Bill Engvall and Real Estate:
Giving Us Signs

Comedian Bill Engvall established his own trademark bit while appearing on the Blue Collar Comedy Tour several years ago. He would share an anecdotal story with an obvious, humerous punchline and conclude with the slogan "here's your sign" meaning the story's ending was a foregone conclusion. Right now we're seeing the empirical evidence of where our real estate market is headed based on the last 45 days through home builder stocks. I think with some certainty we can now speak of the direction of the market and say, "here's your sign."

Like clockwork over the past 4 decades when the direction of the real estate market has turned, it has done so on mark, 9-12 months after the stock prices of national home builders have changed directions. It happened in late 2005 when the builder's stocks peaked and began going down translating into an actual real estate market that showed it's ugliness beginning in late 2006. It was obvious to those of us in the business that post Labor Day in 2006 home sales were the pits. Needless to say they still are BUT......here's your sign.

On or around July 14, to the letter, national home builder stocks have changed direction and for the most part are now trending up as the housing bill was signed. In fact on this day the 15 most impactful builders in the dow are all up.







Take a look at the direction of these national builders and see if the trend isn't more than a bit obvious:

Pulte, Toll Brothers, D.R. Horton, Centex

The stock market isn't stupid (well, most of the time). There's a reason the investors of some of our nation's largest home builders are buying back in. NOT because it's going to turn tomorrow. The investors in these companies are looking at all of the market factors and believe that there's light at the end of the tunnel. What does that translate into for consumers? I'll take a look at what home SELLERS and home BUYERS should do over the next 9-12 months in part 2 of Here's Your Sign coming Monday September 1st.

Questions? Comments? Donations? Greg@GregCooper.com or 317.848.GREG (4734)

Going Green - Like It Or Not Realtors, You're Next.
(Thanks for a huge assist on this post to John Teter, F.C. Tucker)


Those that work in the real estate industry have traditionally been a slow lot to respond to new ways of doing business but all of that is about to change. Market forces, timing and the realization that eco friendly practices are actually good for business are forcing changes that will redefine the process of selling property. This is not about being some wild eyed tree hugger. This is just about common sense and positive business....'doing well by doing good' as it's been described. The good old days of real estate where time, energy and money are unnecessarily wasted for the sake of continuity are coming to an end.

Despite a brief interlude in the price spike of all things fossil, it's doubtful we'll ever see gas at $1.89 again. Likewise every tool needed to conduct business that requires energy will also no doubt remain a costly outlay. Couple the sheer expense of doing business with the recent downturn in the real estate market that has reduced seller's equities and you're about to see a tectonic shift in how the business of real estate is conducted.

For starters the caravan days of dragging 30 Realtors around in the standard issue Sedan de Ville on Tuesday mornings is over. The equation is simple:

Expense + time divided by technology = sanity.

Why in the world Realtors continue to spend hundreds of dollars driving their office mates around to see new listed homes that they can readily preview on the web in 1/10th of the time is beyond me. Soon when all of my brethren wake up, they won't. Sorry sellers, those caravans accomplish almost nothing.

Why we still insist on killing tree after tree to maintain 2 inch thick property files when a simple document scan can easily store, transfer information is also beyond silly. On 9 CDs in my desk is every document signed for the last 22 months of every real estate transaction I've been involved in. When you consider the reduced cost of time, energy, personal effort and expense to keep electronic files versus paper ones, it's not hard to see where we're headed.

These are two examples of market driven techniques that are coming to the front. There are numerous others that make sense from so many perspectives:

-better distribution of online information making the search process shorter
-organization of cyber offices to reduce actual commutes to physical locations.
-more cyber communication will lead to smaller actual office space - saving energy.
-translating incoming faxes to electronic files, encouraging a paperless transaction.
-adding recycling stations at physical offices

Whether we Realtors like it or not, cost reductions in how we do business are becoming a necessity based on a number of things, namely reduced seller's equity, an increased level of ala carte competition and the inexpensive availability of new technology. The days of bricks and mortar are numbered whether the traditional real estate brokerages like it or not. The only question today is who's going to survive in this wave and who's going to fall by the side of the road in refusing to embrace the change.

Virtually Green: What the Real Estate Business WILL Become (coming Monday 8/25)

Dropping the F Bomb: Recovery's Starting Point

For years real estate foreclosures have been a small percentage of the overall market place but still having a powerful affect on values. In the Indianapolis market foreclosures for many years were 7-9% of all properties sold over the course of any one year. Then came 2006....and 2007....and this year. In the latter part of 2006 foreclosures began to run rampant gobbling up a 15% share in the 4th quarter of the year. In 2007 that number rose to 23% of all properties sold and in the last 90 days here in 2008 foreclosures both nationally and locally were running as high as 30% of all homes in the market in a given price point. From a realtor's perspective, that's a stunning number.

30% is a stunning number because that means 1 in 3 homeowners who are selling have lost their property to a lender. It's a stunning number because it destroys value in other resales homes in a given neighborhood or township. It's a stunning number because it also means that municipalities have been denied the property tax revenue for those homes that's needed to provide essential community services. It's a stunning number because over a prolonged time period, it sets a totally different benchmark for comparable sales that affect the lives of many real people who are dependant upon the equity that they've created in their homes.

