Healthy Real Estate Markets and a Passion for Peace

When I am most at peace with the business of real estate, my approach to the circumstances of the day is guided by writings of people such as Thomas Merton and less by the ways of business gurus. For a few years I've kept my eyes open for Merton's Passion for Peace, Reflections on War and Nonviolence, copyright 1995.  Last week the book finally found me. It was out of place on a shelf (probably discarded by a person when something more intriguing found them) and I scooped it up. Compiled from Cold War year writings by Merton, the peace reflections are relevant to me for processing the conflicts of today in government, politics, my business, and my daily interactions. 

Memorial Day weekend is an appropriate time to dedicate myself to practicing principals of peace and looking for areas in my business where I will be aware to apply healthy actions. I can see that some of the changes are well underway in my life and I know those changes have made me a more useful person to the consumers who trust me. Areas I am paying attention to:

• Results: Sales by the numbers are detractors. To determine anything to be Good or Bad by the volume of business I do would be an indicator that my thinking is stinking. Fixation on results by the numbers leads to coercion.
• Coercion: Affordability Indexes are tools of coercion when applied to home ownership for me. I am not licensed to sell investments and when I reduce a home ownership idea as a financially viable alternative I have crossed into an area out of my expertise. A tool in the hands of an unqualified person may be a damaging weapon.
• Calculations: Plans and schemes to anticipate a person's reaction are tools to put me in charge of manipulating situations to my benefit. 
• Patience: Allowing people to make decisions on their own time, based on their own values, and accepting the decision keeps me at peace and puts peace into the lives of other people. 

I know I do not have a monopoly on peaceful business practices so when I say I consider this real estate economy to be healthy, it's not just from my perspective. The level of activity is allowing people room to think, time to rest, and opportunities to consider other's points of view. A frantic pace is not either just good or just bad, but a pace of patience and understanding is peaceful. 

Wishing you a peaceful Memorial Day, with gratitude to all who gave their lives so that I may live another day.

Blackhawk---Looking as Strong as it Once Was

There was a time when it seemed any home in Blackhawk had a buyer as soon as the house hit the market. For us Realtors who provided relocation services to Madison area employers, getting a home for your client was a race to the finish. All that seemed to change a few years ago when the prices peaked at the same time buyers vanished. In 2009-10 we were helping people rent Blackhawk homes. We saw the activity begin to pick up late last year and decisions to buy are turning into commitments this spring.

Fifteen homes will close between the middle of December and the end of July it appears. There have been six closings already and another nine homes have offers pending. That's a big load of the higher end inventory in Middleton and good news for people who have yet to put their home on the market. I don't think all of the buyers have made commitments by any means. (But be cautious--some of the buyers are committed to tremendous value and they aren't about to buy above the bottom price---).

The only thing stopping home owners from selling is--well, the home owner themselves. On average, owners are selling for 10% less than their initial asking price and they are patient. About 180 days (5 months) go by before the owners get their price in line with the expectations of the buyers. After that, the owners are negotitating acceptable offers in less than 50 days. Sales prices are 96% of last asking prices and that's pretty fine even in the sizzling market of 2005.

If you're moving from Blackhawk, be aware your buyer can not be fooled. They see everything from Fitchburg to Verona, to SW Madison, to west Dane, to Waunakee. They know the prices, the values, and they are inspired to get a price they can write home about. Buyers, are wise to know that owners in Blackhawk know what you know too--there is only one Blackhawk. Price of admission is still going to be a little more than you might have expected.

April Accepted Offer Numbers Will Be Up

April showers didn't stop home buyers from getting out and making offers. The activity was as brisk as the temperatures. I expect in July we will see that May and June were aggressive closing months. What happened in April has everything to do with people grasping reality instead of straws.

First time home buyers are reaping the benefits of resisting the 2010 tax temptation...I mean break. Instead of competing with other government subsidized consumers for over priced homes, those who waited have accepted offers on homes priced up to 40% below what they would have paid last spring. Owners are conceding to the facts of the market and letting go of hope for prices that can't be substantiated. Foreclosed homes are trickling on to the market in ones and twos at unusually low prices and the banks are creating competition which otherwise wouldn't exist with a strategy worth noting. In one neighborhood of homes built in 2004 and '05, one home came on the market at $183,000 and sold to the best offer at $200,000; a great price for a 4 bedroom 6 year old home. As soon as that one closed, the bank released another that had sold new for $220,000. The asking price of $174,000 drew at least six offers. I'm guessing that one will close around $195,000--I'll be curious to see.

In the higher price points owners are seeing plenty of qualified buyers coming to town. If we didn't know better we'd think the relocating buyers meet at the Dane County Airport and plan their strategy. Even multiple offers aren't driving prices to the upper limits and owners are placing value on such novel ideas as cash and terms and closing dates.

A healthy market means the local buyer isn't at a big disadvantage to the transferee and they have a chance to negotiate an offer without promising to take a bridge loan until their home sells. Offers subject to sale aren't as taboo today; in fact if you look at in a fishing analogy, an offer on your house subject to sale of another house is like having two lines in the water--if you get a fish on either line you have a chance to catch the one more you need for a limit.

Last spring the activity was 60% below $250,000. This year we'll see the market represented in a more healthy way with sales from top to bottom. April sales might still pale, but nothing is ever either just good or bad. How about we look at things as healthy or unhealthy? The health of the consumer continues to grow as everyone gains insight---knowledge of what is reality.