Silver Lining

Often it's hard to be one of the only places in the country where appreciation is lagging, and more people move out of, rather than into, our state.  However, there is one big advantage to having the rest of the country on a different time schedule for the real estate cycle:  A rising tide lifts all boats.

For several years following the downturn ten years ago, people moving for jobs had trouble buying in the new locations, because they couldn't sell their homes in the places they were leaving.  Often they ended up renting when they moved here, in part for that reason, and in part to make sure that their jobs here worked out.  In a way, the whole national market got stuck, since people were renting out their old homes, and therefore renting their new ones by necessity.  In fact, our relocation department found that the old numbers just switched; instead of 80% of transferees buying, and 20% renting, we went to 80% renting and 20% buying.  That was obviously not good for absorption in our market area of Greater New Haven.

Now, however, transferees coming in are mostly coming from places with markets that are fully recovered--in some cases, declines from the post-recession peak have already occurred.  Those     people are coming with equity to put into homes here, and a positive attitude acquired from their latest real estate transaction.  While it doesn't mean that they will overpay here, and that values are still well below their peaks in many towns and neighborhoods, it does mean that there are new buyers out there.  And that's good news for all of us!

Back From Boise

I just returned from Idaho, where the national group of independent real estate companies to which I belong was meeting, and I can report that it's scary out there. We have all cut costs, and are continuing to cut costs, finding new businesses and new ways of doing business, and changing our organizations to adapt to a changing world. No one thinks that it's going to get easier in the next couple of years.

We are probably not that different from owners in many industries. When you look at the stock market, it may seem as though times are better, since many are reporting higher earnings. However, when you examine things more closely, most of the improvement comes from cutting costs and laying off employees, not from raising revenues. Especially when you get to smaller companies, that strategy has its limitations. As one member of our group reminded us, you cannot save your way to prosperity.

While the whole country is affected, it's a good time to be in the Midwest. Those in that area say that it's because what doesn't go way up doesn't come way down, and that may be so. Everyone agreed, though, that some ways in which we traditionally made our profits--traditional brokerage, relocation, and commercial sales--are all suffering, and people are increasingly looking to new sources of income--mortgage, property management, and insurance (which, ironically, was fairly recently thought not to be much of a moneymaker for real estate). Short sales continue to affect all parts of the country, with the Midwest again being better than Nevada and other hard-hit markets.

We talked about the trends, the harsh realities, and the future of our industry. Afterward, we adjourned to do the only thing we could then think to do--drink!

Summing up 2008

As the new year begins, we're taking stock of how we ended last year. The news is not quite as bleak at H. Pearce as one might have thought. We're down a little over 15% in commissions earned from the year before. Since that takes into account that prices fell, reducing commissions due, plus that numbers of sales fell, we did very well compared to the market as a whole. One of the agents brought in a check on December 31st and told me that 2008 was her best year ever. More agents than I would have thought could say the same thing. In fact, a couple of months ago I checked an earnings report, and noted that 52% of our agents were ahead at that point of their earnings from 2007. That may have changed somewhat by the end of the year, but probably not by that much. It shows that, in this difficult market, whom you choose to sell your property matters. Good agents are more valuable than ever.

We're still waiting to see whether we made a profit as a company in 2008. It's close enough that we can't tell yet. That's good news in this economy! We look forward to making money in 2009, in part by concentrating on the things that will increase: relocation; rentals; appraisals; refinancings; and short sales, in addition to our regular business.

On another note, the running season began with a very cold and snowy Frostbite 5K in Guilford on Thursday morning. The sun was bright, but the snow wasn't all melted and the winds were whipping across the Guilford fairgrounds and the town dock, so all the times were slow. Well over 300 people braved the elements, though. Joel Galvin represented H. Pearce with his wife, Nan, as they helped to man the Guilford Rotary benefit race.