties, and any temperatures above freezing will be welcome from this point on. Many of those who proclaim to want to buy property in the Saratoga County or Capital District area may still be waiting for the first harbingers of spring to do so.

IF THE PHONE DON’T RING…
NOT ALWAYS A BAD THING…

One of the interesting things about how the business has changed in recent years is that the bulk of the incoming business is now definitely Internet-based, and not so much a result of print advertising. In my own experience, I would say that 80% of the inquiries arrive via e-mail, through the various marketing means available there. Those agents and companies who are sitting by the office phones waiting for the customer call-ins these days may be missing the boat. I spend almost half my day responding to emails and sending out information to prospective clients via the silent, non-intrusive method—from one thinking human’s computer to another.

For those agents who still rely on cold-calling—how much longer do you think that will be tolerated? I know that in our household, even the kids have learned to scorn “phone solicitors” so I would have to think that these impersonal incursions into home- and family-life will be curbed in the future. After years of procrastinating, I plan to register for the Do-Not-Call List myself this very week.

So as the great ole country song says: If your phone don’t ring, it’s me… I will call you BACK, of course, if requested, but I won’t be the one to call you FIRST. If you want me, or any information I can access and provide, e-mail wayne@waynesword.com and you will be pleasantly surprised at the comprehensive response you receive. But if old-fashioned verbal interchange is what you’re after—straight talk with no real estate jive—you can still call me as well. After all, the human voice is still irreplaceable as a manner of reading someone’s market intelligence and level of rapport.

Here’s hoping to hear from you soon, one way or another.

Till my next update, take care…

Sunday, January 27, 2008