Here’s an interesting tidbit from Realtor Chris Fountain, of Greenwich, CT.  Up until last week, he also wrote a real estate column in the local Greenwich paper.  Seems as though some of that paper’s real estate advertisers didn’t cotton to his rather honest assessments of the difficult local market, so they figured out a way to shut him up.  You can now check Chris at his blog, http://www.greenwichrealestate.blogspot.com/

Just in case you don’t trust print media to give you the true story on real estate, here’s further confirmation that they aren’t.  Of course, while every print media stock in the US continues to plunge toward 0, they aren’t going to alienate their biggest remaining advertisers: real estate companies.  Read and enjoy: 

Fired!
My publisher, Greenwich Post, has just fired me - according to the owner, it came down to a choice between my readers, who liked me, and certain real estate agencies who did not. The latter pays bills, the former does not, so I got the heave ho. Fair enough, but I question the wisdom of eliminating one of the few items in a newspaper that, according to my readers,anyway, made the paper worth perusing. If you have no readers, who will advertise? Oh well. I’ll be punching up my posting activity on this site, so please check in regularly for truthful reporting on the real estate scene. If you’d like calm, reassuring news that your real estate investment in Greenwich is doing just fine, feel free to check the Greenwich Post each week.

News Flash
One reason I was dumped was, I believe, my reporting a New York Times report that Realogy, parent company of Coldwell Banker, Century 21 and Soetheby’s, was in danger of going bankrupt. I hear from other agents that staff members of at least one of those firms haven’t been paid in 4 weeks - they got flowers on their desks this past Friday. That’s a nice touch, but try placating your landlord with a bunch of wilted orchids.

Wonder how The King of Real Estate would spin this.  Even the hopeful statistic of December’s inventory being 16% lower than in August is erroneous; inventory always declines from Labor Day through New Year’s, and the 16% drop in 2007 is exactly the same percentage drop as in 2006!  From the “Bible” of New Jersey real estate statistical analysis, The Otteau Report, dated January 25, 2008:

HOME SALES DECLINE FURTHER AT YEAR END

The pace of home sales in New Jersey declined further in December providing compelling evidence that the housing market recession has not yet reached bottom. In December, Contract-Sales activity declined 24% below the November pace and was 31% less than in December 2006. When considered against the backdrop of high Unsold Inventory levels and a looming economic recession, it appears certain that existing-home prices will continue their decline into 2008. As a result, strategies of ‘waiting until Spring’ are ill conceived as overpricing inevitably leads to extended marketing times and lower prevailing market price levels. Best-Practices for a weakening housing market is to price ‘ahead of the decline curve’ to shorten marketing time and capture a higher selling price before prices drift even lower. From the new construction persepective however, many home builders have already embraced this strategy with Right Pricing! that reflects the current market realities. For the next segment on our Right Pricing! Strategy, register to attend our 2008 Spring Workshop Series next month.

Despite the ongoing market decline, some bright spots are emerging. Unsold Inventory declined for the fourth consecutive month and now stands 16% lower than in August, reflecting 12,000 fewer homes on the market. Also encouraging is that mortgage interest rates continue their descent providing a boost to home buyers’ purchasing power and helping to close the housing affordability gap in New Jersey. According to Freddie Mac’s latest Primary Mortgage Market Survey® (PMMS®), the 30-year fixed-rate mortgage averaged 5.48 percent for the week ending January 24, 2008, down from 5.69 percent the prior week and 6.25 percent last year at this time. The last time mortgage rates were lower was March 25, 2004, a time when home buying activity was at a frenzied pace. Another positive factor is yesterday’s announcement that President Bush and House leaders have agreed on an economic stimulus package that would allow Fannie Mae and Freddie Mac to raise the limit on the loans they purchase from $417,000 to $625,500. Similarly the FHA limit would be increased from $362,000 to $725,000. The effect of such increases would be to expand the pool of money for borrowers of so-called Jumbo Mortgages thus increasing liquidity and reducing interest rates for these loans in the process.

The take-away from all of these developments is that while the market has further to fall, the bottom point is getting closer. Home buyers should take notice of these developments as 2008 presents an unusual combination of being in the ‘driver’s seat’ of price negotiations at a time of record low interest rates. Those who wait too long will eventually find this opportunity window closed when higher interest rates and firmer pricing returns to the market.

Nice to start the New Year with some sunshiny optimism, courtesy of our local King of Real Estate:

“Going into 2008 mine may not be the only optimistic voice you hear, the majority opinion is that we have passed the worst of it. The National Association of Realtors is predicting a slight increase in existing home sales for 2008. While the market may not bounce back to what it was a couple of years ago, things are not expected to get any worse.”

Well, the 10th largest bank in the US, National City, just closed its wholesale lending division today and cut its shareholder dividend by 50%. Other lenders, such as Countrywide, are discontinuing stated-income and low-downpayment programs on an almost daily basis. So…where are all the buyers going to come from that will sustain the market at its current levels?

There’s no more funny money available out there, and no more buyers will enter this market until prices take another radical dip lower. It’s not about rates anymore; it’s about affordability. And, NJ housing will need to drop another 20-25% in price- across the board- before we’ll see any significant uptick in sales.

Sellers in the current environment deserve some straight talk about what’s going on right now. And, what’s transpiring amounts to the beginning of the biggest real estate crash in American history. A seller’s best opportunity right now may be to get things done ASAP, thereby cashing out as much equity as possible, before things get worse. “The worst has passed”??? This thing hasn’t really even started yet. Every real estate boom in US history has been followed by a bust of equal proportion. That means a local market which ran up 100% from 2001-06 will retrace 50%. To date, we’ve only shaved maybe 15-20% off the highs of that market.

Of course, making a statement like the one I’ve made above doesn’t get you on MSNBC or get you invited to be a guest speaker to groups of real estate agents. However, consider that The King of Real Estate relies on a statement made by the National Association of Realtors to bolster his case. That’d be nice…except for the little problem NAR has with the accuracy of its predictions and its credibility. In 2007, NAR issued 12 (yep, one for every month) monthly housing reports, which were then followed by 12 monthly revisions of its forecast and outlook. That’s right: for the calendar year 2007, NAR batted .000. Of course, NAR finished off its stellar ‘07 by predicting a slight increase in existing home sales in ‘08. Amazingly, NAR’s new Chief Economist, Lawrence Yun (who, in mid-’07, replaced the totally discredited David Lereah) seems to have developed a projection algorithm based entirely upon hope and wish, as no statistical evidence exists to back his assertion.

I’m not down on the long-term ownership of real estate. I do not- as I have been accused- hate my own profession. There are narrow opportunities for both buyers and sellers in the current environment, and I do believe that falling prices will act as a purge that will ultimately strengthen the market by forcing a return to fundamentals in both financing and pricing of the asset class.