Thoughts on Life and Real Estate

Today is Labor Day. Born of political expediency, as many things are, it means so much more than an appreciation of the work force. It signals the end of the summer for most of us. Halloween is just around the corner. Soon the leaves will be changing colors (in most of the country) and cooler weather will be on the way.

The NFL pre-season has ended and later this week the first games of the regular season will be played. Many of us will be sitting down next weekend, alone or with friends, to watch a game. We'll root for our team and boo and hiss the opposing team. It's part of the fun. We'll sit down with a bowl of chips, pretzels or maybe some fresh organic carrot sticks and humus. (Not me, though... I'll be eating the stuff that is bad for ya.)

There will soon be finger-paintings, Crayola drawings and homework with stars stuck on them on the refrigerator. Science projects and sports practices and “can I go to the dance?”

We acknowledge all four seasons, but in our culture it is summer that seems to stand out the most. Maybe it's because so much of the country still observes a “summer vacation” for kids. (Which was originally more of a “summer work on the family farm during seeding, growing and harvesting” season.) Whatever it is, summer has a special place in our lives. It means different things to different people.

It means camping, water-skiing, canoeing, travel to new places, travel to beloved places we have been to many times, the mountains, the beach, the desert, sailing, motorcycles – the list goes on and on and on.

There are summer camps and summer gardening projects and summer house repairs. Some good. Some not so good. But most of it memorable. Especially for our kids. Many of them won't really appreciate just how valuable these days are, how important these experiences will be in helping to determine the person they will become. But some day they will look back on these days and say, “when I was a kid we used to...” with a smile on their lips and love in their hearts.

Even though times are hard for many right now, we have all done our best to make summer, this time of memory making, the best it can be. So here's a special salute to everyone smiling through the challenges of this economy – but a special salute to the moms and dads out there who are doing their best to keep the lives of their children filled with happiness, love and hope.

Well, the final figures are in for August. There were 22 single-family homes sold in the 95023 area for the month. That's a pretty dramatic drop off a cliff from the previous months this year. Of those, 13 were either a short sale or a bank owned home. That represents 59% of sales.

Sales prices ranged from $156,000 to $481,000. If we look at sales prices in Hollister from the beginning of the year we see a roughly 20% drop in average and median sales prices from January through the end of July. In May we had 54 sales. In June we had 51 sales. In July, when the federal tax credit 60-day window from the end of April ended, we had 40 sales. The average for January through July was 42 sales per month. The 22 sales for August represents nearly a 50% decrease in sales activity as compared to prior months this year. Let's all hope that August was an anomaly. For a lot of reasons.

This graph tells the tale pretty effectively.

What do you think? Which way are we headed? Are things getting better? Worse? About the same?

If you like graphs you can click here to get some more information about how the real estate market looks so far this year.

Here's hoping things for you are looking bright and shiny.

I watched a movie called Marley & Me the other night. I read the book a couple years ago and loved it. So I was a bit wary of the movie. After all, how many times have readers been disappointed by a film adaptation of a beloved book? I was afraid this might be one of those times. It wasn't.

I have three dogs, myself. And other than a single stretch of years have had dogs my entire life. They are a big part of my life. I can't really articulate the feeling I have about dogs. But I have an affinity for them. Always have.

So I watched the movie and enjoyed it thoroughly, despite it being a little different than the book. It propelled me back in my mind to times gone by, allowed me to relive some moments with four-legged friends I have had to say goodbye to over the years – good and bad. After all, without spoiling the movie (or book), that is one of the themes: we take the good with the bad when it comes to dogs. And it's worth it.

So I was thinking about it this morning while I was walking Jersey (the 90 lb. chocolate lab that lives next door.) About the movie. About the book. About the many dogs I have had in my life through the years, including the three I have now and the foster-dog I have living next door.

There are a lot of reasons to love dogs. I know some people don't. Some people are afraid of them. Maybe a bad experience in the past created fear and dislike. Or maybe some people fall into the “I like Cats... I am a Cat Person... so I can't like dogs” thing. For the record, I like cats too. I've had my share of them.

There are all the usual things we have all heard about dogs. They are loyal. They need love and attention. They love us no matter what. They don't care if we don't look our best, get that promotion, drive a fancy car or live in a mansion. They just love us.

And I believe those things are true. But after some thought (which hurt my brain, as usual) I think the number one thing I love about dogs is that they are terrible at being disingenuous. They are innately honest creatures.

That's right. What I love most about dogs is – “Dogs Don't Lie.” Sure, they will hope you think a burglar broke in and ate the sofa cushions. But their tail between their legs and the way they hang their head when they greet you at the door tells the real story. They just hope you will love them anyway.

