Realty News - January 2014

Market Conditions

$38,000,000. That’s how much residential real estate my team and I sold in the past twelve months. Not bad, huh? It’s more than the average agent would hope to sell over a fifty year period of time. Then why am I feeling just a bit less than celebratory? Probably because it’s 5% less than the $40,000,000 that we sold last year. Don’t get me wrong- I’m very proud of our accomplishment. However, we were predicting an increase of more than 10%. What went wrong?

It turns out that our inability to meet our goal had little to do with the manner in which we were conducting our business. We’re still providing really great customer- focused service. Actually, our clients are more satisfied than ever. Instead, the decrease in sales had more to do with demographics. November 2011 marked the beginning of the end of the downturn in the local real estate market. The month of the year that is traditionally a period of lackluster home sales turned out, remarkably, to be the beginning of an eight month run of incredible real estate sales. The 2012 spring market kicked in three to four months early and ran at breathtaking speed for eight consecutive months. Only with the passing of time and a bit of distance am I able to see what had really happened. Those with greater personal net worth and a higher annual salary began to feel the effects of and had a greater confidence in their personal financial well- being before those who were financially less-privileged. For this reason, beginning 26 months ago, they began to release some of the pent up real estate demand that had grown during the recession. They began to sell their homes and purchase new ones sooner than homeowners in Henrietta, Gates, and Parma. So much high-end real estate had been transacted in 2012 that, according to the Greater Rochester Association of Realtors, dollar volume of sales in more expensive markets, actually fell this past year. And, with it, so did our sales. Conversely, residents of towns that needed a bit more time to feel comfortable with the strengthening economy actually saw huge increases in sales this past year. Specifically, as of the third quarter of this year, sales in Brighton had fallen 4.3% and those in the town ofFairport fell 11%. Meanwhile, sales in the town of Chili surged 48%,while sales in Gates increased 31% and East Rochester saw a 71% jump in transactions! Incredible!

So, if the economically privileged bought and sold in 2012 and the remaining 99% followed their lead in 2013, what does the coming year look like? By all measures, Delphic or otherwise, it appears as if it’s going to be a remarkable year in sales. All of the economic indicators, both local and national, point to favorable conditions:

  • In mid-December, the Federal Reserve stated that, until the national rate of inflation approaches 2% per annum, there would be no significant increase in long term interest rates. Currently, the rate of inflation is pegged at .7%.
  • Thirty year interest rates are currently available at 4.75% while the 15 year rate is 3.875% (Be sure to call Karen Haberer at Premium Mortgage if you have questions in regard to your mortgage. Her number is 241-0000).
  • The national unemployment rate continues to tick downward. As of this writing, the national rate is 7%
    - eight tenths of a percent lower than the previous year. The local unemployment rate sits at 6.3% which is the lowest that it has been since 2008.
  • The stock market seems to reach new highs every week for the past several months.
  • Consumer confidence has increased every month for the past four months and is currently at its highest level since 2004.

The convergence of so much good economic data seems, already, to be having an impact. I’m experiencing a surge, across the entire economic spectrum, in the number of buyers and sellers who have stated that they would like to enter the market in the first half of the year.

Additionally, I believe that there is going to be an early start to the spring market. Certainly, the economic indicators are there. In addition, there was a small bubble of pent up demand that was created this past fall- demand that should be released soon after the first of the year. This past October, the United States Senate and Congress voted to shut down the federal government for 17 days. When they did so, consumer confidence temporarily collapsed and, with it, so did real estate sales. My team and I were supposed to enjoy another $2.5 million worth of sales in October- sales that never materialized. Once consumer confidence had returned, consumers were focused on turkeys and firs. My gut tells me that those who had intended on buying or selling in October probably won’t be waiting until March. They’ll most likely begin to make their presence known in January. The only uncertainty is that of the weather. So long as we don’t experience any serious storms, we should be off and running soon after the first of the year!

New Endeavors

In addition to the remarkable team that I’ve assembled the past few years, I’m both proud and excited to have engaged in a relationship with two local organizations that should help to catapult us toward $50 million in annual sales.

We’ve just concluded fifteen months of intense scholarship with executive coach Jim Mahan. A year and a half ago, I had queried twenty friends who were all successful business executives in and around Monroe County. When I asked them whether they had ever engaged a business coach, almost all of them had indicated that they had done so. When asked who they had worked with, Jim Mahan’s name was repeatedly mentioned. He’s helped us to create new processes and improve corporate culture to make us more responsible not only to our clients but also to each other. We’re looking forward to test driving our new found skills!

I’ve always admired the remarkable work that my friends Lauren Dixon and Mike Schwabl have accomplished on behalf of their clients. Their polished, world-class efforts are well known to many of us in Rochester. I decided that, rather than simply appreciate Dixon-Schwabl’s work from a distance, I would engage them to help with our marketing and public relations. One month into the collaboration and I’m more impressed than I thought possible! Look for their launch of our new web site sometime in the next couple of months.

As is always the case, let me conclude by saying Thank You. I’m grateful for the opportunity to work with such a kind, intelligent and committed staff. I appreciate the opportunity to work with so many interesting Rochesterians- many of whom, at the conclusion of a sale- I end up calling “friend”. It’s no wonder that, twenty four years after beginning this profession, I love it more than ever!