Now, don’t get me wrong. I found the latest installment on local housing trends in the San Diego Union Tribune yesterday morning more balanced and a refreshing change from the doom and gloom we have become accustomed to. But, the article by staff writer Roger Showley didn’t disappoint in the soundbite category.
For those who took the time to actually read the piece, it said exactly what Steve said here on Thursday; we are seeing signs that buyers are starting to move off the sidelines, perceiving an attractive balance of favorable interest rates and lower pricing. However, the title of the article is inconsistent with the citations that follow and misleading to anyone who chose not to investigate further.
Slide in housing prices halts, and buyers reduce inventory
Strictly speaking, the slide in housing prices did halt. The composite numbers showed an October increase in average sale price of $9,000 to $485,000. This much was trumpeted in the first sentence of the article. Buried on page 4, however, was the statistic for resale detached homes, which dropped $10,000 in October to a median of $535,000. Another little factor that will never show in the numbers is that the sales prices of today versus six months or a year ago invariably include seller concessions, and often some whoppers. Let’s not forget that that composite price increase of $9,000 includes all of the seller paid closing costs, seller mortgage rate buy-downs, and builder prize packages that are so common today. Mr. Showley speaks to this (see buried on page 4), when he cites the incentive by one home builder of a $10,000 vacation voucher offered to buyers of some new homes.
Buyers reduce inventory? This statement was backed up by statistics that show the percent increase in unsold inventory was the smallest year-over-year increase since July 2004, with the highest inventory in eight years reported in August of this year. The implication is that the reduction in the increase is attributable to buyers swooping up homes at a greater pace. But are they really? Based on statistics on resale single-family detached homes as reported in the Sandicor Multiple Listing Service, our reduced inventory may be in fact due to discretionary sellers pulling their homes from the market, as the number of monthly homes sold continues to drop.
My point here is not to challenge the overall tone of the article, which I find on-target. Things are settling down. My beef is that this article, like the massive number of articles that preceded it suggesting that our local real estate market was dropping like a cannon ball, failed to present a clear picture to the many who chose not to move past the headline.
And finally, Mr. Showley had to insert this little dig in a stand-alone paragraph:
But agents, brokers, lenders and all the other players in the housing industry shouldn’t uncork the champagne to toast rising prices and commissions just yet…
Say what? Three columns into my reading, I found this statement entirely out of context and wholly irrelevant to the discussion on market trends. What do agents’ earnings have to do with the price of pork bellies in Iowa? Mr. Showley has a history of harping on agent commissions to the extent that it begins to sound bitter. Agent is seemingly considered a dirty word in his vocabulary and, for the life of me, I can not figure out why this statement found a place in this article. Mr. Showley, I am going to give you the benefit of the doubt and assume that no malice was intended with this random, off subject remark. For the record, however, let me assure you that I do not pop the bubbly with every positive DataQuick report. All things being equal, my income would certainly be greater when prices increase. But all things are never equal. Many other factors come into play, none of which are constants (commission rates and marketing costs to name two). Good agents will continue to make a living in a down market as they did in the frenzied market; they were here yesterday and they will be here tomorrow, and at least my livelihood is not dependent on double-digit home appreciation but on my ability to provide professional, superior service to my clients. People will need to or choose to buy and sell in any market for a variety of reasons. Part-time, less experienced, less motivated agents may suffer in a down cycle, but that is perhaps a topic for another piece. And, by the way, I do take offense each time you raise the subject of the living that I derive from my chosen profession as if it were dirty, laundered money. I and those “other players in the industry” contribute heavily to this economy, provide a service for which a demand exists, and work hard for those we serve.