If you have ever had dogs, you know what I mean. You've seen the look I am describing. Though sometimes they act like nothing happened when you get home (because they already moved on to chewing something they were supposed to chew on). When you ask “what did you do?” they will tell you with their body language that yes, it was them, they did it. They can't help themselves. They are hard-wired that way.

For most dogs it's not so much a matter of whether or not they are great, but of whether we give them a fair opportunity to demonstrate it. Of course, that might also be true of people.

Well here we are with one day to go in the month and it's not pretty, folks. I am really hoping against hope that we see a lot of escrows closed today and tomorrow. But I can't imagine enough of them closing to prevent what, on paper, looks like a horrid month (another one!) for real estate in our area.

As of a few minutes ago there are a total of 15 closed sales of single-family homes for August in the 95023 area. Unless that number rises dramatically in the next 36 hours we are looking at roughly a third to a half the number of sales in August that we had in July. Ugly.

Of the 15 closed sales, 9 of them were either a short sale or a bank owned home. That's 60%, which is a little higher than usual, but still in line with how things have been for quite a while now.

The number of listings continues to grow. We are up to 163 single-family homes listed in the 95023 area as of 11:00 AM this morning. Of those, 86 are either a short sale or bank owned home. That's 53% of the available home inventory, which is on par with what we have been seeing for quite some time.

High unemployment has people wary of large purchases. And those with jobs are, in many cases, barely getting by, many due to under-employment, work hours cut or salaries decreased.

If there is a silver lining I suppose it would be interest rates. They are incredibly low. For anyone in the position to buy, this really is a great time. Borrowed money is cheap right now. How long it will stay that way remains to be seen. But I can't imagine rates racing upward due to anything less than another national financial catastrophe. I don't consider that too terribly likely. But hey, no one saw the current mess coming either. No one has a crystal ball, no matter how big their smile or how good their TV commercial.

But there is one thing I have noticed. People seem to me to care about each other a little more. Sure, there are some people that have been untouched by the current state of affairs. But most have seen the effects of what is going on around them. Most have seen friends lose their house, if they have not lost their own house. Most have see friends forced to leave the area to find work, if they have not had to consider it themselves.

There's a connection between people that seems somehow stronger. There's a look in the eyes of our neighbors, people at the grocery store and elsewhere that seems to be saying, “we're all in this together.” There's a renewed sense of what really matters. I note that people are quicker to shake a hand, offer a hug or give a smile. Even if they themselves could use the same gift from others. “How are you doing?” seems to hold so much more meaning.

Despite the state of our economy, despite the state of our real estate market, despite how hard things are for so many – I find my heart filled with hope as I look into the eyes of the wonderful people of Hollister and the surrounding areas. We're tough. We can be knocked down. But we always get back up again.

The end of the month is nearly here. And as of right now there are 13 single-family homes that have closed escrow in August. There will be more. This is the last Friday of the month, after all. And we still have Monday and Tuesday of next week. But no matter how you slice it, 13 closed sales at this point in the month is pretty anemic.

As I have written about before, sales seem to be on the decline and inventory seems to be increasing. That puts significant downward force on home pricing in our area.

Nationally, sales were down over 27% in July. That's huge, people. You may recall me saying that we'd have to wait and see how big an impact an end to the federal tax credit would have. Well... now we know. And fears of a “double-dip” drop in the real estate market are no longer an occasional thing. Most analysts I am reading seem to think it's a strong likelihood. Here's an example of one of the articles detailing things.

Locally, of the 13 homes that have closed escrow so far this month, 9 of them were either a short sale or a bank owned home. That's not a typo – 69% of sales so far this month are distress sales.

We are up to 160 single-family homes listed for sale in the 95023 area as of a minute ago. Of those, 84 (52%) are either a short sale or a bank owned home. The numbers don't lie. It's a very rough market.

With national unemployment figures at just under 10%, and unemployment in San Benito County at 15-20% depending on the source of the data, a lot of people are just not in the position to be able to make a home purchase. And many of those who are able are living with the daily fear of whether their job will be the next one to be cut in the name of keeping a business afloat. Those people are often understandably afraid to commit to a home purchase. It's a scary time in the job market for a lot of people. And these numbers don't address the many people currently under-employed.

On the bright side, interest rates are unbelievably low. Anyone with any equity in their home (I know – who has equity?!) might consider whether refinancing into a lower rate makes sense for them. If you are in this position, first let me congratulate you. And then let me suggest calling to see whether a refinance makes sense for you.

Where do you think things are headed? What is your situation right now? Better? Worse? Your thoughts are always welcome.