Monday, June 25, 2007

Fundamentals Up, Psychology Down

From Salon.com (hat tip Rocklin Renter):

But what about those would-be buyers, cautiously watching the carnage from the sidelines?

Lawrence Yun, the staff economist for the National Association of Realtors who has replaced our favorite whipping boy, David Lereah, as the Man Who Must Be Quoted in all stories about the real estate market, complained that the housing market was "underperforming" given what he considered the general overall health of the economy.

"Psychological factors," he said, explained buyer reluctance to jump into the market at the present time.

How Yun and his ilk are able to cite "psychological factors" as the reason for anything is an exercise in tautological meaninglessness that continues to baffle How the World Works. If you're going to blame consumer psychology when the market is headed down, then in all fairness you should blame it when the market is going up. But back in the go-go days, we never heard anyone from the National Association of Realtors say anything along the lines of: "The real estate market overperformed this month, as home buyers, irrationally convinced that home prices would continue to appreciate beyond all rhyme or reason, stepped up their splurging on new and existing homes, rashly confident that they would be able to sell their purchases at a 25 percent markup in just one year."

Psychological factors are always in play, whether a market is going up or down. We've been giving Yun a chance to establish some street cred, but with each whine about buyer psychology, our willingness to give him the benefit of the doubt takes another hit.

19 comments:

Diggin Deeper said...

I'm in complete agreement with this article. At least double speak Fed Head Greenspan acknowleged that the dot.com stock market was "irrationally exhuberant", which to me said it was psychologically driven. You can't take sentiment out of any market. Its the underlying driver and creator of bull and bear markets regardless of whether we're talking tulips, fine art, stocks and bonds, or real estate.
This one's got severe depression, and the only medicine that will treat the symptoms is a drop in interest rates. Even then I have my doubts about its future over the next several years.

AgentBubble said...

Purchasing a home is one of the most emotional decisions a person will ever make. Just look at the quotes from the Cal Expo auction where people bid more than they intended to. NAR knows it can no longer rely on data to convince a buyer "now is a good time to buy" so what else do they have left aside from psychological maneuvers? I have a buyer that almost pulled the trigger about 18 months ago on a house in Elk Grove. All of his friends were buying and laughing at him because they said he'd be priced out forever. I got through to him and told him to trust me on my advice to wait. He now calls me every month to thank me.

Diggin Deeper said...

agentbubble...when I do get ready to buy, I'm looking you up! The great real estate brokers/agents are those that build a clientele base over time. Their customers are willing to pay a price for solid, correct, and timely information. I doubt the good ones ever go hungry.

Gwynster said...

Same with us Diggin, I'm guessing we'll buy fall of 09 - market depending. If the market doesn't correct, I'm ok with renting and sticking away $1300 a month too.

AgentBubble said...

When you do buy, we'll split my commission 50/50. That's my deal with another blogger and I'll do the same for you two as well. We got a houseplant when we bought our first home ;-)

Gwynster said...

LOL when I helped my ex buy a house, he got a house depot gift card for $100.

I suspect we get discounts because we're savvier (is that a word?) then your average joe and therefore should be less work.

I will say in advance that I'll pick you up a bottle of Vicodin when we get to really looking again. You'll need it. Hell hath no fury like a cranky burnette with a delayed nesting urge and firm grasp of the market >; )

On the plus side, I love playing good cop/bad cop with listing agents. Muhahahaha

smf said...

Agentbubble:

We could be ready to buy soon, we will find a property and then we can use you to deal with the paperwork.

What deal can you give us?

Fanchew said...

Sounds like agentbubble is drumming up some business. Put me on the list too for 2009. =P

Gwynster said...

That's because we like realists, not fluffers >; )

Patient Renter said...

I'd say put me on the list for 2010, but all of the Realtors I'm friends with or are personally related to would have my head.

Fanchew said...

Gwynster, that's true. I contacted an agent recently just for lookeloo, making it clear that I wanted to wait until I had a sizable downpayment and for the market to settle. She started blathering about there being no need for a down payment, just do 100% financicing, don't wait too long because the market will take off again just like in 2004 in just four years! I'd rather work with an agent who doesn't spew bullshit to make a living, if that's possible.

buying time said...

You all certainly have one on me if you are able to wait...as much as I would like to say I will wait....I'm being realistic cause my nesting is in overdrive (two very young kids). Within the next year or so I am fairly confident I will find a reasonably priced place (by reasonable I mean around 2002 prices)....will it be the best deal out there...no...but there comes a point where the marginal gains aren't worth the wait.

After all, I wouldn't want agent bubble to go out of business while he waits for all of us to finally purchase =)

Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

Gwynster said...

"That's because we like realists, not fluffers"

...Yup, and not those archaic, ignorant, self serving, and downright intelligence-insulting agents who continue to claim, that there's no time like now to buy...

I'll give you a lot of credit Agentbubble...I like the creativity used here. You've got a built-in buying group right here, and most all will pull the trigger when the time is right.

As a seller of high end capital equipment for 30 years, when the stakes get high, you wouldln't believe the tactics, strategies, and outright lies people will use to gain success. When you boil out all the sh*t it always seems to come down to experience, knowlege, creativity, and a willingness to give the customer a little more than he or she's asked for. Imho, its a simple formula that when mixed right is the difference between making a living and making a fortune.

Hang in there, it might not be tomorrow, or next week, or six months from now, but I'd bet you'll get your just reward off this blog just for telling it like it is.

And I doubt you're going out of business anytime soon...

AgentBubble said...

smf--Of course I'd do the same thing for you! I guess I am drumming up some business (sorry Lander, not trying to advertise)!

No need for a down payment huh fanchew??? It's agents like that saying that kind of stupid stuff that made me go independent.

Lander said...

Sorry to interrupt the love-fest, but when do I get my cut? ;-)

AgentBubble said...

I was waiting for this moment...Would you settle for an "I Love My Realtor" bumper sticker? I also have a "Now is a Great Time to Buy" stockpile....

smf said...

I can certainly split the proceeds, since I would have to sell my current house to move into a bigger one.

AgentBubble said...

smf--I've done enough advertising here for one day. Send me an e-mail to agentbubble at gmail dot com and I'll tell you my deal when I list a house.