It's Time for a New Year and a New Attitude

Much of what's been published about recent consumer trends and confidence is very encouraging.  Even the real estate news is improving.  Car sales went up at the end of 2011, and both online and retail holiday sales were very strong, compared to projections.  Can there be any doubt that, in 2012, real estate sales will follow?

So now the question for prospective buyers is:  Do you want to be ahead of or behind the curve?  Once all the signs for improvement are in place, you know that it's only a matter of time before prices start to rise.  You also know that, due to tightening mortgage requirements everywhere, and the hurricane and freak snowstorm locally, there is a lot of pent-up demand waiting to be satisfied.  There are also a lot of folks on the sidelines, just holding off until they know that the economy is on the mend. 

Given those variables, you can put your oar into the water first, and get the best price, or you can stand still until you see other people starting to move, and then try to beat them.  It's your choice, but I think the correct answer is clear!

On the Campaign Trail

I was invited this noontime to a lunch for women business owners with Linda McMahon, the U.S. Senate candidate.  We had a very nice meal at Cave a Vin, a new wine bar on State Street in New Haven.  Ms. McMahon is doing a listening tour of the state to hear what problems women businesses are having in the current economic climate.  Several things emerged as themes:  the cost of governmental regulation compliance; taxes; health care costs; and, most of all, the sad state of the economy.  The last item comes down to jobs, of course, and is most evident in what sector?  You guessed it--real estate.  It was surprising how much effect real estate has on the business fortunes of firms in other lines of work.  Real estate matters to everyone. 

It was also clear that many of the businesses represented were not making money at the present time.  Some owners were not paying themselves (this was more common than I would ever have guessed).  Others were retooling their firms, and their skills, to find new and different ways to attract revenues.  Those in retail spoke often about the lack of disposable income among their patrons. 

We didn't expect any immediate or easy answers, and we didn't get them.  To her credit, Ms. McMahon made no campaign promises, took no pot shots at incumbents, and seemed really to be there to listen and learn.  We all learned, and the enduring message we took away was that women needed to be cooperative and help each other succeed.  That is something that men should be able to buy into as well!

Be Patriotic--Buy Some Real Estate

Happy Fourth of July! The front page of last Thursday's New York Times showed the results of a poll of Americans regarding their feelings about real estate. Not surprisingly, it indicated that a big majority of those polled believe that owning real estate is still the American dream, and that it would be their choice, even though those same people were more divided as to the safety of such an investment.

It used to be that almost everyone believed that buying a house was the best and safest thing to do with their money. Their faith in the second half of that statement has been shaken by the recent financial crisis, but the first half is undeniably still true. Even those who do not own homes believe in the mortgage deduction's importance, and hope that the primacy of real estate will remain steady.

That's good news for the future of the economy. While we realize that there is still work to be done in convincing people to put down their deposits and buy, it's clear that they wish to be convinced to act. It also seems true that they would be happy to find reasons to do so. When that's the case, it's important to find ways to get people off the fence. Once those who are not absolutely required to sell begin to do so, others will follow. The consumer confidence necessary for that isn't there right now. It's up to government, unfortunately, to find a way to make that so. Jobs have to be created, and the future needs to look a little brighter. But the underpinnings are there. The beliefs remain.

So this Fourth of July, while you are watching the fireworks and soaking up the sun, make plans to get out there soon and buy some real estate. It's the patriotic thing to do!

Financing Woes

There has been plenty of discussion about what's wrong with the real estate market. We've been through a few years where the focus was on what was wrong with the banks, and the government put in a lot of money to make sure that the problem got fixed. Somehow, the banks are now rolling along with big profits. It would be too much to say, however, that they are rolling along just as they did before. There are numerous new rules and regulations, intended to prevent the same thing that happened before from happening again. This time, though, it is the same taxpayers who paid the bill for the last fiasco who are being harmed. The banks are passing the consequences of those new rules along to the consumers. I'm not saying that this is necessarily wrong, but what's happening is that real estate is suffering, perhaps disproportionately, for what went on with the banks in 2008 and 2009. Where before people could, and did, finance 97% of the purchase price of a home (yes, that was the median financing amount in the boom years), now they have to put down 20% in many cases. So, of course, real estate sales have slowed.

The answer is not that we should all go back to financing the whole cost of a real estate purchase. However, our economy will clearly not recover until people have jobs and until real estate, which represents the biggest asset class most people own, bounces back to normal. Not where it was before, but to normal--that's all we're asking. In order for that to happen, we cannot spend all of our time trying to fix the last problem, and we may have to put in some money and effort to boost sales through this period. It's not enough for banks to make money again. The whole system is bogged down, and it has to be jump-started. Now.