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.

Lots of Cash

Many more real estate sales lately are for cash.  While it's true everywhere in the country, it's particularly true in Connecticut.  Can you guess the percentage of people who close with cash?  If you guessed 39%,  you're right!

While that seems like a lot, and it is, it makes some sense when it's so cumbersome to fill out the paperwork for a mortgage, and when the restrictions are so much tighter.  I suspect that some number of those buyers later apply for, and receive, mortgages, especially with rates so low (although they're certainly not losing much in the way of interest on cash, and they don't have a great deal of stability in the stock market).

When there is no mortgage, the closings often happen much sooner.  We see people closing in a couple of weeks, once all the inspections are finished.  Getting a mortgage later really speeds the process up.

One tricky question, however, is how to know whether the buyer is serious and qualified, without the help of the mortgage qualification letter.   It seems strange, but it's sometimes easier to believe that someone is really going to buy if they are borrowing the money, than when they say that they have it in the bank.  Not a bad issue to have, I guess, but it has been arising more frequently.  The danger of real damage is less, however, when the closing is quick. Nothing's perfect, but cash is king!

Where the Money Is

I've been reminding agents this week that most, if not all, of the money people make investing in real estate comes during the run-up in prices after a downturn ends. While it can be somewhat equivalent to trying to be a market timer in the stock market, it's a little easier to judge in real estate.

We know that prices and units have both been flat or declining since the beginning of 2006. We also know that there is a lot of pent-up demand, as people have been sitting on the fence for some time now. As soon as demand picks up, there's a good likelihood that prices will follow. Those who act now, and get in on the ground floor (no pun intended) will reap the biggest rewards.

Of course, that applies as well to investment property. There is a fairly good selection now of rental and other property. This might be the time to take money out of that 1% (or less) money market account, and buy some real estate.

Back to the Cold

Today is my first day back from vacation. I just finished going through my 600 emails and dozen papers, and tomorrow I will start writing articles that I've promised to people. Like a lot of people, I hope that the new President and his administration will bring a new beginning for our industry and others. The government is certainly pumping money into the economy--it just has to find its way down to the real estate market. And, in the Northeast, the weather isn't helping! Every day seems to bring snow, ice, or freezing temperatures. We know from other years that people don't look at property under those conditions. We also know that it can lead to a nice pop as the spring market blooms (pun intended), and never before have we needed that so much.