Real estate isn’t as sexy as it once was, and it probably won’t be for a long time to come, according to the pros.
Why would I relate real estate to sex, you might ask? Well, you know the game of association, right? I’ve been thinking about Donald Trump lately, someone who’s certainly associated with real estate. I’m about to change my home address to a magnificent structure bearing his name and, somehow, as odd as it may seem, I sometimes recall that infamous comment that Marla Maples made about The Donald that all guys must secretly wish someone had made about them at some point in their lives. Admit it, guys.
But, just this week, the comment about real estate not being very sexy any more was made to me by J. Philip Faranda, president of the Hudson Gateway Multiple Listing Service, when I called him to comment on its third quarter report. The report indicated that sales had slowed down somewhat when compared with the same quarter last year.
He was referring to how sexy investing in real estate seemed to be in the early 2000s when the big bubble was yielding double-digit appreciation, multiple offers on overpriced properties and subprime mortgages with zero-down payments. It was a heady time when there seemed to be no ceiling in sight. That is, until the bottom fell out in 2007 and we were all left holding the bag with the worst economic conditions the nation had seen since the Great Depression.
As a realtor, I was wondering for a while whether I had chosen the right parallel career for myself. I had always liked sexy jobs, like the one I enjoy as a public relations practitioner. Suddenly, as I shared with Faranda, real estate wasn’t as sexy to me anymore.
“That’s a good thing,” he responded, “if you’re talking about the absence of the drama of volatility in the market. Anything that behaves like an investment is either going to be high risk, high reward – in other words, a gamble–or it’s going to be more stable, on the conservative side and maybe a little boring. During the bubble, you had people using discretionary income, gambling in a high-risk way; they were winning and it was great…until they weren’t winning anymore.
“But when it comes to your home, you don’t want to gamble; you want stability,” Faranda continued. “You want to come home knowing that your roof isn’t leaking and that there’s no padlock on your door. It’s the place where we raise our children. It’s a sweet place, full of memories; it’s not a place for a roller coaster ride with a lot of drama. In short, we just want to know that it will be there. As realtors we have to stop selling homes like a 401(k). As buyers we have to approach it the same way. People have to live within their means and not invest in a house like they’re using discretionary income.
“As David Lerner would say, buying a home should be ‘the solid middle ground’ kind of investment.’”
While Faranda said that stability is good for the real estate market, he concedes that people have a short memory and surely they will forget the lessons learned. “After a cycle of stability, there will come a time, probably in another 10 years, where the cycle we’ve just experienced will repeat itself yet again,” he said. “People just forget, and history repeats itself.”
In this region, while sales decreased by 2.7 percent in Westchester, they increased 3.1 percent in Putnam, although that number is somewhat skewed by very low sales in the same quarter in 2013. The median sales price of a home in Westchester increased by 4.7 percent to $682,500 over 2013. In Putnam County, there was a drop of 3.8 percent in the median price to $320,000.
Inventory is still relatively low, which is troublesome because, as Faranda said, “If you can’t sell a house, you can’t buy a house.” But a factor showing relative stability in the housing market is the low interest rates for a 30-year conventional mortgage, ranging between 4.2 and 4.4 percent during the quarter.
So maybe the sex in real estate isn’t as great as Marla proclaimed for The Donald, but when it comes to having a roof over your head, it’s probably much more satisfying in the long run.
Bill Primavera is a Realtor® associated with William Raveis Real Estate and Founder of Primavera Public Relations, Inc., the longest running public relations agency in Westchester (www.PrimaveraPR.com), specializing in lifestyles, real estate and development. His real estate site is: www.PrimaveraRealEstate.com and his blog is: www.TheHomeGuru.com. To engage the services of The Home Guru and his team to market your home for sale, call 914-522-2076.