My daughter asked me last night, “What’s wrong with you?”
Well, that’s a loaded question for sure. Does she mean in the larger, more clinical sense, in the lifetime-full-of-baggage sense? Or is her question related to the once flash-frozen Orange Chicken served under the pretext of being an adequate dinner entree? It turns out she meant, “What’s wrong with you today?”
I hadn’t really noticed but, on reflection, I must admit Emily was right. I was little off. And it wasn’t any one big thing that had put me in this downer state, but a combination of little things which once piled up began to act as emotional shackles making it all but impossible to perform the ritual Happy Dance.
Trying to rid my head of pies charts depicting foreclosures and the Bear Stearns predicament, of gas at $4.00 a gallon and our own breaking news that the cat has fleas, it was time for a break. So Steve makes me watch Into the Wild, a charming movie about a 24-year-old who puts his parents through hell and back and ultimately starves himself to death in the wilderness. That was just a warm-up for TIVO time and a little LOST. Jin dies. At least the baby looks healthy. But otherwise, everything is such a bummer.
No one thing, not gas prices, not Sean Penn’s movie, not even Jin’s apparent demise is enough to justify my emotional recession. At moments like this, it is important to take a step back and avoid a run on the bank.
As we have talked about the real estate market here lately (we are, after all, known to do this from time to time), each post taken independently has been a rather benign installment along the lines of Fluffy Needs a Flea Collar. But, stepping back, and considering the consolidated message, one might get the impression that its time to assume the crash position and pop the Prozac.
Just because we are flying at a lower altitude doesn’t mean the plane is going down.
Bad news begets bad news, and fear begets fear. Perspective gets lost along the way. So, it is time for a little perspective check.
There was one comment in particular that set me off this week. It was a comment on another blog regarding one of our listings. This blog happens to be a sort of safe house for the people who continue to pile up all of the little negatives until they have created their own virtual Mt. Everest of gloom. They do this by choice, seemingly reveling in the mirth mountain they have created at the expense of others’ misfortunes. Maybe it is envy, maybe silent regret that they are still renting, or maybe it is just a case of having spent far too long mired in the negatives that they can no longer see the positives.
A property the Berg’s are currently listing is 17% over 2007 prices and since this house is in RP and it has seen a fortunate rise in prices it is now only 11% higher than the selling market. In case you thought this was a plum it’s a 1970 sqft house on a spacious 5k lot and it is 23 years old.
I found this comment particularly funny since the previous day, this home had gone into escrow with multiple (as in three) offers after just two weeks. When I pointed out this little fact, I was offered two possible explanations: The offers were all $100k lower than the asking price (”Just more smoke and mirrors that Realtors use to justify a stupid price”); or the buyers were all just stupid.
Wrong. Why the loathing of agents? Why the mocking of buyers? Emotional tailspin. I suspect this very contingent would have been taking the same public delight and apocalyptic outlook in the mid-1990s had blogs been available as their therapeutic soapbox. Remember the ’90s? Steve and I purchased a home in Scripps Ranch in 1989 (using a loan carrying a 10% interest rate, with which we were exceedingly happy) and watched from first the downhill and then the uphill sides of the price slope, with the net result being that our “investment” had been dead money for the better part of a decade.
Geez, buyers are so stupid.
Yet, call me crazy. I do not see my home as day trade. I am not an anomaly, and I am certainly not stupid. Our homes are long-term investments, to be sure, but for the vast majority of people, homes are first and foremost security, shelter, and a sense of pride. If I could rent a home comparable to mine for a tenth of the cost of ownership, I would still own if I could afford to do so. I would do this because of the satisfaction of knowing that every nail hole I put in the wall is mine, and for the fulfillment that comes with giving my family comfort, constancy and stability. If you trade in penny stocks, emotions have no place. When you purchase a home, emotions have every place, because it is personal.
The dozens and dozens of home buyers and sellers we have represented over the past year, a year during which all of the indicators suggested the market would continue to correct, a year during which we continued to advise our clients that the market would continue to correct, were not stupid. And when Steve and I sold our “dead money” home in 1999 for a new home, we were not lucky, because we weren’t day trading. We needed a larger home, we were in a position to buy one, and we did.
And a year later, I was in tears. I wasn’t grieving the fact that I could have and should have kept our previous home as a rental, now that prices were skyrocketing. I wasn’t counting the payday I hadn’t enjoyed but could have realized, a windfall that might have gotten me a little closer to retirement. I was distraught over the realization that I had forgotten to transfer all of those little hash marks on the wall in the hall before leaving. You know the ones. They had memorialized the growth of our daughters over their first years of life, our daughters who were born and raised in that home, the girls who took their first steps in that family room and their first tumbles down those stairs and their first bike rides on that street.
I’ve got new hash marks in my new home. They start a little higher, on the wall of the home I should have sold in 2005, because I would have been a little richer had I done so – Richer, that is, if all that matters is the balance sheet.
