Three statisticians go hunting. When they see a rabbit, the first one shoots, missing it on the left.
The second one shoots and misses it on the right.
The third one shouts: “We’ve hit it!”
As an erstwhile blogger, one of the things important to do is to verify what, if any, pieces of information are being looked at. At WordPress, I know how many people view the site each day and which postings are viewed. I also have a record of what gets searched for, landing the searcher on my blog.
For the past 3 weeks, “Goldman Sachs 20%” has been top of the search list. Casey Kasem would have an anticlimactic show, having to announce, “Topping the charts again this week, ….”
Why so much interest in Goldman Sachs? What relevance their prognostication?
To quote Pushing Daisies, “the facts are these:”
- Upon expiration of the first time homeowner credit, the number of new executed contracts fell through the floor.
- Closings remained about the same, thanks to the extension until September to close those contracts signed before April 30th.
- Sellers got nervous.
When sellers get nervous, their listing agents get nervous. Buyer’s agents are in a little world of nervous all their own because their phones are jingling merrily less often. We collectively begin wringing our hands and wondering, “Is this the end of life as we know it?”
Come on, you’re being a bit overdramatic. Buck up little cowboy (or girl, or person, to cover my politically correct backside). Let’s take a look at what we can expect.
This morning on my 24 hour market watch there were 582 new or back on market listings for the swatch of real estate I follow. There were 624 price reductions and …. hold it, did you just say there were more price reductions than new houses coming on market? Yes, statisticians, that is correct. To be fair, 32 listings did increase in price. And 128 sold. But the notable statistic is more price reductions than new listings; nervous sellers wanting to move their properties.
The uptick before the end of April was people wanting to squeeze another $8,000 off the price of their home. No longer having that incentive, the buyers who weren’t quite ready have now had time to settle in and see what the market really has to offer. The discussion forum on BlueGill which I participate in at times is rife with comments about how sellers will now have to give their homes actual pricing, rather than pushing up listings by $8K.
Furthermore, having a downturn in the market, the obvious question is “how far” or “how low?” That’s where Goldman Sachs comes in. They have predicted a 20-22% decline in the market and understandably, buyers would like to know if they should hold off on that home of their dreams, should they be able to pick it up at 1/5th off the current price. Side note – surveys tell us 7/5th of the general population don’t have a firm grasp of fractions.
So nervous Nelly, do you have cause for worry? Yes and no. Yes if people sit in their armchair and continue analyzing instead of buying for the next 18 months. No, if they get tired of analyzing and decide they have found a home they want to purchase. Gazing in my crystal ball, I will issue this prognostication: we will see an upswing in new buyers by mid-August as the bargain hunters move away from their search engines and back into viewing houses.
My blog will miss you keyword searchers. Please feel free to drop by anytime.