Realty Bites

Do you have distant family members who send you a Christmas letter every year but don’t interact with you at any other time? How about friends who send a canned greeting card on your birthday but don’t include a personal note?

I call this type of communication “relationship pinging.” It’s a term I coined about twenty years ago. At the time, I was receiving messages from a former college classmate who would send a mass e-mail to everyone in her address book. The theme was always the same: “Here’s a cause or charity I’m interested in at the moment, and I expect you to contribute.” She reacted angrily when I responded, simply, “Unsubscribe.”

I’ve had people alert me every time a dog goes missing at a Wal-Mart somewhere in America. Some people send me every joke that comes across their desk. Others want me to know about every bulletin they see on Fox News or MSNBC. These messages are always about them, not me or us.

The etymology of the term “relationship pinging” will be obvious to some of you. In the early days of personal computers, Internet connections were not persistent. That is, if you failed to type a keystroke every few minutes, your connection would “time out” and  be lost. You would then have to log in again, a powerfully annoying feature. Some bright young programmer came up with a little bit of code you could run on your computer that would “ping” the connection at regular intervals to keep it from timing out. A ping was just a tiny packet of meaningless information sent to the server to remind it that you were still there.

Relationship pingers are doing the same thing — trying to keep the relationship alive with minimal effort and no meaningful contact. It’s a phenomenon that has existed for centuries, but it is particularly prevalent during the age of Facebook, when people have replaced actual friends with “buddy lists.” People no longer get together to share stories of their lives over a sidecar. Instead they post to their “wall” once in a while. Some have taken it to a perverse extreme, tweeting every few minutes to let their “followers” know, “I’m eating the awesomest burrito right now.” (Thanks to Alex Watts for that one.) The personal relationship is dead.

I sometimes feel this blog is an extension of that problem. There isn’t enough interaction here to give me the sense that anyone is actually reading my posts. Of course, this is mostly my fault for not publicizing this blog, but I wonder. Do people actually read blogs? I don’t know. But I’d love to hear from you.

If you don’t know, I like to take pictures. As a kid, I tooled around with my all-manual Minolta SRT-201 and thought I was hot stuff. Until, that is, my brother Steve picked up a camera. It was instantly clear that he was the one with creative talent, so I dropped the hobby and didn’t take another photo for decades. Four years ago, a good friend who loves electronic gadgets and knew I was leaving for a month-long trip to Europe gave me a lovely gift — a digital camera that could fit in my pocket. I’ve been having fun with it ever since, without a trace of sibling rivalry, of course.

I know this has nothing to do with real estate, but I thought you might enjoy seeing some wildlife pictures I took recently on an extended trip to Florida.

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Eastern Lubber Grasshopper

I came across an old post on my friend Laura Koehne’s blog this week. It’s from last year (all right, all right, I’m behind in my reading — aren’t you?), but it’s still fresh and relevant today. Laura is a gifted career coach, and she writes movingly about social networking in the modern age. For those of us who, say, write real estate blogs or spend hours on Facebook and Twitter, so much or our time is consumed by electronic interactions that we neglect the people around us. That’s right, people. Remember them? In the old days, social networking was accomplished by getting together for dinner with your family, going bowling with your friends, having coffee or cocktails with your colleagues — you get the idea. What happened to those days? I’m following Laura’s lead and making most of my interactions with other people in person or at least by telephone. I hope you’ll do the same.

Here’s a link to Laura’s post: Why I’m Not Hiding Any More

Q. Have home prices hit rock bottom?

A. Yes. And no.

As most of you know, I’ve been bearish on home prices since 2002, when I first began warning my clients to stay out of real estate investments if at all possible. Sell your home now and rent, I told them. The economic news has continued to be dire since then, and there are few signs of a lasting recovery in sight. And yet, somehow, the stock market has been rising steadily, which bodes well for the real estate market as well. What’s going on?