So, if you leave a comment today, I may be a little slow responding. I am going to be showing property to a family who wants a new home. They can afford to buy one, they like the low interest rates available, and they plan on staying in this new home awhile. They could rent something; their financial bottom line would after all be a little better and they might find a better deal next month or in a year, but they want to own. And they want a big backyard where their children can play. And she likes kitchens open to the family room. And he likes a three-car garage, but mostly he likes whatever makes her happy.
Geez, buyers are so stupid.
ABOUT THE AUTHOR Kris Berg is Co-Owner and Designated Broker of San Diego Castles Realty. If not-so static web sites are your thing, go here at once where you will find loads of real estate information including homes for sale, market trends, floor plans and more. Kris's hobbies include fencing and spot welding. She likes kittens. 
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{ 16 comments… read them below or add one }
Kris — I feel your pain. Every time I make public my belief 2008 will be the year we hit bottom, the crazies swarm. Sam Zell has now said on live TV the same thing. It’s my prediction folks might believe Sam over me.
The glee with which these ‘true believers’ revel in others’ distress will redound to their chagrin — and let us hope that Karma is closing in.
Great stuff, Kris.
Kris,
OCR’s comments were rude and uncalled for (he was being a body part that rhymes with rick), but that is what happens on blogs. I was surprised Jim didn’t call him out for it. (He called me out once for being “snarky” – whatever that means).
Realtors(R) and Loan Brokers are easy targets because they made lots of $$$ off what were clearly poor fiancial decisions made by a whole lot (hundreds of thousands, millions?) of people (not to mention the banks and wall street) over the last three-four years. When Realtors(R) advertise their importance in the home sale process based on “you need a realtor(R) to give you professional advice to help you with this most important financial decision in your life”, but then the “most important financial decision in their lives” turns out to actually be the “most unfortunate financial decision in their lives” from which only their Realtor(R) and Loan Broker prospered, you’re gonna have some resentment and backlash.
My advice? Have a thick skin. The thicker, the better. Rude comments made at Realtors? Gee what’s next? Rude comments about politicians and lawyers?
Just water off your back. Trust me, I’m a lawyer.
Thanks Jeff. And thank you, Smithers, Esq.
S- What you say is true, but I will add one caveat. The most important financial decision is in fact theirs, as you yourself said, and people have many reasons for making the decisions they make, as I had my own personal reasons for making my housing choices. It is convenient to blame the facilitator in the end, but I have a lot less influence than you or I would like to think. And the reality is, it is not my place to influence – only to advise.
My skin is not as thin as you might think, but periodically I do get to the point where I want to blow off some steam.
Thank you for the balanced comment. It’s appreciated.
Kris – of course the decisions were (and are) those of the buyers and lenders, and not of the middlemen and middlewomen. But we love to blame others for our problems, and those that made money off our dumb decisions are most convenient to blame.
Why the “loathing of agents” and the “mocking of buyers”? Exhibit A is the “Suzanne the Realtor(R)” tv ad that remains ever-popular on most bubble blogs and youtube (I would link it, but you’ve seen it plenty of times). The buyers are depicted as a dumbass couple deserving to be mocked (or at least slapped around for a while), who rely on Suzanne their agent to “run the numbers”. The ad says to buyers “We, the Realtors(R) will tell you what you can afford. We will run the numbers, and you can have your big garage.”
I don’t know what they (the big brokerage) were thinking when they ran that ad, but they certainly were not worried about their image.
Don’t know what the weather is like in SD today, but it is a beauty here in the Bay Area. Time to get off the computer.
2008 will not be the bottom unless we see another 30-40% drop in the median price by the end of the year, which is possible, but unlikely. This will painfully drag on for as long as the feds wish to try and prop up average homes that are simply too expensive relative to the average population. But calling the bottom is foolish anyway. You should act when the valuation is attractive FOR YOU. Everyone is different. Trying to call a bottom and act on it just because it’s perceived as a bottom is a sure way to lose your shirt. So go ahead and a call a bottom, Kris. But just remember that for every Sam Zell, there’s another highly respected economist who said we had nowhere to go but up in 2005, or who now believe that a bottom won’t hit until 2010.
As to why brokers and realtors are hated, it’s for being patsies to the mortgage meltdown. Everyone was looking for a quick buck. Buyer’s interest diverged from that of the buyer’s broker, which led to breach of fiduciary duties owed by the agent (the broker) to the principal (the buyer). In order for this to become so catastrophically bad, a number of people (including brokers and realtors) had to act in bad faith, or at least fail to speak up as to the despicable practices being perpetrated by flippers, appraisers, mortgage originators, I-Banks, etc. Not that every broker/relator did this…but it’ll be guilt by association so long as we are in a free-fall.
Individuals loved to claim credit for their brilliance in the run-up, but now want to blame anyone for their problems on the way down.
