Saturday, March 21, 2009

Using Fear to Earn Real Estate Commissions: "Housing Prices Going UP in Orange County!"


I am searching for a home to buy in Lake Forest, California and surrounding communities. I wanted to share with you a recent real estate flyer I received via e-mail from a rather well-respected, highly experienced realtor in the area. I've removed the names to protect the shameless (except for those quoted in the flyer).

Read it. What do you think?

Housing Prices Going UP in Orange County! So Consider Buying NOW.
In case you forgot, you first contacted me through my web site at www.xxxxxxxxxxxxx.com and started searching there for homes. You have been getting your requested emailed updates from me since then.

If you are waiting for housing prices to hit rock bottom before you buy a home to live in or rent out, wait no longer.

Orange County home prices last month ACTUALLY ROSE for the first time since June, according to DataQuick.

The median selling price was $375,000 — up $5,000 from January but still down 27.9% from a year ago.

For calendar month February 2009, Orange County saw:

$375,000 median selling price that is 42% below June 2007’s peak of $645,000.
Single family homes sell for 41% less than their peak pricing (June ‘07) while condos sell 46% below their peak in March 2006. Builder prices for new homes are 42% below their February ‘05 top.

Home prices usually rise in February vs. January. Last time they fell in this period? 1999!

January was the 7th straight month of sales gains vs. the year-ago period. That follows 33 consecutive months where sales failed to beat the previous year’s pace

Delores Conway, a real estate economist at the University of Southern California, says home prices have come down 40 % in Los Angeles and Orange County since the mid decade peak.

She notes that those prices, coupled with record low interest rates, mean today’s buyers can secure the same monthly payments home buyers enjoyed six years ago."


This is marketing from a Realtor. This person is trying to earn my trust.

Look, I understand as well as the next person that even Orange County California Realtors have to earn to eat.

What I don't agree with is cherry picking recent 2 month MLS and DataQuick numbers, throwing down a fear hypothesis (prices going up) in an e-mail piece with zero supportive evidence, all in order to cajole people to buy a home and promote a self-serving, commission-paying agenda.

We've all seen this film before. And it sucks.

If I'm of just average intelligence and I read the above Realtor pamphlet with the stated 41% drop in single family home prices, I'd be asking myself "why did that happen?". "What factors could cause such a major drop?", and then determine whether this drop might continue down to 50% or 60% or more?

50%! You're crazy!! NO! NEVER! That can't happen. This is Orange County, California!

No, you've got to BUY NOW or....*yawn* you'll be priced out of the market forever you no-buying-fence-sitting-wastes-of-space!!!!!

I'm just an idiot renter here. But do we really need this? I mean, given all that's happened over the last 2 years in Orange County residential real estate, at what point do we conclude: "Hey, we should really stop ourselves with all the shameless bullshit!"?

Here's a message to Realtors from a prospective buyer: Drop the fear tactics, and do what you can to start instilling some confidence instead.

4 comments:

biting time ! said...

If I'm such a stupid fence sitter ,why do I have so much money compared to the upsidedowners and the forclosies signed moving on up !

Anonymous said...

My I humbly critique the statement to read

"I've removed the names to protect the GUILTY (except for those quoted in the flyer).


Names have been changed to protect the guilty....

Taylor said...

I don't understand why you disagree with the facts presented by this real estate agent and from Data Quick. It's a well-respected real estate data firm. Do you think the sales agent shouldn't let people know about this? Or do you think his/her interpretation of the data was incorrect? It doesn't look like the agent or Data Quick made these statistics up or anything, it looks like they're just reporting local sales and sales prices. I don't think this economic downturn is over, but I am interested in market movement and momentum and find it interesting that prices seem to have rebounded a bit.

Markus Arelius said...

Taylor,

I don't disagree with laying out facts for consumers as the Realtor tried to do by repeating numerical stats. These Dataquick numbers are probably correct regarding Jan-to-Feb sales growth. I'm not really debating the statistica resources themselves, only I sure wish we had like 4 or 5 indices that provided accurate numbers instead of just freaking Dataquick and the NAR.

What I disagree with is the interpretation and salesperson's call to action (and dramatic action at that, since readers of this flyer are being asked to make the biggest financial outlay of their lives RIGHT NOW! Not tomorrow. Not a week from now. The TIME IS NOW!)

And for what? Based on a ridiculously small sample (2 freaking months!)?

To me this is an example of Realtors finding any quark particle of good news in the media and making it into an housing rebound.

This is wrong. And not just a little bit wrong.

The only redeeming aspect of the flyer was that the Realtor did not neglect to state the obvious about the housing values being down since artifically-inflated peak of 2007. That was good to see, because it was honest.

Don't get me wrong. I know realtors are running a business and they have to sell. And they need to find customers. I think they will find those customers eventually.

For what it's worth, I believe we may be reaching the end of the downturn from a psychological market standpoint. There were will be many, many more foreclosures, bank write downs, job losses and investment losses, I believe the coming months of 2009-2010 may show us some interesting and positive turns in the economy.
And they won't be where we're currently looking.