Consumer Confidence and Real Estate

Real estate sales have always tied closely to the index of consumer confidence.  Buyers' attitudes toward spending in general matter as much as interest rates to our level of sales.  The index has been going up most of the time over the past couple of years, rising even before we noticed an uptick.

Now, although the real estate market is much improved, the consumer confidence index is wobbling.  The past couple of months have seen declines, and, although we aren't seeing its effects directly, we know that the market recovery has always been shaky.  Every change in the stock market or mortgage policy makes us nervous.  We cannot count yet on the rising tide to carry us back to a strong sales climate.

We certainly can keep our fingers crossed that the recent dip is just that--a dip.  Also, it seems as though our improvement has come disproportionately from first-time buyers, who might be less inclined by age (they can't remember past downturns), life status (they are in the peak years of household formation), and risk profile (they tend to be less conservative), to worry quite as much about statistics.  Let's hope so.

Urban Specialists

Bidding Wars in Phoenix

Everyone knows that certain parts of the country--the ones that were growing quickly--took the biggest hit in the recent downturn.  Arizona and Nevada, along with Florida, are always mentioned as places with thousands of homes for sale at drastically reduced prices.  Now, things are changing, even in those states.  Today's New York Times has an article about the return of bidding wars to Phoenix.  The story points out that this is not necessarily because prices would have risen on their own, but because the supply is finally drying up, and there is more demand for what's left.  That sounds like a normal explanation of supply and demand to me!

Prices in high-end neighborhoods in and around Phoenix are still dropping, but many of the foreclosures in harder-hit areas have moved through the system, leaving homebuyers with little to choose from.  Even new construction, which is finally picking up, cannot keep up with the pace of demand.  One suburban home, a foreclosed property, had 84 offers before the bank closed off further ones.  This illustrates how a glut of short sales and foreclosures can hold down prices, and what can happen when the flow of such properties ends.  

Women's Pay

There is a very interesting article in this morning's New York Times about the slowing of equal pay for women in the work force.  The gap between men's pay and women's decreased steadily for several decades, but has now stopped, as has the entrance of more women into the workforce.  There are many reasons for the persistent discrepancy, with about 9%, according to one study, being due to discrimination.

It's different in real estate.  We're the original "equal pay for equal work" profession.  Even when women were discriminated against in sales situations, we still paid the same amount to women for the sales they had. It may be surprising to some to know that women were once the minority in the real estate agent pool, because that dynamic has shifted completely.  In fact, one of the major factors in that shift is the fact that women could go into real estate without having to work next to a man who was getting paid more for the same work.  In addition, child care, which was cited in today's article as still being the cause of some of the remaining pay differential, is less of an issue in real estate, where the hours and days are flexible.

There is a downside to real estate pay, of course.  You only get paid when something sells or leases.  Agents receive a commission at the closing or signing, and a 1099 at the end of the year, so they are responsible for many of their own expenses and taxes.  We "eat what we kill", from a compensation point of view, so not everyone can afford to enter this field, because you have to spend money while you are getting up to speed.  But it's nice to know that, when you do succeed, you won't be dependent upon someone else to decide what you will earn.  When you combine that with the flexibility, variety, and the satisfaction of being your own boss, we expect to see a lot more younger people--both men and women--turn to real estate as a career.

What is Staging, and Why Do We Do It?

Most people do not have the ability to look at a piece of property and imagine what it would look like with different furniture, or reconfigured walls, or even simply cleaned up.  Many of them end up not buying places that would be exactly to their liking without wallpaper, or with hardwood floors.  That's how there came to be a business called "staging".

Stagers come in and work with owners to "de-clutter" rooms and rearrange furniture, as well as make cosmetic changes and accessorize the space.  Since appearance can make a big difference in the offer a buyer makes, the cost of staging is often well worth it.  When you've lived or worked somewhere a long time, you can reach the point where you don't even see the flaws in a building.  It can take an outside, objective eye to point them out and mitigate them.  Stagers sometimes even lend furniture or "props" that will enable buyers to imagine the room after redecoration, or that will make a space seem less personal and therefore more able to be decorated to one's own taste.  

Real estate agents, who have often looked at thousands of homes over the years, can be effective in recommending changes, additions, or deletions to rooms.  However, when a great deal needs to be done, or when expert help is required, a stager can be just the ticket to a faster, better offer.