Thursday, August 28, 2008

Blogs and Comments...

Blogging, along with the ability for instant public comments, has brought new dynamics to areas of consumer interest from how to feed a goldfish to real estate and finance. Consumers can now interact anonymously on a variety of subjects. H0wever the ability to remain anonymous has also allowed consumers to say things online they might not say if they had to use their real identies.

Many well regarded bloggers in various fields are no longer allowing comments unless the commenter registers as a member of that blogging community. I suspect this is a trend that will grow especially on national blogs.

A few days ago I was surprised to see someone post a comment on Manhattan Beach Confidential stating that I censor comments. It was nice that another poster disagreed. I found it interesting that not only did the the comment come out of nowhere but was not true. I published all the comments I received with the exception of one from my rich cousin in Australia who was so glad to find me after all these years.

Just to clarify my policy on comments... the only comments I don't publish are those that are obviously spam or use profanity. If you read the comments on my blog it's easy to see that I publish comments whether they agree or disagree with I admit to being a bit confused.

In the last few months I've noticed that a number of comments on many real estate blogs have lost their civility and have turned rather nasty. If you don't agree with a point of view by the blog writer or other commenters the retort isn't polite discourse but rather petulance and derogatory remarks that have little in common with the give and take of a civil discussion.

I have always believed that you never learn anything if you only view one side of a subject. But I may amend my policy a bit. I'm thinking I might add a clause that states... I will continue to publish all comments whether or not we agree as long as the comments remain civil in tone. Sarcasm is OK... differing opinions are great but rude or crude will be a no- no.

I enjoy reading consumer comments and welcome them on my blog... however if you want to have your comment posted you need to write a comment and then I need to receive it.


Anonymous said...

You may be inviting some of the disrespectful reaction. Your previous post, for instance, suggesting that most sellers have come to terms with the market and most first-time buyers are out of touch with reality is a pretty disingenuous and insulting selling tactic.

A "steady" and "consistent" market is not good if it's steady and consistently slow. Inventory falls not just because of sales but because sellers get discouraged and leave the market. At the end of the selling season, inventory down slightly from extremely high levels doesn't indicate a balanced market. If most sellers really had come to terms with the market, sales would be as strong now in the 400k to 1.5 mill segment as they are in the inland areas that may really have bottomed out.

It's not a matter of irrational buyer psychology or lack of knowledge that is the problem. The market is not slow because buyers with pockets full of cash are sitting on the sidelines waiting for a bargain. In the new post-easy lending era, there just aren't that many people who can afford what sellers in that price range are asking. And many of the buyers who can afford it see much better investments around that take the sheen off the dream of owning a house.

Recent history has offered ample proof that the list price at the online sites you mention can be way overvalued, especially in a slow market, and it can collapse in months or even weeks. And even if it doesn't, that doesn't make buying at book a great deal. There are an awful lot more homes that seem overpriced that are not selling at all than there are ones that sell in a week with multiple offers. Making an offer below online book value doesn't make a buyer dumb or out of touch. Fixing a sales price according to these sites doesn't mean a seller has faced reality even if that price is lower than what they originally spent. Reality is whatever the market will actually pay.

Most current buyers are savvy and knowledgeable enough to see this. In fact, the evidence strongly suggests the majority of those who waited this long are likely more savvy and knowledgeable than the majority of people who bought in the last few years and are now trying to sell. There's no shame in making an offer in proportion to a more reasonable rate of appreciation for a house that would have been perfectly affordable before the collapsing Ponzi schemes of the last few years conspicuously overinflated its face value. A house that Econ 101 suggests will in time inevitably return to near the same proportional value it was before in relation to the rest of the economy. If the offer is refused, that's the seller's problem, not the buyer's. Time and common sense are on the patient buyer's side.

But you know this. Maybe some buyers are frustrated with the slow pace of the correction in some areas. But judging from your pointed and one-sided comments, you sound a little frustrated too. I'm sorry if someone said something on MBC that wasn't fair or respectful to you. But your last post wasn't very respectful either.

Kaye Thomas said...

I'm not sure where to begin to answer your comment as we really are far apart. Perhaps that's just the nature of the current market.
While I think some buyers are not being very realistic, I don't think most first time buyers are out of touch with reality. Rather I think there is a tendency right now to try and make all markets the same without understanding the differences.

Inventory is not at extremely high levels in the Beach Cities. In fact it is lower then it was at this time in 2006 and much lower then in the 90's.

A consistent market, even a slow one,indicates a market that is not in panic mode. I'm not sure why you believe that is bad. You are correct that inventory does fall because sellers leave the market but that is not a bad thing. If a seller doesn't have to sell then it may mean the seller is not in financial trouble.

