In the current issue of Crain’s New York Business, there was an editorial on the hyping of real estate. I thought it was pretty good, especially ’cause I was named as the voice of reason.
If the top 10% of transactions (those for more than $3 million) were excluded, Manhattan apartment prices were flat for the past two years, notes Jonathan Miller, the appraiser who is the savviest observer of the local residential market. In fact, Mr. Miller has been pointing out for most of the past year that the activity in the most expensive segment was distorting the average price and that the decline in the number of transactions spelled trouble. He always insisted that Wall Street bonuses drove the market, not international buyers.
The concept for sharp-minded people:
Live by the sword,
die by the sword
My observations of real estate professionals in housing markets as they begin to weaken seems to go like this:
- Over hype the positive
- Spin, misdirection
- Passive acceptance
- Jump on the bandwagon
- Over hype the negative
Many agents are doing a better job in relating to the current environment, but there are still stragglers.
I had an agent come up to me last week after I spoke at the Inman conference on Friday and asked
why do you paint the market so “negatively”? How can you possibly know what the numbers really are?
I’d like to consider myself a “neutral observer.” I got beat up in 3Q 05 and again in 1Q 08 when we had significant evidence of weaker conditions. The punishment often came from top agents, who perhaps had more to lose? In each case our results were status quo after acceptance of the new market was realized – usually 1-2 quarters later.
Change can be hard to deal with.
Tags: Wall Street Bonus, New York Observer
JM… Totally agree… Our agents need to first learn the “truth” and data, then learn how to “speak the truth”…our clients want “real” information so they can make informed decisions…as i said to you after Inman…we need to tell the real story, but as always, it is all in the delivery :-)…
Right on Laura!
I thought it was a given that real estate agents tell something other than the truth. Indeed, I have learned to seek reliable information from someone other than a sales person–and that is basically sales of anything. They want you to buy and to buy from them. Whether you know what you are doing or not is definitely not their priority. Puffing is still dismissed with a tsk, tsk and there is a huge defense incorporated into the law called buyer-beware. I have taken appraiser instructors (MAIs) to task for commenting that appraisers are salesmen first. NOT EVEN. Once confronted, the defense is that we must sell our competence and our report conclusions. BALONEY. NOT EVEN. Salesmanship of any kind I have ever seen has no place in the appraisal profession. Our competence and conclusions must be supported not sold, period. In the mean time, beware of the accuracy of the MLS and reccomend therapy for Yun.
DONT CHANGE JM! WE NEED YOU! WE NEED YOU! Unfortunately with a such a huge vested interest in the deal occurring, many agents will utilize sales tactics to get the deal done. I think this slowdown will ruin alot of business for those agents that painted a rosy picture throughout this entire mess. Especially publicly.
Noah – thanks! I was hoping you wouldn’t convert your favorite saying within the context of this post: “catch a falling sword.” 😉
Right on Laura!
I’m confused, so does this mean that things in the bottom 90% should sell today for what they sold for in 2006/2007 ?