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Let’s Get Chicken Little

You all know the story…young chicken, fearful of the worst, runs around declaring that “the sky is falling, the sky is falling”.

In today’s real estate market, there are many people (professionals and amateurs alike) with opinions that make buying real estate sound like throwing money away.

One thing I have learned in life is that opinions are like belly buttons, everyone has one. I certainly have my opinions which  are not always universally shared. But, I wanted to share mine today by asking those of you Chicken Littles some questions:

  • If we all agree that homeownership has been the American Dream, what do you propose will replace it? Video games? iPads? A better social media vehicle? Without a dream, civilizations perish.
  • If people stop investing in real estate and values crumble much further, how do you propose stopping our economy from a complete and utter collapse? Moreover, how will it ever recover?

Let’s face it: The real estate frenzy got us into this mess, in the same way that the dot.com bubble overinflated the stock market and eventually popped. But, dot.com companies were only a part of the stock market; therefore, the market could take a hit and limp around for a while yet still fall back on the other industries to regain its footing. It has taken years, but the stock market is credible again.

Real estate is different. When it slides, there is no other sector of the economy that can bail it out. You could try and argue that commercial real estate or even real estate investors who buy and hold for rent can ease the pain. However, they can’t devour all the inventory. Real estate has to be salvaged and supported by the government or the whole economy slides into the ocean.

The government has tried many things from restructuring Fannie Mae and Freddie Mac to appraisal reform to tighter underwriting guideline to artificial manipulation of interest rates to licensing of loan officers and more. They understand the importance of real estate values to our nation’s net worth. They are committed to real estate.

My point, dear Chicken Little, is that if you believe that the United States of America is going to continue to lead the world, you know our economy has to lead the way.  In order to do that, we need housing to recover its position of strength.  That makes buying a home a safe, long term smart move. If you don’t believe it…..might be time to look for real estate in another country.

The problem with Chicken Little is nothing more than he doesn’t ever propose a solution. He just wants to predict and point out problems. Our faith in the American Dream is being tested. I believe in the Dream. And I think you should too. It may look like a leap of faith more than logic to some but there are few Chicken Littles who ever become wealthy until they change their perspective.

Just my opinion…from my belly button.


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10 replies
  1. Pete Sambets
    Pete Sambets says:

    Sadly, I think we all are letting this perception become reality. Negative news takes front page headlines. Good and encouraging news is buried in the middle of the paper, unless there is someone trying to take the credit. And, that seems to be the problem. With the exception of REALTORS, and those in related businesses (of course, because WE have an interest, our information is slanted!), we don’t see enough done to promote home ownership, and how that will help to strengthen the economy. With hindsight being 20/20, we now know the banking bail-out did little to spur the economy. The banks did not ease lending requirements, and instead it seems continued finger pointing at mortgage lending has left loan officers afraid to sign off on anything! I feel that if the state and federal government don’t get on board, and soon, then perhaps the sky will fall. And when out of necessity, and hopefully not too late, our leaders finally offer a sensible plan to help and promote home ownership, there will be headlines to grab!

    Reply
  2. David Mott
    David Mott says:

    The appraisal process *along with LARA (http://appraisersforum.com/showthread.php?p=1757354)* is broken.

    When the MLS alone is used to determine the value of a property, and the MLS is full of short sales and foreclosures, it’s safe to assume that there is no bottom to the market (in some areas).

    Outside of that…

    The main boogie man is actually your next door neighbor that refinanced their bubble priced home, took the equity and paid cash for a second home, a big RV, a new boat or car, (or just took the cash), and then turned over the keys of the original collateral to the bank. It’s no different than insurance fraud to me, but then – I’m naive.

    Reply
  3. Ryan
    Ryan says:

    The only comment I would make is we need to get government out of the way and let true market forces take over. Government manipulation of markets has got to stop. If we want home ownership to be the cornerstone of the “American Dream” we have to quit making it an entitlement. Larger down payments and credit scores to start. If people have more skin in the game they aren’t going to cut and run as fast, leaving the tax payers to pay the bill.
    The government has no place in the real estate industry period.

    Reply
  4. Nathan Hosier
    Nathan Hosier says:

    We in the Real Estate professions have an inside joke about the consumer that would rather take advice from a friend who is a Sailor or a neighbor who is a nurse about what to do concerning the purchase or sale of their home. I can’t tell you how many times I’ve had to field questions or conduct damage control based on what “my buddy Jim” said about how prices will come down even more and we should hold out for a better price.
    The fact that everyone has an opinion (and unfortunately, advice) makes problems worse than they have to be. When “Chicken Little” runs around screaming about the sky falling, he puts everyone in a panic and nothing gets accomplished.
    My nagging question is: How do we silence, or at least turn down the volume on, the doom and gloomers who prevent the process from moving forward? An even better one: Why are people more willing to take advice from friends and neighbors rather than an industry expert?

    Reply
  5. Carol
    Carol says:

    People are probably suspicious of what realtors say because you have a vested interest in selling property. That being said, if my husband and I weren’t both out of work, I would love to buy some property for investment, as this is the best buyers market that I have ever seen. People with money to invest should definitely buy property!!!!

    Reply
  6. Grand Rapids Short Sale Agents
    Grand Rapids Short Sale Agents says:

    Chicken Little’s tend to always listen to Chicken Little News. I guess in some way I stick my head in the sand by always trying to listen to the good things in life and in real estate. If we concentrate on the bad it gets depressing. If you concentrate on the good you have optimism.

    Reply

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