I'm always fascinated with the tendency to compare the Beach Cities market to the Inland Empire. A number of the current sales in the IE are not to individual home buyers but to investors who are buying multiple properties. That is not a trend you find in our area.

I stand by my comment that buyers need to know where prices are in their local areas. I think there are a number of tools buyers can use and should use to determine where that level is. An unrealistic buyer is no different from an unrealistic seller.

The affordability issue is one of long standing and isn't going to go away. In fact if rates go up it will continue to be an issue. Contrary to what many people think prices don't plunge drastically when rates move upward... they tend to remain flat.

What is meant by affordability differs greatly. I suspect you would be surprised at just how many people can afford to buy in this market. Whether or not they choose to buy is a personal decision.

You should buy a home because you want a home not because you expect to make a profit. We need to get back to homeownership as more shelter oriented then as quick profit oriented. That is where a number of consumers got into big trouble. Real estate has always been a long term not a short term investment.

One of the things I have seen over a number of years is that people who are continually waiting for the market to drop generally don't purchase a home because the market rarely meets their expectations. Rather they become very frustrated and drop out of the market.

Homeownership is not for everyone and not buying home is no reflection of someone's financial standing. I know renters who have a lot of money and homeowners who don't. But if someone wants to buy a home in the immediate future they need to look at the market as it is rather then as they want it to be... that's just common sense, not a put down.

Frankly I have no idea where the bottom will be in this market. If there are no further "economic surprises" it could be sometime in the spring of 2009. If we see further inflation and sink into a major recession the time frame could be a lot longer.

However if all things continue as they are and the market reaches the bottom in the spring do you really think prices will fall another 40%-50% in 6-7 months?

Reaching the bottom doesn't mean prices will start moving upward. I think we will see a flat market for another 2-3 years before we see price increases.

Finally allow me leave you with this thought... disagreeing with your opinion or you with mine is not showing a lack of respect for either side. We can each have our point of view... that's what makes life interesting.

Laurie Manny said...

You are correct Kaye, sites are removing the ability to comments. I'm seeing more of that as the months go by. I don't like it though. While I don't comment often, when I want to join a conversation I don't like being cut out of it. Although I do understand why they turn them off.

Kaye Thomas said...

I also understand why comments are often turned off... but one of the things I like best about blogging is the ability to interact.

I've always wondered what would be the effect on comments and blogs if everyone had to register with a public ID when they commented.

Anonymous said...

I attempted to post six weeks ago
but the post was never published.
I again tried to post last week
and that post was never published.
I'm not a blogger, just a guy looking a LONG TIME for a home for my family. Both my post were never profane in any way. I strongly disagree with many of your points of view regarding the local RE issues but never would I be rude or use bad language.
Why were they never posted?

Kaye Thomas said...

Anonymous 11:59,
I apologize for the misunderstanding... They were not posted because I did not receive them. I don't censor other then for the reasons I stated.

I suspect it may be the blogger platform. Many times I have a difficult time posting things and saving posts I am working on... and say rude and profane things when it happens.

Please feel free to e-mail me if you don't see something posted and have a question about it.

You do not need to agree with me to get posted. Believe it or not I will even change an opinion if I am presented with new facts that check out.

I am setting up a new blog using a different platform that will be fully functional in a few months. It is in start up mode now and I usually post the same articles on both blogs... I still have a lot of things to add to it but you might check there from time to time

I hope this answers your question... and FYI.. I have a number of clients who have been looking for a long time for a lot of reasons... it's very normal.

Anonymous said...


(and I am anonymous 3:46)

Your own words: "Most Sellers have finally come to terms...The bad news is that a number of buyers now seem to be the ones out of touch with market values....this seems to be a phenomena found mainly in first time buyers."

Do you really not see how that could be taken as antagonistic?

On top of fixing blame, and clearly suggesting that buyers should pay more for less than they expect, you offer no evidence for your case. Instead, you endorse list values and ignore the market context. You make vague references about inventory and sales without sourcing it. And when a person actually goes to the sites you mention, your info does not hold up.

Redfin inventory graphs:

Your inventory stats don't check.

Next, let's look at "number of sales" on Trulia:

Your sales stats don't check either.

Prices-- Except in Manhattan Beach--where data shows sales have fallen off the most and steady high end sales can skew the data more than anywhere else--the data at Zillow, Redfin and Trulia shows prices are trending downwards too.

