Does a Bear Sit in the Woods?
There’s a bear in the woods of the economy and in the real estate sector in particular…he’s tired, angry, confused and very hungry. His insatiable appetite can no longer be assuaged by an industry lacking the fortitude to initiate collective, pragmatic and meaningful change to its business model and its relationship with the consumer.
Who is the bear?
As REALonomics forges this post, we estimate that nearly 40% of all real estate brokerage firm owners are the edge of financial collapse. Agents are leaving the industry for jobs at the malls. One said to me, “hey, I gotta eat.” The bear grunts its disapproval and hot steam shoots from its nostrils.
Who is the bear?
While the mortgage industry scrambles around attempting to locate financial relief, 1.8-2 million homeowners will experience up-ticks in their adjustable rate loans in 2008. The money changers are reaching out to foreign investors for capital due to a weakening dollar, indications of recession, bailouts of some of our most cherished lending institutions. Countrywide was just absorbed by Bank of America in what has to be one of the sweetest deals in decades. The bear rumbles through the woods, pacing and snorting.
Who is the bear?
Title and escrow companies have already started trimming, not the Yule tide tree but rather, their staffs…more layoffs are just around the corner…office consolidations are underway…middle managers are updating their resumes…sub-leases opportunities are growing. The ability to sustain the overhead and retain experienced personnel is waning. The roar of the bear is deafening and its hunger is obvious.
Who is the bear?
The landscape of contemporary and financial relevance is starting to shift under the feet of real estate franchisors whose transaction revenue streams have plummeted to amazingly low levels. It’s likely that franchising may become a negative growth industry in 2008…this will be a first since 1976. Wanna buy a real estate company? Eight of ten may be on the market by mid 2008. Market value, zero. The bear stalks the woods, its movements tracked by the sound of snapping branches.
Who is the bear?
The National Association of Home Builders (NAHB) reports are full of sub-prime finger-pointing and predictions that new home recovery will rebound in 2009. Some Midwest markets report that contractors are simply shutting down, packing up and walking away from unfinished projects and unfinished home construction jobs, leaving owners in a lurch with no trades available to complete their project. The forest belongs to the bear and no segment of the terrain is beyond its reach.
Who is the bear?
Finally, the National Association of Realtors (NAR), with declining membership and revenue, while locked in an ongoing and costly herky-jerky legal dance with the Department of Justice (DOJ), recently announced its plans for change, relevance and transparency as only it can define it…drill-down pseudo Web 2.0 mapping for major markets via www.Realtor.com coupled at the neighborhood level with FSBO MLS listing opportunities through www.HousePad.com. Indeed, strange bedfellows. The bear’s ears are penned to its head, flattened in an instinctive response to a threat…he rises on his hind legs, assuming a posture of potentially fatal engagement.
Does a bear sit in the woods? If so, who is the bear?
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Who is the Bear?
We are the Bear and the Food that sustains the Bear.
As we continue to support the old models that drain the operating income from our businesses, (our very blood), the result can only be revolution!
Revolution in the way we operate our businesses.
Revolution in the way business is done with us.
Ignoring the post prior to this ( which is incomprensible to me, at least), I’ll throw in my opinion.
The BEAR is the media. Without alarmist rhetoric, no one would pay any attention to the media, so they paint worst case scenarios (remember, bad news sells papers).
I am a Real Estate Broker and have been in this business for over 30 years. Every day I meet more and more people who know more about the nature of real estate after watching a CNN special report.
However, my buisness is doing great. It is simply due to the fact that there is a ton of suppressed demand out ther, people who want to own their own home, have the means (even in this credit crunched market), see the property they want, and yet are afraid to buy because the media is telling them that their property values will go down. This would mean something if they were investors; but they are not. They want to own their own home. It takes little convincing to show them the worry they have is nothing to worry about. If they like the home, and can afford it, then they should buy it.
Investors however have other qworries, but there are lots of bargain hunters getting filled up on low prices properties today.
The smart money always seems to be buying when everyone else hates the market. This is typical of every swing of the economy and the housing market.
Ignore the media and do what makes sense to you. The bear is only a teddy bear.
John - nice comment and right on the money! Markets are not only influenced by empirical factor, such as mortgage rates, inventory and the stock market but also subtle pschological factors. Being told (hammered) constantly about how bad the market is produces its own impact on market psyche, buyer predisposition and ultimately absorption rates. Thanks for the comment - REALonomics.net