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To the Editor:
ReMax associate broker Nancy Rea’s blaming the media for keeping buyers from the severely depressed real estate market (Aug. 3) misses the truth by a light year.
The slump in the housing market — best described as a bubble still in the process of bursting — was the direct result of a wildly overheated market in 2005 that was caused by the real estate industry: overly exuberant agents, developers, appraisers and aggressive, even predatory, lending practices.
During the “good times,” when purveyors of real estate were making money hand over fist, buyers were exhorted: “Hurry up and buy at today’s prices, because tomorrow you’ll pay even more.” Greed clouded everyone’s good senses. Sellers were encouraged to list their homes at unrealistic and unsustainable prices. The lending industry obliged and a feeding frenzy was under way.
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Of course, the result was easy to predict (as I did in a series of print and radio ads, as well as in a feature article in the Sierra Vista Herald in May 2005). A serious leak in the bubble began at beginning of 2006 when buyers became tapped out with unrealistic mortgages. In a few months, the inevitable foreclosures followed. New buyers saw the light and backed away from the market in horror.
The media may be blamed for many things, but their reporting the status of the real estate mess is not the cause for bursting the bubble. The media simply reflect the reality of the housing market at any given time. The present reality is that new buyers have become educated to and wary of the gross excesses that created the financial pain presently being experienced by a large number of buyers.
Rea urges buyers to jump into a market that is presently clogged with an excess of homes for sale, thus bringing the bursting bubble to a halt. That might be nice for the real estate industry, but it would be counter to “market forces” that are now in charge and, in my opinion, point to the bottom somewhere farther south.
There is nothing mysterious about “market forces.” They consist of two major components: (1) A willing and able buyer negotiating a price with a sincere and willing seller; (2) The real estate industry (agents, lenders, and developers) giving honest, realistic information and counsel to buyers and sellers.
Here is my counsel: To buyers, caution and prudence; don’t jump before analyzing. To serious sellers (not speculators or those looking to create a retirement bonanza): be flexible and explore openly with able buyers a price both can live with. To agents and developers: be realistic by being informed and honest with their clients.
Howard Janssen
Independent broker, Scarabeus Realty
Mary wrote on Aug 10, 2007 3:18 PM: