Housing Prices Continue to Slide: Looking Back Empowers Agents to Prepare for 2008 and 2009

During the last 10 years the global financial and real estate markets have experienced huge volatility.  We’ve had more bubbles and crises than during any other post Second World War period.  Bubbles are usually hard to identify beforehand, not widely accepted during the upswing but easy to detail with hindsight. Retrospection is remarkable, isn't it? 

Take a look at just the past two decades:

1987 Stock Market Crash

The steepest stock market drop since October 1929.

1989 - 1990 Housing Crash

House prices plunge.

1990 - 1992 Credit Crunch

Some say the worst troubles in the banking industry since the 30s.

1995 - 2000 The Internet Frenzy

Technology drove the stock market to dizzying new heights and minted thousands of newly-made millionaires.

2000 – The Dotcom Crash

Many newly-made millionaires quickly became the newly-poor.

2000 - 2003 The Recession

The U.S. economy experienced negative growth in three non-consecutive quarters between 2000 and 2001. By many measures the worst bear market since the great depression.

2001 - 2005 - Housing Bubble

Real estate prices soared in many areas, madness drove speculation and greed threw caution to the wind.

2005 - 2006 Housing Market Stalls

Many in the real estate industry faced a turning market for the first time.

2007 - 2008 Subprime Catastrophe

Largest collapse of mortgage brokerage companies and huge write offs in living history – huge jump in foreclosures and sales volumes drop dramatically.

According to the National Association of Realtors^® existing-home sales slipped 0.4% to a seasonally adjusted annual rate of 4.89 million units in January 2008. This is down 23.4% from the 6.44 million-unit pace in January 2007. The national median existing-home price for all housing types dropped to $201,100 while total housing inventory rose 5.5% at the end of January to 4.19 million existing homes available for sale. This is a new high and represents a 10.3-month supply at the current sales pace.

According to RealtyTrac, January 2008 reported 233,001 foreclosures during the month, a 57% increase from January 2007. California topped the list of states with 57,158 foreclosure filings in January, up 120% from January 2007. Florida was second with 30,178 foreclosure filings (up 158% from January 2007) and Texas was third with 14,698 properties in foreclosure.

According to the Swanepoel Tends Report, published February 2008, real estate agents can still expect a difficult year in 2008 and most likely 2009. The Report discusses numerous strategies brokers and agents can follow to increase their income and maximize the opportunities created by the shifting market conditions. As the licensee ranks begin to thin out, smart agents and brokers have an excellent opportunity to add to their knowledge, skills and grow their market share.

There is little value in hindsight unless we as real estate professionals analyze what actually happened and learn from it - the haunting question is will they?

For a great many agents that have never experienced anything other than the recent feeding frenzy this is the first time they'll be learning a lot of new lessons.  For the rest who have "been there before" it's a time to reflect on the last time through the cycle and add the new lessons learned.

Above all, as a professional committed to the business of guiding others through the intricacies of real estate transactions, you need to find ways to help clients navigate situations that are unique to the current market.  Pre-foreclosure procedures, creative facilitation of contingent buyer transactions and marketing strategies for property listings are but a few activities with changed nuances in today's market. 

Their key to success is to arm themselves with the most current information about the real estate trends shaping the future of the real estate business. Furthermore smart agents should use the downturn in the housing market to improve their skills such as Home-Staging, Short Sales, niches such as Luxury Homes, as well as maintaining an awareness of new regulations about lending practices, will go a long way toward helping struggling homeowners navigate current trends.

Real estate agents need to reposition themselves as trusted and knowledgeable real estate advisors and now is the time to do this.