The suggestion that you are "always fascinated" by the tendency to compare the Beach Cities to the IE is patronizing and disingenuous. Like the notion that the Beach Cities is part of the same housing market and subject to the same economic laws as everywhere else is some old wives' tale. Or the corresponding inflation spike at the beach cities with the rest of the housing universe was a coincidence. Disposable income may forestall foreclosures and prevent gravity from pulling the beach cities back to earth as quickly, but pressure from surrounding communities still has an effect. And the data makes it very clear the basic laws of economics apply to the high end market too and are already being felt.

Your statement that prices have leveled out and will go up in 2-3 years has no basis. The bubble hasn't popped at the beaches. Inflated prices have to get back in line with the rest of the market and the economy eventually. That's just math. Even if you were right and prices at the beaches were just going to level out until inflation elsewhere catches up, it'd be more than 2-3 years ...probably more like ten.

The only question is whether it's going to be a fast correction or a slow one. I'm not projecting a 40-50% cut in 6-7 months--that's you putting words in my mouth. But with the Alt-As that are so much more prevalent in high income areas than sub-prime just starting to recast(which you never mention), and defaults trending up,
there's good reason to expect the downward trend lines, if anything, to accelerate. It's hard to believe you have no knowledge of this.

There is plentiful data to warrant knowledgeable buyers bidding below list value. And knowledgeable sellers are looking at the same data. It may annoy you or your sellers, but it doesn't hurt to bid below list. Buying at list in a bubble is big risk. If a buyer can't find a dream house for the right price that they'd be comfortable living in for a long time, the smart thing to do is to wait a few months and see.

But I have yet to see a realtor counsel anyone to wait to buy. I don't begrudge you a sales pitch, and I'm sure there are some buyers who have unrealistic expectations...just like sellers. But your tactic of applauding sellers in general and faulting buyers in general for being out of touch with the market, does no one any favors, including you. If you are going to criticize buyers--sans evidence no less-you should expect a backlash, even if you try to do it with a silk glove.

Kaye Thomas said...

Anonymous 2:46,

I'm not going to get into a who is right or wrong about the market... I am basing my opinion on the current market as it is and having been through a number of down markets over many years.

Let me say a few things upfront. Yes prices are declining.. about 10% since 2006 and yes there are going to be more foreclosures. If you look back at my posts I have never said anything to the contrary. As for prices... if the economy stays fairly stable I believe things will settle down over the next 2-3 years, staying flat for awhile. I don't think we will see prices trend upward until 2013(5 years). Again this is what I have said for sometime.

I am neither applauding sellers nor denigrating buyers. There have been numerous times when I said that sellers were not realistic. My point for both buyers and sellers is that they need to know their local market if they have expectations of buying or selling.

I don't find anything wrong with making low offers on properties... you never know what will happen if you don't ask. I have certainly written a number of them for clients. But that is not what I said.. what I noted was that a number of first time buyers are making extremely low offers and are upset that their offers are not being taken. They have an expectation that they can buy at lower numbers then the market is currently dictating and don't understand why their offers are not being taken by sellers. There is a concept of market value even in a declining market. If you can pick up something under market value great.. but you need to know where that value lies. I fail to understand why this concept is unfair to buyers. The fact is it doesn't take long for buyers to learn about the market if they follow what is happening in their local market.

As far as the numbers from Zillow, Trulia and Redfin... they are not always reliable. You can have the same home listed numerous times because they don't catch price changes or re-listings by different agents. They often miss sales and pendings. Many times they show properties as active that have closed escrow months prior. It is just the way things are as they are not primary sources. I monitor my listings on Zillow and Trulia to be sure they are accurate. Even MLS records are not always accurate but they are better then other sources.

This is not the first down market I have seen and it won't be the last. None of us knows whether or not the market will reach bottom soon or spiral down further. If the economy continues as it is the home market should settle down by next year. However if we wind up in another war, LAX gets bombed or we find ourselves in a massive recession then our local real estate market will get worse not better.

Will we see more foreclosures... of course we will. The question is not whether or not they are coming but the magnitude. The reason I state that the IE and our area are different markets is because they are.

In the IE you had huge numbers of tract homes that are far from employment centers. These homes were purchased mainly by people who could not afford to buy near their work for a variety of reasons. Many of these buyers had little financial backup and often poor credit. They got into loans that were ill advised and found themselves unable or unwilling to make the payments. The rise in fuel costs have only added to the problem.

Consequently you have a situation with massive foreclosures, developers going bankrupt and huge inventory. That is not what is happening in our market. Could it happen ... of course... it did in the early 80's and 90's... but that is not happening at this time in our market.

