Amidst all the excitement over the end of 2008, the local paper published some articles that you may not have seen. Well, alright, you probably saw them, 2 of them were pretty big headlines, at the top of the page. The morning paper had the headline “Jobless rate here hits 5%, highest since September ’92”. The evening paper ran the headline “Home sales here hit 25 year low”. Buried in the business section of the morning paper was an article titled “Consumer confidence at an all time low”, right beside another titled “It’s time for vacation – unpaid that is”.
Tough stuff. Sounds awful. So, what does it mean for us, in real estate. Let’s take these things one at a time, shall we?
We’ll start with the home sales. It’s true, for the month of November, the number of closed sales posted (281) was down 35% from last year (I saw that one coming from the pending sales forecast, watch for more of that from me in the future, December won’t be any prettier) and that level is probably the lowest single month since 1983. The total number of transactions is overall lower than it has been in at least 8 years. So, we have less people buying homes here, but we also have less home coming on the market, as new listings were also down about 17%. Sometimes we have to remember the right perspective. If we had a ton of new listings coming on the market at the same time activity is going down, we would be in really bad shape, but if the number of new listings keeps falling in conjunction with the number of sales, the lines track each other nicely and add up to a fairly healthy inventory. I did an graph last month to show the trend I am mentioning here, it is interesting how the new listing volume (green) tracks so closely to the sales volume (red).
Prices bear discussing as well and they are fairly stable, partly because we never had the huge run up in prices other areas have seen. Here in Lancaster, the MLS does not yet reflect all the year end closings and probably won’t for another couple of weeks, so expect this to change, but the average residential sales price appears to be $187,449, down about 3 percent from last years average sales price of $194,507. When you compare us against market like California, where prices dropped 25% to 30%, we look pretty darn good. The year will end here in Lancaster with sales volume down about 24%.
To understand this phenomenon, why we have less activity while prices remain stable, interest rates are super low (5%), yet buyers and sellers aren’t jumping in, we need to look at the rest of those articles I mentioned.
Jobs. Will your job be there next week? That’s what many of you are wondering. Lancaster County has lost some jobs recently, some larger employers have closed down or downsized and while we aren’t anywhere near the tough times people in the midwest are seeing, if you lose your job it hurts. Our unemployment rate is at 5% because of those changes, but it’s still the third lowest in the state. There is a growing trend in the business world of furloughing employees, just telling them to take a few unpaid weeks off until business picks up. So, while you still have your job, you just lost those weeks of pay. We also have a number of workers whose hours get cut back on a regular basis, from 40 to 30, or overtime just disappeared, many people in Central PA are having to do more with less.
Is it different here than anywhere else? Actually yes, it is, it’s better. Despite all of the bad news, it is better here than most of the country, numerous financial publications have consistently ranked Lancaster County as one of the best economies and housing markets in the nation. Cold comfort if you are one of the ones hurting but we should be happy with what we have.
So, if we are better off, if our unemployment rate is among the lowest in the state, if our economy is relatively stable, why the lack of action. Well, in a word, it’s fear. Consumer confidence is at an all time low. People have been bombarded with negativity, so it’s no wonder. How many giant headlines about lost jobs and tough times can you read before it becomes a self perpetuating cycle of fear? It’s not just the headlines, it is the reality, the staggering arrogance and greed of finance leaders and CEO’s who bet your savings on their own profits, who mismanaged your money and then when their actions pushed your nest egg down by thousands of dollars, went to the government and said that without a hand out they would go under. So, they get the handout, the market tanks anyway and they have the audacity to say the “decline to disclose what they are doing with the bailout money”! It’s no wonder people are angry, frustrated and scared!
Fear is keeping people from moving forward. The 2008 National Association of Realtors Survey of Buyers and Sellers listed some interesting statistics. I thought the most interesting of all was that out of the 10,000+ responses they received, 62% of the buyers bought because it was “the right time” to buy. Not because of interest rates, not because of the right home being available, but because it was the “right time”.
If you needed any more proof that humans make buying decisions, especially big ones like buying home, based more on emotion than logic, I don’t know where to find it. Fear is why no one is moving in Lancaster County. It keeps sellers from listing their homes, buyers from buying, it makes people want to hide in their living rooms until “things get better”. Don’t believe me? Next time you meet someone who talks about buying or selling in the future, ask them why they aren’t doing it now. The answer will most likely be because they are waiting until things “get better”.
I for one am looking forward to 2009, a year where fear does not rule people any longer. Things are changing, changing for the better. I’ll leave you with two thoughts, one from Nobel peace prize winner Aung San Suu Kyi who said “Fear is not the natural state of civilized people”. We cannot exist in a state of fear forever. I am not downplaying the realities here, but if it is fear, fear of making a mistake, fear of doing the wrong thing, fear of change that prevents you doing what you want in life, then ask yourself how long fear is going to rule your life, how long will fear hold you back, delaying the inevitable?
The last thought is a piece from Shel Silverstein:
“The hens they all cackle, the roosters all beg,
But I will not hatch, I will not hatch.
For I hear all the talk of pollution and war
As the people all shout and the airplane roar,
So I’m staying in here where it’s safe and it’s warm,
And I WILL NOT HATCH!”
No matter how much the chick wants to wait, hatching is inevitable. As always, if you are ready to hatch, you can call me Direct at 717-371-0557 or at the Office 717-490-8999, email me at Jason@JasonsHomes.com or send me a text message using the tool to the right of this post! Happy 2009!
Your Friend in Real Estate,
Jason
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