Thursday, August 26, 2010
Housing Sales Down? Dig Below the Surface to Understand Why
Friday last week was a day I will long remember in history.
I sold my log cabin second home in North Georgia and in fact, was able to put some good money back into the bank.
It is memorable because the news story broke that same day.
The one with the headline… “Existing Home Sales Fell Off A Cliff In July”.
“Sales of previously occupied homes plunged last month to the lowest level in 15 years, despite the lowest mortgage rates in decades and bargain prices in many areas.”
Personally, I did breathe a sigh of relief.
When the agent brought me the offer, my response was simple…”where do I sign?”
No question. Real estate today is a very different business.
All of the news media — both right and left — are jumping all over the numbers and all the adjectives that I remember hearing as a kid when I brought home a low test grade.
While a low interest mortgage rate can provide an extra incentive to buy…a low interest rate in and of itself is not a motivator to buy a house today.
It’s like saying that the McDonald’s Dollar Deals make our mouths water and feel compelled to eat a burger as soon as you hear about the Deals.
I will be the first to say that the economy has played a role in the real estate market…but perhaps more indirectly than directly.
It doesn’t take a genius to dig below the surface and quickly learn that there are a host of other factors involved in the mix.
It is unfortunate that the media doesn’t dig deeper than the surface stats…but then again, it is an election year.
One factor playing a role in housing today is the whole paradigm change of business…driven just as much by technology as by the economy.
Why should a corporation move people from one city to another when the iPhones and Crackberries continue to redefine mobility?
The past paradigm of having to have individuals commute each day to a central office has not only been replaced by work-from-home, but the idea of even having to have individuals all living in the same town, state and country has been replaced by the no-boundaries world of the web.
Today, “relo” is as much of a “no go” as it is a “don’t have to.”
The aging of the Baby Boomers in semi-retirement years and their movement from family units to empty nester units is a factor as big as the Boomers themselves!
While the economy has impacted Boomer retirement dreams, suffice it to say that the Boomer role in companies and businesses is on a decline.
The idea of buying a bigger home with more green space has been hit further by the Boomer’s changing lifestyle desire to “do less” versus “do more.”
Sure, getting rid of the 5 bedroom house would be nice…but combing two of those bedrooms into a master suite and another one into a home office or “man-cave” makes a bunch more sense that spending all the time and headache of packing up the boxes and purchasing another smaller home.
Travel right into the heart of the family household today where both the Generation X Mom and Dad work…
…Both in their jobs as much as in the process of sinking down roots in the communities where their kids go to school and in friendship bonds that they did not have growing up because there was a 50–50 chance that their parents had divorced and they would be moving and severing those friendships.
By the way, GenXers today represent the heart of management of many companies and businesses where “locality” and “sustainability” are part of the corporate value set.
And yet another factor?
I must admit, living now in a University town gives me very quick, convenient access to the inside tract of the Millennial Mindset!
And in Athens, a significant share of those Millennials winning their college degrees end up staying and exploring our great Athens-rooted music, dining and entertainment business.
And get this… the word “home” for many a Millennial conjures up as much the launch page of a website and where their Facebook friends file sits as it does something that they are going to spend dollars to buy in the “offline” world.
Buying a physical house and land space is no longer “cool” as the flexibility of having a home that they can pack up and move just like going from one site to another site.
Shoot…with that IKEA furniture so cheap, if their ADHD design scene changes, they can chuck that $199 living room set and go out and get a new one.
If the Millennials are going to do any home buying right now, the idea of a DWELL Magazine eco-sustainable 600 square foot pre-fab is way more cool than buying one of those existing homes!
No question that the real estate market is seeing sales decline compared to where we were five years ago…even twenty years ago.
But the economy is only the very tip of what is driving the change!
When life deals lemons, it’s often the smart entrepreneur that says hey, let’s not only make lemonade, but even add some cool flavors, fizz and presentation to define a whole new perspective of the marketplace.
If you get bored, call me and let’s go dig below the surface and unravel more of the submerged!