As far as the Alt-A loans, there is speculation that with the discount rate low a large number of these loans that are coming due in November will re-set at lower levels then expected. I have clients that have had their loans reset and the rate barely changed. While there were a lot of people who got into property that they could not afford; most( not all) of the buyers in our area have sufficient resources to continue to make their payments and/or refinance. Now that is not a guarantee that the owners didn't refinance or take out equity beyond current market value but it is an indication that vast numbers of homeowners may not be in serious trouble.

As prices decline there will be those who choose to walk away from their homes or who can't refinance and will find themselves in foreclosure but historically our area doesn't see this as much as other markets assuming the economy remains fairly stable.

We had thousands of foreclosures in the 90's because most residents were employed by aerospace related companies. There were over 10,000 jobs lost in the South Bay. Those who were laid off could not find new employment. There were a number of people who lost everything including their homes and their savings. We are not seeing that scenario today. The local economy is broader based. Could it happen again ... sure... has it.. no.

You will find this hard to believe but my clients do know that prices may decline more in the coming months. They know market values and are making decisions based on that knowledge and where they believe the market is headed. Some are buying now while others are waiting. Many have set a price line and will not go beyond that number. They are making some very low offers hoping to catch a bargain. The difference is that they are not upset if the offers are not accepted. They would like to buy under market but don't have expectations that all sellers are desperate.

I don't make decisions about whether or not clients should buy or sell... they make those decisions based on their needs. The only time I make a buying or selling decision is when it's my house and my money.

I have clients who want to buy now and clients who have been looking for years for the right house. I know that some will never buy because they will always be waiting for the market to drop to a previous level. The truth is that not everyone wants to own a home and not everyone should own a home.

This idea that an agent can force a client to do something they don't want to do is inaccurate at best. Do you really think everyone but you is putty in the hands of an unscrupulous agent? If I tried to convince you to do something detrimental you would not do it. What you would do is find another agent... fast!

I value my clients and they know it. I have always told them to walk from deals I thought were bad. My clients will tell you that my philosophy is that there will always be another house...if something isn't right...don't do it.

Only time will tell which of us made the best prediction about where the market is headed.

Anonymous said...

"You can have the same home listed numerous times because they don't catch price changes or re-listings by different agents. They often miss sales and pendings. Many times they show properties as active that have closed escrow months prior."

But this margin of error is a constant, and becomes ever more insignificant when comparing relative volume over a period of months or years.

Another reason to only look at a market snapshot if accuracy threatens the desired verdict. But if you have more accurate records that show a trend as different from the sites as you insist, I'd love to see them.

"Do you really think everyone but you is putty in the hands of an unscrupulous agent?"

No more than I think everyone is putty in the hands of a drug dealer. But one is always available for those with poor judgment. Dealers don't usually pay a lot of attention to what they're selling or refuse to sell if they think their client is taking a big risk.

Unlike dealing drugs, selling real estate can be a big positive in the right circumstances. But too often, agents delude themselves and their clients when facts conflict with their interests.

You present yourself as one of the noble ones, and as an objective market analyst. But there is a clear slant to your figures and statements that conspicuously suits your personal interests and conflicts with public records. It is very valuable to see how people who share your interest are spinning things, even if it doesn't actually reflect the state of the market. And whether you share online or not, that influence is still going to be there. That's why I am appreciative rather than infuriated as I guess some are, and appreciate your site.

Kaye Thomas said...

Anonymous 2:02,
I suspect we may just have to agree to disagree...

There is a margin of error no matter what base one uses. As I noted the MLS has errors and even the tax rolls are not always accurate. However they are better then many online sites because most agents really do try to be accurate.

Consumers can get a good picture of their local market. Go to a number of open houses and then track the homes that are similar to ones that interest you. Make a note of when they sell and how long they were on the market. Were there price reductions prior to the sale? What was the final list price? Zillow is pretty good about closed sale prices so take a look there if you don't want to use agent information. If you do this on a consistent basis you will know how your market tracks and where market values lie for your area of interest.

I am curious about what public records you refer to that are in conflict with the information from the MLS that I use. While there are some off market sales most of the property that is sold in the Beach Cities winds up on the MLS.

It is very valuable to see how people who share your interest are spinning things, even if it doesn't actually reflect the state of the market.

Hmmmm... so I'm spinning things because I have a different viewpoint then you do. I suppose that's one point of view.

As a final note.. my philosophy about how I conduct my business is simple... I treat my clients the way I would like to be treated. That's not trying to be noble or too good to be true, it's simply good business.

P.S. I don't cheat at golf either... I count every stroke!