The crystal ball is still very murky but eventually we are going to see the foreclosure numbers turn. The recent passage of the 'housing bill' will allow many of the millions of sub prime loans made in '06,'07 and '08 to be refinanaced, thus saving them from the foreclosure wrecking ball. That will be a huge factor in any recovery from the housing depression we're in. It seems that the bottom of the trough may come late in 2008 or early in 2009 with the potential for the overall foreclosure market to begin to recede. When it does the resale market will begin to correct it's excessive inventory and eventually new home construction will begin to improve. But that's at least a year away. For now, simply saving more residences from ending up overgrown, dilapidated and depressing to many of their closest residences is a noble goal. It's one that actually may be in sight as the proverbial 'light at the end of the tunnel.' How far off that light is or how soon it becomes reality is still unclear. How soon it comes will determine whether our housing slowdown is a 'V' or a prolonged 'U.' For the sake of everyone's financial sanity, let' drop the F bomb NOW....and make certain that letter is a quick V instead of a long term U.

Questions? Comments? Donations? Greg@GregCooper.com or 317.848.GREG (4734)

A different type of open house....

Lucas Oil Stadium, home of the 2012 Super Bowl, is Indiana's magnificent new billion dollar retractable roof venue which will house the NFL's Colts along with a massive new convention effort. I had a chance to wander through this monument to professional sports on Sunday the 17th of August and it's every bit as good as advertised. Above you see the view from outside the north end zone which stares into the massive six panel retractable 'window' and the open roof. I stood in that window which sits stories above ground level and below is the view that fans will have while watching Peyton Manning and company in the coming years:

From Conseco Fieldhouse on the far right to the soon to be demolished RCA Dome on the left, architects have done a wonderful job of utilizing Indy's skyline as a backdrop to football and thousands of other events that will take place in 'The Luke' as it's now being called locally. This view is from southwest to north east across the city. The north end and roof retract while the south end, while also a large window holds addional seating and is a giant fixed pane of glass.

With over 1100 flat screen televisions across the veunue located everwhere from concessions areas to suites to the 70 inch monsters that greet you from inside the grill of the giant Colt's helmet, no matter where you are inside, you don't miss much. Inside the field area, the two massive 90 x 45 foot screens seen below in the corner, project a stunning hi definition view. While it didn't photograph well, in this shot a public official was speaking and had a mole on his chin as big as an Escalade (Yikes).

The entire process will allow for a huge new convention center to be built on the site of the RCA Dome, once it's removed. The new convention center and staduim will attach to much of downtown Indianapolis by a series of enclosed walkways. Come the Super Bowl in 2012, visitors will never have to go outside if they choose not to.
The staduim and convention center will produce thousands of jobs, millions in tax revenues and house conventions attended by hundreds of thousands. While arguments rage over public funding for professinal sports, this building was essentially created out of an eleven county restaurant tax and will add incalcuable good to the region for decades to come. Nice job Indiana. A legacy created that will add countless opportunities and community gain in the years ahead.

I have seen the
bottom and it is here!

(I hope....maybe....quite possibly.....we'll see....tune in 1/1/09)

I'm taking a leap of faith today. A proverbial high wire exercise without a net. I'm assuming things and we all know what happens when you assume but this time it will be different. Once upon a time Felix Unger demonstrated to Oscar Madison that to assume meant you make an "ASS" of "U" and "ME". I'm hoping my outcome will be more positive.

Assuming that in fact this bill that passed Congress and was signed by the President will allow fewer homes to enter into foreclosure, I believe we are in the lowest trough of the current real estate downturn and here's why:

In 2005, 2006 and early 2007 there were roughly 14,000,000 loans made in the U.S. with a staggering 7,000,000+- being considered 'subprime.' I know, how could we have been so STUPID? It's no shock given those numbers as to why we have the ridiculous mortgage/banking crisis we've seen in the past year and a half. The most recent legislation dubbed the 'housing bill' may go far in curing the foreclosure dilemma because of this bill. Of the 7,000,000 subprime loans, many of which are cascading toward foreclosure, the majority are owned by Bank of America, Wachovia, Washington Mutual and several other large national institutions. The bill as passed will allow these lenders to go back and refinance their bad loans if they choose to a more palatable level of pain for the homeowners. Make no mistake these lenders may still take a hit on these loans BUT if they can save 80% or even 70% of the potential defaults, it will vastly reduce the number of bank owned properties coming into the market place. THAT is the place any housing recovery must begin....reducing the foreclosures.

From that point legit resale inventories will begin to vanish and good grief we may actually see a building market recovery after that. If it all sounds too swell to believe, it is. While we may be on the path to recovery, there is no guarentee as to how long this will take. The factors that may influence that timeline are incredibly wide ranging and volatile. Energy costs affecting inflation which could affect mortgage rates, the value of the dollar, other geo political events unseen today, etc., may all play a role. The most prolific point remains and that being the downturn of bank owned sales potentially declining in the market as a whole. If our bonehead lawmakers got one thing right if even by accident, it may be slowing and decreasing the foreclosure mess that has plagued our national real estate market to a very deep degree.

Questions? Comments? Donations? Greg@GregCooper.com or 317.848.GREG (4734)