John Philip Mason is a residential appraiser with more than 20 years experience and covers the Hudson Valley region of New York. He’s a good friend and a true professional who believes that all appraisers need to have a macro-economic perspective in order to be effective. This week, he blames us all (except me of course) in Solid Masonry. …Jonathan Miller
It seems almost everyone has an opinion as to why the real estate market isn’t doing well these days. Not unlike the stock market boom of the late 1990’s, many folks enjoy talking about the latest investment craze. Naturally, as people tend to focus more time and energy on a subject, many come to think of themselves as quasi-experts. Not that their opinions aren’t valid, but when I question the actions of say, the Federal Reserve, I must in all honesty admit that I’m full of myself. While many differ as to why the real estate market has cooled off, there seems to be a general consensus as to the source. Well, sort of. Someone is to blame for this mess. It’s as though a single person or group is the culprit. Never mind how mammoth the real estate industry is, if we are to believe the critics, it is apparently vulnerable to the actions of a few. Some of the favorite victims of the blame game include:
- The Federal Reserve Board A popular target, despite this institution being made up of some pretty impressive individuals (i.e. no mental midgets here). The truth is, when you listen to most of the arguments against the Fed, almost all appear to have a self-centered motive (i.e. how policy change impacts their own personal economy), rather than a genuine concern for the overall economic picture.
- The Media While the United States has enjoyed a free press for over 200 years, the perception of a biased media conspiracy still lives on. That is, the industry is controlled by a few individuals, or at least, a few who are politically slanted one way or the other. Another blame game that has survived the ages is the sport of “kill the messenger.” Many feel if the media would simply stop reporting bad news, it would all just go away. Yeah right!
- The Lending Industry Despite this industry being comprised of a massive conglomerate of government agencies, corporations and investors, both here and abroad. If anything, there are too many competing interests here for these parties to jointly mastermind a series of uniform actions which would result in a market downturn. Just like any of us, when things are good we all want in and when things turn bad we all want out.
- Sellers First they were blamed for asking too much money for their properties (while buyers were all but killing each other for the chance to buy at any price). Now they are blamed for too many of them putting their properties on the market. “They’re flooding the market.”
- Buyers They are at fault because they are now sitting on the sidelines. If only they would do less looking and more buying, all would be well. But let’s face it, for this group there is no sense of urgency when inventories are rising, prices are dropping and interest rates on mortgages are projected to remain relatively flat into the foreseeable future. Could it also be that would-be-buyers simply can not or will not pay to enter the market at current price levels? The fact of the matter is if we homeowners were all asked to purchase our current homes at today’s prices, many of us would also not be able or willing to do so.
- Real Estate Agents/Brokers Why not? Some folks love to blame them for almost anything. Talk about a love/hate relationship. The tales of the Greek Gods pale in comparison to the dynamics of real estate agents and their clients.
- Speculators Once the envy of many and pursued by developers and real estate agents for their bravado, speculators are now spoken of as though they had converted to cannibalism. They are now seen as a scourge and are considered one of the largest threats to market stability today. In truth, they facilitated many projects that never would have been possible without them, but it was only a matter of time before market conditions would cast them in an unfavorable light.
- Politicians They probably belong near the top of the list, as they seem to be the default explanation when folks don’t know whom else to blame. This is especially true when people are looking to bash members of an opposing political party.
Certainly there is at least a little truth in many of the accusations thrown around. But the reality is, the status of today’s real estate market is a collaboration of the actions of many, individually and collectively, for better or worse. So is it okay to blame everyone? Because it seems we’re all to blame.