What’s the real story with the Real Estate market?!

Sunday, August 19th, 2007

I spent an hour this morning trying to figure out a straight answer to this question, and I have concluded: Nobody really knows.

Sure, we can all look at the numbers that have been scrubbed by the media to support whatever story they have written - sales are down, prices are down, the world is ending, etc.

But when I talk to people who deal with Real Estate every day, I hear a totally different story.  Houses are selling.  Fix and flips are moving.  People are buying.  Hmmmmm.

So I looked where I always look lately when I am feeling uninspired, or just need a push to think about something in a different way, from someone who has been where I am - selling Real Estate in a difficult market - and who advises some of the most successful brokers in the country.  (I’m so glad their blog is free, because I’m pretty sure I can’t afford their advice…)

Today Marc Davison from 1000 Watt Consulting reminded me - with an analogy from Pulp Fiction, no less - that everything’s gonna be alright….here’s his post (I was just going to put part of it here, but seriously, it’s so brilliant -you gotta read the whole thing):

In the movie Pulp Fiction, hit man Vincent escorts his boss’s wife, Mia, around town. While Vincent is in the bathroom, Mia discovers his stash. She thinks it’s cocaine and promptly snorts some. Bad idea – it’s actually high-octane heroin. Vincent returns to find her writhing on the floor uncontrollably, nearing cardiac arrest.

Enter Lance, Vincent’s dealer. He hands Vincent a railroad-spike-sized syringe to bring Mia back to life. Here’s the scene:

Lance
OK, you’re giving her an injection of adrenaline straight to her heart. But she’s got breastplates. You’ve gotta pierce through that. So what you gotta do is, you gotta bring the needle down in a stabbing motion. [Makes 3 stabbing motions] 

Vincent
I gotta stab her three times?

Lance
No, you don’t gotta fucking stab her three times! You gotta stab her once, but it’s gotta be hard enough to get through her breastplate into her heart, all right? And then once you do that, you press down on the plunger. Vincent
OK, then what happens?

Lance
I’m curious about that myself.

Vincent does as instructed. Mia immediately bolts upright, eyes wide open. Apparently fully recovered.

Life imitates art

On Friday, world markets, pundits, consumers, and real estate professionals were borderline comatose, in cardiac arrest - the result of a high octane overdose of the credit market crisis. Enter the United State Federal Reserve with a space needle like syringe to plunge $120 billon of pure adrenaline liquidity through the breastplate and into the heart of the banking system.

Global markets bolt upright. The FTSE Eurofirst 300 index rallies, ending Friday 2.4% higher and clearing all its losses for the week. In London, the FTSE 100 bolts up 0.4% on the week.The S&P 500 index surged 1.82%.

Like Mia, the markets bounced back. But the underlying problem remains.

Analyst Hugh Whelan put it like this; “If you’re a leveraged financial institution, a leveraged individual, a leveraged hedge fund, on Monday when you walk in, you’re still facing the same stresses you faced today and yesterday.”

The American consumer, long addicted to purchasing on credit, reached for cocaine homes blind to the dangers the high octane debt heroin they were sold from the many Lance’s in the mortgage and real estate sectors.

A catastrophe.
A paralyzing blow.
An epic crash.

It finally caught up. It’s a problem that requires massive intervention.

The price of addiction

None of us can discount the realities that face us. Foreclosures continue to rise. Rates continue to rise. ARMs continue to reset.

But there’s hope.

While driving out for coffee this morning, I passed an open house. A couple was entering as another appeared to be leaving. I slowed down to observe. The couple leaving stopped, turned, and began pointing around the front yard.

They seemed like ordinary, everyday buyers. And I think:

Homes are going to continue to sell.
Buyers are going to continue to buy.
Agents are going to continue working.
And money will continue to be lent.

There will just be fewer Vinces, Mias and Lances.

Thanks for the pep talk, Marc!  Everything’s gonna be alright…

- Stacie

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