Certainly there is plenty of reason to fear another downward spiral in prices. The lending environment is, shall we say, challenging. A large proportion of recent sales have been foreclosures and their close cousin, short sales. (A short sale is simply a sale in which the purchase price is not sufficient to pay off the mortgage.) And we can expect wave after wave of foreclosures in the future as people struggle to pay their mortgages while out of work and unable to find jobs. Things look pretty grim. And yet.

And yet, stocks have bounced back strongly from their lows last year. What gives? The Yale economist Robert J. Shiller may have an answer. He suggested recently that home prices aren’t tied so much to economic data as they are to homebuyer sentiment. Indeed, if you ask around, many people are enthusiastic about the prospects for improvement in real estate prices. There seems to be a general sentiment of optimism among people who have been sidelined by falling prices. If enough momentum develops, recovery could become a self-fulfilling prophecy.

In my opinion, it all hinges on whether there are enough buyers who can still afford to get into the market for real estate.

I don’t read the Baltimore Sun, but an alert friend sent me a link to an article that appeared January 12, 2009. The headline was “Baltimore-area home prices fell 3% in 2008.” Gosh. Kinda makes you wonder: Where do they get these numbers from? If anyone reading this blog owns a home in Baltimore that has fallen only 3% in the last year, I’d like to hear from you.

Hey, good news. The world didn’t end last week! Anyone care to guess what the stock market will do next week?

Q: Does your home price hype cycle theory apply to the stock market?

A: We’ll find out next week.

There was, in fact, a headline on the front page of The New York Times on Sunday, October 12: Those with a Sense of History May Find It’s Time to Invest. To my way of thinking, this is the rough equivalent of The Worst is Over. As you know from my previous post, when The New York Times reports the worst is over, the worst is just beginning. It is entirely possible that the stock market continues to drop sharply next week.

Consider another unattributed article from the Times on the same day. This one was quite clever, comparing today’s news to actual quotes from 1929, just moments before the stock market crash. Here are some excerpts from the piece:

From a “Wall Street Analysis” by Thomas C. Shotwell in “The World Almanac for 1929″:

The market is following natural laws of economics and there is no reason why both prosperity and the market should not continue for years at this high level or even higher. MORE →

C’mon kids. In my very first post I invited you to ask questions, let me know what topics are on your mind. What are you waiting for? Don’t be shy. As anyone who knows me could tell you, I have plenty to say. So, what would you like to hear about? Lay it on me, string bean.

That was the lead headline that came across my desk today in National Realty News. Here’s an excerpt:

Data through February 2008, released by Standard & Poor’s for its Shiller Home Price Indices, the leading measure of U.S. home prices, show declines in the prices of existing single family homes across the United States worsened in the second month of the new year, with 17 of the 20 now reporting MSAs [Metropolitan Statistical Areas] posting record low annual declines, 10 of which are in double-digits. MORE →

If you’ve been paying attention, you already know my answer: it depends.

Prices are certainly lower than they were two years ago. In some cases, a lot lower. But that old adage still applies: Just because something has fallen in price doesn’t mean it’s cheap. In fact, I believe we have a long way to go before hitting bottom. It may take years for prices to recover. Whether you should buy depends on the answers to quite a few questions, including: 

• Are you upgrading from a less expensive home? If so, the longer you wait as prices fall, the more you’ll save on the house you buy than you’ll lose on the house you sell.
• Are you downsizing? Then the reverse is true. You’ll lose more on the house you sell than you’ll save on the house you buy. Take action as quickly as possible.
• Will you kick yourself if you miss the next real estate boom?
• Can you imagine yourself renting for a few years? (Hint: it’s what I decided to do when the market peaked.)
• Are you honestly willing to pay a fair market price for your home, or do you demand a bargain?
• Do you have a choice? Or is your employer/spouse/school the real decider-in-chief?

The truth is, buying a home isn’t the right choice for everyone. A good Realtor® will tell you when it isn’t. That’s a sure sign he cares more about helping you in the long term than about making sales in the near term, don’t you think?