Eh, you’ll be o.k. As I see it, the problem is not so much that some poster on a website is second-guessing or mocking you (or whatever), but rather that this affects you. Why people care what others think of them is a mystery to me. I assume it’s a byproduct of evolution – some sort of helpful survival mechanism within social systems. But I digress.
One thing I’m tired of reading, however, is about the so-called “bitter renter” or “envious renter.” [I happen to be an owner (although, for the record, I want prices to tank because I only own one residence but need to buy two more).] I’d say at this point that the number of “bitter owners” far outnumbers the “bitter renters.” The renters I know (who would like to be buyers) are jubilant. Not a hint of bitterness. The owners who bought in the last 3-4 years, however, are another story. For the most part, they’re the definition of bitter. Just an observation.
Kris:
You are so right – there is so much more to buying a house than just financial considerations. As a real estate broker for 30 years, I sold some properties too soon and others too late. I have probably bought some properties I shouldn’t have. And I have sold some properties that I should have kept. I tried to do the best I could based on the best knowledge I had at the time given the realities (financial and personal) of my life. But I have lived in the same house I brought 22 years ago. Through all of life’s tribulations (and don’t get me wrong, I have a wonderful life); my home has been my Rock of Gibraltar and the smartest financial decision I ever made. Who could ask for more?
Arn – Thank you! Someone gets it!
Kris –
The sincerity of your post comes through and I completely agree that there is a lot more to owning a home than the $ that it brings (or not) in appreciation. For buyers who are looking for a long term committment, to make a house their own personal statement, to raise a family, and create memories, and to be part of a community, there will always be non-financial reasons to buy.
As Realtors, we can help them focus on the neighborhoods, floorplans, school districts, and everything else that will help minimize their financial risk while maximizing their enjoyment and quality of life in their HOME (which is not necessarily their investment!)
Vicki
I had the immense satisfaction of helping one of those “stupid buyers” buy their first home this past weekend.
They are a fantastic young (referred) couple who fell in love after meeting on e-Harmony, she is moving to Boise, and they will be blending their young families in a beautiful brand-new starter home.
1,434 sq. ft, 3BR, 2BA, bonus room, cased windows, beautiful cabinetry, etc.
$176,900, zero down IHFA program, and the seller is paying their closing costs.
We will close two weeks from today.
They will get their $500 earnest money (which they can barely scrape up), back at closing and their payments will be equal to rent after tax deductions.
Contrary to all the doom and gloom, there are people who want to buy a home for the right reasons.
I am sitting here feeling pretty good for having been able to help these people achieve their dream of home ownership.
V – “Their home which is not necessarily their investment.” Add the word “primarily” and you have hit the nail on the head.
P – Those poor, stupid, happy people. Shame on you.
Kris, touching comment about the height lines. My parents have a set of those lines from me and my sister dating back 25 years at our summer house, and I can bet they value that as much as anything in the house. You’re right, a house is an emotional investment, and that’s something that few of us put into our spreadsheets.
BTW, I just listened to the radio show, loved it. Thanks for addressing my question. Maybe I’ll call in this week with a little bit more friendly question.
Jakob – 25 years? Wow! And I bet you are right about the value they place on those. As a mom, I will tell you that children don’t typically “get it” until they themselves are parents. That’s when the guilt sets in, and it is a day I look forward to.
Thanks for the comment and for your question last week – It helped save us from a lot of dead air time.
Honestly, the jury is still out on whether or not I want to give the radio thing another shot. This first time out was Beta, and I will tell you that it is much harder than I expected, and I am still wrestling with the added value (or if there is any). I’ll come to a decision by mid-week. The key is having good questions like yours to discuss and callers who can raise interesting issues. Then, there is always my concern that my mouth might get me in trouble.
“they will get their $500 earnest money (which they can barely scrape up) back at closing.”
sigh ….
Great post, Kris. New buyers come into the market every day of the week here in the Bay Area, but of course those bubblistas wouldn’t know that, or believe us no matter how many times we told them. Nor would they believe that, on occasion, there are homes getting way over asking price. The buyers are certainly out there. Are we patsies for being facilitators? I personally don’t think so. Like you, most of us realtors are simply trying to do a great job for our clients and make a living while we’re at it (roll tape of Jon Lovitz as Harvey Fierstein: “I just wanna be loved, is that so wrong?!”)
Bitter/envious renters? Quite possibly they are, or maybe they’re just former day-traders trying to shift the blame for their inability to make a quick buck in this economy. Ah, do I miss those late night Tom Vu infomercials!
“Just because we are flying at a lower altitude doesn’t mean the plane is going down.”
Kris: Always remember that they don’t let the bad pilots fly low because they crash too many planes.
Consumers need good pilots now more than ever, and you most definitely are an ace. So put it on the deck and open up those throttles-this is where we were meant to be! (roll Top Gun clip)