As an auctioneer specializing in real estate, I see a plethora of circumstances and indicators that conflict with the reported information. Lately, our industry has experienced a shortage of interest in our offerings. Less bidders equates to lower prices realized.
In conversation with other real estate auctioneers, observation of results and from direct experience at our own auctions, it is obvious that there are still serious challenges ahead. The next time you see one of those up beat housing reports on the MSM propaganda outlets, I want you to consider these 5 facts about the American real estate situation.
#1) According to RealtyTrac, foreclosure filings were reported on 367,056 properties in the month of March. This was an increase of almost 19 percent from February, and it was the highest monthly total since RealtyTrac began issuing its report in January 2005. So can you please explain again how the U.S. real estate market is getting better?
#2) The Mortgage Bankers Association just announced that more than 10 percent of U.S. homeowners with a mortgage had missed at least one payment in the January-March period. That was a record high and up from 9.1 percent a year ago. Do you think that is an indication that the U.S. housing market is recovering?
#3) Existing home sales in the United States jumped 7.6 percent in April. That is the good news. The bad news is that this increase only happened because the deadline to take advantage of the temporary home buyer tax credit (government bribe) was looming. Also, this so called incentive was effective only upon the lowest price point sector of the market. An $8,000 1st time buyer & $6,500 reseller credit isn’t going to have much influence above the $250,000 sale price mark. If one needed the credit to qualify for the mortgage, could they really afford the house? So now that there is no more tax credit for home buyers, what will that do to home sales?
#4) Defaults on apartment building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter of 2010. In fact, that was almost twice the level of a year earlier. Does that look like a good trend to you?
#5) How can the U.S. real estate market be considered healthy when, for the first time in modern history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together?
There are many other signs that point southward and these are but the most obvious 5. Many small realty companies are dropping their franchise relationships and going it alone. A great deal of rank & file licensees have been forced to leave the business. Many agencies have the “Career Night” signs out, trolling for fresh meat, assuming the old adage that every new licensee has at least 1 listing in them.
From our vantage point as auctioneers, we are seeing an overall liquidity crisis. Our sellers can not afford to carry the property they own, nor can they usually afford to necessary expenses required to properly market their property. Ready, willing and able bidders on the other hand are in short supply. A few bidders, smelling the blood in the water are stepping up but they are doing so with extremely low offers. Due to the liquidity crisis on the buyer side of the market, those bidders are not being sufficiently challenged to the point of truly competitive bidding often resulting in protracted negotiations. In essence, this is a protracted way of saying: Prices are in the tank because everybody’s broke.
This situation obviously reflects a true market value that is very hard for sellers to accept.
The facts often are.
Omar P Bounds III
The Bounds Auction Company
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