Could there be a housing shortage by the end of 2009?
By Joe Pangburn
Inside Tucson Business
Published on Friday, January 30, 2009
By the end of this year, people around Tucson could well be talking of a housing shortage.
So says Rosey Koberlein, CEO of Long Companies, who spoke at the Tucson Association of Realtors 2009 forecast seminar last month.
“Prices have dropped 16 percent this year, which will probably never happen again,” she said. “Between seller frustration, foreclosure properties and no new housing developments in the making, resale homes are going to be it. New home builders won’t react fast enough when things start going up and we’ll have a shortage.”
Multiple Listing Service numbers could be supporting her theory. The first week in January there were 228 properties under contract and in the second week there were 272 properties under contract. For those same two weeks a year ago, there 138 and 132 properties under contract.
She Koberlein told the Realtors “Whether you like the man or not, we have a new president who has given many people in this country hope. And hope brings confidence.”
She believes the median home sales price will drop slightly during the first part of the year but then start to rise and end the year up.
“Homes will sell. Buyers will buy. And sellers will sell,” she said. “That’s all we need to focus on.”
In order to focus on selling those homes, several of the brokers on the broker panel said Realtors need to get back to basics this year.
Al Mayor, a coach at Real Estate Champions, sees it as the best way to survive.
“In weaker markets, the better agents get better and the weaker agents quit,” he said. “I think it is God’s way of pruning the real estate industry.”
Mayor saw a list of the top 200 agents in the country for 2007 containing 35 of his former students. The list compared stats from 2006 to 2007 including sides, or one side of a transactions. The agents had all increased their sides in 2007 from 2006. Despite less being sold they increased their sales.
“I talked to them,” Mayor said. “And 31 of the 35 said they went back to prospecting. I know you don’t want to hear that. But we haven’t been doing our prospecting. You agents who have built a treasure chest of 300 or 400 past clients who you’ve already shown what excellent service you provide, why would you give that up? Why would you ignore them?”
Mayor said e-mail prospecting won’t cut it.
“Passive prospecting will give you a half to three-quarter percent return,” he said. “But face-to-face or voice prospecting will get about a 15 percent return.”
For seasoned agents, Mayor illustrated how their “ladder of prospecting” should look.
• Past clients
• Spheres of influence
• Expired and for sale by owner properties
• Target markets
“If you made five calls per day, five days per week 50 weeks per year, you could call 12,500 people per year,” Mayor said. “If you have 350 people you’ve sold homes to, then you can call them four times a year, what do you think that would do to your referrals?”
Sue Carter, CEO and a broker with Realty Executives Southern Arizona, tried to give those in attendance ideas of new emerging markets.
“REOs account for about 35 to 40 percent of the sales each month,” she said. “This isn’t necessarily an emerging market because we’re in the thick of it, but we need to be informed about them.”
She said other areas to keep an eye on are:
• Green housing
• Women business owners
• Foreign buyers
• Internet purchasing
“We’ve moved past the lookie loo people online and now have some serious action happening there,” she said. “People are starting the purchase process without even meeting with the agent yet.”
There is also a new set of buyers out in the marketplace, namely generations X and Y.
“Baby boomers, are you Twittering or texting?” she said. “We are slipping into new ways of communicating that your buyers want and you need to be a part of it.”
National Association of Realtors economist Paul Bishop said the housing market is weak in many areas, but not in all of them.
“Sales are relatively stable now,” he said. “From about September 2007 to September 2008 we saw right around five million homes sold each month. Sales will be lower the next couple of months but I expect them to rise.”
While many indicators look good, Bishop said it could take as long as two to three years to fully recover and reset.
“We are already starting to see some housing recovery in Nevada, California and here in Arizona,” he said. “Housing will lead the economy out of this recession.”
William Patton of the University of Arizona Eller College of Management’s forecasting project, agreed this recovery will take some time.
“Since 1999, people have been adding debt faster than they have been adding assets,” he said. “They will now be paying down all that debt instead of consumption.”
He said population growth, availability of credit and willingness and ability to pay are the drivers for the economy, in Tucson.
“We had a net migration of 175,000 in 2005, now that is back to 50,000,” he said. “It will come back though.”
For the last decade, Patton showed a trend line of median sales price and average sales price.
“In the bubble we skyrocketed off that trend line,” Patton said. “We have now fallen below it. But that is common in corrections. We will overshoot the trend line and then come back up to it and get back on track with it.”
He said current inventories at 10 to 11 months supply made it difficult to say how far below the trend line prices would go and when they would come back up.
Vicki Cox Golder, president elect of the National Association of Realtors shared what the association is lobbying for in Washington D.C.
“We want to unlock America’s economy,” she said. “We are lobbying to get the interest rate down to 4.5 percent. The problem with that is if people think things are going to keep going down they are going to stay on the fence. But things aren’t going to get much lower than they already are. Now is the time to buy.”
Calling all green product makers
The Tucson Association of Realtors is seeking green businesses that offer green products or services.
The group is hosting a green show at the Southern Arizona Home Builders Association Spring Home & Patio Show April 3 – 5 and is looking for other businesses to showcase. TAR Green Show exhibitors will be able to promote their services to attendees over the three-day weekend.
To be included in the Green Show, contact Marketing Manager Laura Kruszewski at (520) 382-8775 or laura@tucsonrealtors.org.
Submit items for Real Estate & Construction to jpangburn@azbiz.com. This feature appears weekly.
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