Are you worried about stagflation? More to the point, do you
know what it is? No, silly. It’s not the result of an adult male
deer that’s been wandering around in the bean fields too long.
Rather, stagflation is a macroeconomic term used to describe a
blend of lackluster growth coupled with rising prices and
unemployment.
Are you worried about stagflation? More to the point, do you know what it is? No, silly. It’s not the result of an adult male deer that’s been wandering around in the bean fields too long. Rather, stagflation is a macroeconomic term used to describe a blend of lackluster growth coupled with rising prices and unemployment.
The term came into being during the 1970s (Remember disco? Now where are those slinky silver stilettos I had?), a period in time dominated by slow growth, a weak labor market, high oil prices and rising interest rates. Does this sound at all familiar?
According to recent articles in the Washington Monthly, the Week, and the Economist the specter is raising its ugly head again, and some real estate professionals believe it could have a huge impact on real estate in particular. Why would that be? A couple of reasons. First of all, many people have gotten into homes with 100 percent financing recently. This means they have no money in the deal. While equity was rising rapidly that was a good thing. However, now that the price point has pretty well flattened, buyers no longer can look to increased equity to keep them in the deal. Couple that with an adjustable mortgage, where monthly payments could be increasing. So now the buyer got into the home without risking a penny. They haven’t made a dime in equity. Their payment is creeping up and so is the cost of gas, food, clothing, etc. What’s their reason for continuing to stay in the home? Why shouldn’t they just walk away and rent someplace cheaper?
It is an interesting question, isn’t it? Time will tell. I wouldn’t jump on the panic button yet, but you might want to keep it in the back of your mind … next to where you left your keys and who that person is in the grocery store – looking familiar and knowing your name – whom you can’t quite place.
Did you get to the rodeo at Bolado Park in Tres Pinos last weekend? If not, you missed one the wonderful events of San Benito County. Get to it next year. And what about the parade on Thursday in historic downtown Hollister? I was the one driving the little blue convertible with words and giant pencils and a notebook for the San Benito Writers Group. Whoa, doggies, we had a great time! Sure it’s hokey, but it’s such a warm and hometown celebration, creating a sense of belonging and wonderful memories to treasure. Make a note to grab some kids and get downtown next year.
What’s new in the marketplace these days? We’ll look at south Santa Clara County first. Inventory stands at 489 available homes. There were 70 new listings, and 27 owners accepted contracts. The inventory shrank with 4 properties withdrawing from the market, 29 canceling listing agreements, and 6 listing contracts expiring. Sales were completed on 19 properties.
The stats were similar though on a smaller scale in San Benito County. Inventory at 324, 33 new listings, 13 contracts, 10 closed escrows, 6 withdrawn, 7 canceled, and 6 expired.
You can see there are still buyers and sellers out there, and our market is what we like to call “balanced.” This means there are enough homes so that buyers get a choice, but the market is paced so sellers don’t have to give away the farm, so to speak. Days on the market continues to elongate so the increased number of cancellations and expirations and withdrawals of listings has more to do with seller impatience than actual lack of sales.
For a good picture of what is happening in your neighborhood, contact your local Realtor. Even if you’re not ready to buy or sell but are contemplating it for the future you can begin a dialog so you’re ready to jump when the timing is right.
At the San Benito County Association of Realtors’ marketing meeting on Thursday agents from throughout the region meet to tour new listings, compare notes, and update one another on the status of properties. What’s the trend there? We’re seeing prices reductions beginning to come, and commissions going back up to the traditional 6 percent.
Why are commission rates rising again? Two reasons. First of all, the inventory is large. So imagine your home is competing against 20 other homes similar in size and amenities. Six of those homes are offering 3 percent to the agent who brings in a buyer, and 14 of them are offering 2 to 2.5 percent. Which homes do you think most agents, who will work with the seller for six to eight intense weeks, will choose to show first? At a reduced commission, a home will get shown in the second or third time a buyer goes out with the agent. (You can’t look at all the homes at one time…they start to blend together.)
Second, top agents tend not to discount their fees. They offer more marketing services, and hence have more expenses in their businesses. As the market becomes more competitive for sellers, many people discover the wisdom of not “saving” money when they sell but in investing in a professional to maximize the return on their large investment.
Get the facts. Make a choice that works for you. And then be kind to your Realtor.
