Chuck Ponzi November 18th, 2005

Some avid bubble readers may have stumbled across what might be one of the most honest pieces I have have ever read by a realtor. And… it is hosted on realtytimes.com. The piece is titled San Diego Real Estate — A Trend to Go National?

I think most of us are quite hard on real estate agents, even though there are many that are quite competent and skilled at their art. Our frustration is correctly aimed at those poorly organized, poorly informed, or downright dishonest about the market. Bob says it like this, “So, sure it’s great to be optimistic about your real estate market place, but ignoring the obvious trends will cost you in both money and reputation.”

His call to action? “What I’m saying is be up-front and truthful with your clients, especially sellers. In just one hot area here the last few sales showed huge drops in the actual sales price vs. the original listed price. In one case this difference was $100,000 or just about 20 percent of the listed price. The other differences were about 9 percent of the listed price. Personally, I attribute these huge reductions mainly to the agent’s inability to see that our market has turned. When you tell your seller that the real market is fantastic, it’s a little tough to get multiple price reductions.”

What’s surprising is how realistic he is in his assessment. “Yes, we have started on the down leg of the typical ‘Bell Curve’ and the probability of surpassing our approximate 20 percent drop in San Diego home values experienced from 1990 through 1996, seems assured. Plus, as real estate trends seem to start in the West and then move east, any U.S. real estate market that experienced huge price appreciation the past five years, will experience the same depreciation in real estate residential values.”

He even uses the reasoning of the last bubble “It was about five years ago that the mantra was that this was a new paradigm and the stock market no longer followed the old rules of valuation. We were soon to reach Dow 20,000! Hopefully, you missed that costly over-enthusiasm. The result was such a drop that five years later we finally may be building a base.”

One assessment from him? “According to the California Association of Realtors, only about one in 10 households in San Diego can afford to buy a median-priced, single-family resale home with a 30-year, fixed rate loan. Combine the above, with the multiple Fed interest rate increases and the proliferation of EZ qualification, 100 percent interest only financing, and the stage has been set for not just a ‘return to normal,’ but a major change.”

AND…

“However, due to the huge home appreciation all San Diego real estate has seen, with the average home up 100 percent in the past 5 years, combined with the boom in 100 percent adjustable/interest only loans, the stage is set for what is sure to be mind-numbing depreciation.”

I have to applaud Mr. Schwartz. I’m sure it must be difficult to voice his opinion or even hold these kinds of ideas in his profession, but I am sure he will weather this one quite well and his clients will be pleased with his work.

I, myself, am quite happy with the broker who sold my house. He was professional, knew how to market my home, and was able to get me far more for my home that I had imagined. The result of this… he was well worth the 4.5% I paid. He helped me negotiate broker fees, asking prices, and even a rent-back. An agent like this is worth his weight in gold.

And, honesty cannot be faked. Thank you Mr. Schwartz. If I ever buy a home in SD in the future, I will be sure to look you up.

• Uncategorized