October Real Estate Reports: Confront the Brutal Facts
1st, the Brutal Facts
The euphoria of this week’s Presidential election is quickly wearing off. The ten-million pound gorilla, ECONOMIC CRISIS, is sitting smack-dab in the middle of our national living room. Friday’s press conference by President Elect Obama was sober and somber. President Bush’s reassurances that his administration will help with this difficult transition helped magnify the fragility in the current American economy.
Then, there were the Real Estate market reports and press releases from the local multiple service and newspapers. I must say, up-front, that there is little in these reports that makes one want to rush right out and buy a house. In fact it’s obvious that the self-appointed leaders in the area aren’t facing facts:
The NWMLS press release from November 6th is a mish-mash of facts and figures mixed together with half-baked statements such as:
“Despite the uncertainty of the financial markets, home-ownership continues to be one of the most solid investments an individual or family can make.” (Lennox Scott)
Unfortunately, the report is peppered with facts and statistics that don’t support this claim. King Co. pending sales dropped 27% from a year ago. There were double digit drops in all counties. Listings have dropped, prices are down 7.4% from a year ago. Prices for single family homes fell about 9% last month compared to a year ago. These facts don’t justify an “optimistic” perspective in my book.
Let’s review some of the headlines in the local press:
Area faces bleak real estate forecast, SeattlePI, November 7
Median King County house price falls below $400,000, Seattle Times, Nov 7
House sales slip in county, SeattlePI , November 6th
House prices down again, expected to get worse, SeattlePI, Oct. 29
This all reads like a bad dream, doesn’t it? At times like this, I like to turn to those wiser than myself for advice:
Here’s the lesson:
Jim Collins in his landmark book, Good to Great, describes what he calls “The Stockdale Paradox.” Collins states that all great organizations embrace a worldview in which they “stoically accept the brutal facts of reality while at the same time maintain an unwavering faith in the endgame, and a commitment to prevail in spite of the brutal facts.” (paraphrase). This concept is named after Admiral Jim Stockdale who was tortured over twenty times while in captivity during the Vietnam War. One of the key moments in Good to Great is when the author asks Stockdale: Who didn’t make it out of the prison camps? His answer: “Oh, that’s easy, the Optimists.” Stockdale simply said that those who didn’t survive lived with false hope; they didn’t confront the brutal facts of the current reality. Tough words, indeed, yet I can’t help but relate them to the current “brutal facts” in the real estate market. There is a disconnect between what experts hope will happen and what is actually happening in the market today. I would encourage you to read more about Admiral Stockdale but for now let me tell you what I think:
1) The facts show that this is the most challenging real estate market in recent memory.
2) The facts show that prices, sales, and market confidence are moving downward.
3) The facts show that lenders ARE lending. Homes are being sold. People are buying.
4) The facts show that national/international challenges are impacting the way in which banks are lending money.
5) The facts show that we may be in this situation for a long time.
6) The facts show that even the “leaders” are struggling to make sense of the market.
Conclusion: Confront the Brutal Facts. Toughen up. Realize that there are opportunities out there, you’re just going to have to work harder and be smarter to prevail. Deal with it.
