With the 2ND half just underway here are some key points to watch for in the coming months in Today's New World Of Real Estate.



INTEREST RATES are holding fairly steady with conventional rates hovering in the mid 5's and jumbo loans in the 7.5-8.0% range.

APPRAISALS are still a nightmare with the new regs that have kicked in as of May 1. The Federal Government in yet another attempt to 'fix' what's wrong with the housing market now requires stiffer rules on appraisers and how, where, what, etc. they do their jobs. As per most Fed dabbling, the problems are worse than ever.

CAP AND TRADE which is one of the most idiotic proposals EVER relative to the housing market has passed (I SAID PASSED) the U.S. House and will now move on to the Senate. If it passes there and is signed into law it will single handedly destroy half or MORE of the equity that American homeowners have. In fact, I'll have a new VIDEO BLOG coming this week about just that subject.

QUESTIONS? COMMENTS? DONATIONS?
317-848-GREG (4734) or Greg@GregCooper.com.

Distracted? Having trouble focusing? Time to find your focus screen.






The SINGLE biggest challenge facing the real estate market in the next 12-18 months.

This post is originally from June of 2007. Every day
that goes by I wonder more and more if it's not coming
true. Gary Vaynerchuk of WineLibraryTV.com is
constantly saying 'STOP DRINKING YELLOW TAIL.'
In Today's New World of Real Estate I would offer
'STOP SENDING OUT RECIPE CARDS!.'

Denny Crane says
'Who wants to be a Travel Agent?'

Welcome to my metaphor. Inspired by nearly a week of reading my new favorite blogger, Rich From Copywrite, Inc. (linked on the left side of the page), this piece is motivated by change. For my purposes, I'm speaking to the change in doing business or owning real estate. The manner of conducting a real estate sale is about to be swept away into an entirely new paradigm like a number of businesses have been in the recent past.


On ABC's Boston Legal, William Shatner, aka Denny Crane, constantly pops into scenes tossing out the painfully embarrassing, yet somewhat obvious line. In the real estate business, Denny would again be loudly asking the obvious of those of us helping to orchestrate real estate transactions and those who own real estate as an investment.

"C'mon.....who wants to be a travel agent?"

Why? Because those who conduct the business of Real Estate and those who own real estate are in the midst of a titanic shift in the process, much like the travel industry saw several years ago. For my skewed context here, there is no irony lost on the character of Crane, played by Shatner in his commercial endorsement role to PRICELINE.com . 10 years ago, the travel industry was respected, successful and storming ahead with it's service to people in every form of travel based need. America was increasingly affluent, mobile and loved to be on the move. That year, 1997, Priceline.com introduced itself to the traveling public in the form of William Shatner through a stream of wacky commercials that pushed us to point and click to find the cheapest air fares (and later in classic brand extension hotel rooms and rental cars). A decade later the travel industry has laid off thousands of workers. Essentially it's become a shadow of it's former self. Many other service industries are experiencing that as well along with the products they represent, like real estate.

Old school agencies who broker travel have basically been redefined to an Internet based business that fills a niche of customer service. The difference is there is no need to have legions of people seated at a desk to actually place the orders. There are some direct service agencies, but they are a small minority serving certain business and other pigeonhole clientele. To be fair, the change wasn't necessarily any fault of the travel industry and the huge numbers of it's successful representatives other than they never saw it coming. Who did? Can any of say we knew how the Internet was going to absolutely flatten so many businesses by the immediate accessibility it provides?

Well it's coming again to the business of real estate...this time precipitated by the current down turn in the Real Estate market. Anthony Robbins, motivational speaker and infomercial guru has written that 'things don't change when conditions are comfortable....change occurs when pain is present.' If that's the case, change is a full blown tidal wave heading directly for us. Dropping values due to foreclosures, excessive new homes supply, a sub prime mortgage fallout and other secondary factors are the norm today and it will affect most all of us. Falling equity in homes has driven the discount service brokerage movement in the past year and they will continue to gain strength (much to the chagrin of many of my colleagues). They will not, however, replace the affect of the most successful brokers but rather will feed upon those individuals who continue to try and charge a premium fee for less than top shelf service. It's the classic Wal Mart - Nordstrom example. The middle is disappearing to be replaced by the most cost effective (discount) and the very high end.

Real Estate brokers and their companies must learn to do things differently. The effect of the current market downturn will demand that. Watch the numbers in the winter of '07-'08. The quantity of Realtors in this country is going to take a major nose dive (not all would think that's bad, I know). Likewise, the manner in which we all make investment decisions about real estate is also going to change. Dwindling demand for 'vinyl village' types of homes and increasing demands for prime locations will be highlighted. In our area, lots and neighborhoods with character (water front, heavily wooded, golf course) will be the most coveted for more than aesthetic reasons. At this moment they are the only locations selling at a premium and as the public becomes more and more aware of this as a business issue, their demand will rise even faster. The days of buying something slick, shiny and new just for those reasons will soon be a secondary decision. Consumers will be forced to look at the investment first which is not how many decisions have been made in the past. Consumers who blindly buy property for any reasons other than investment first will quickly become the 'travel agents' of the real estate marketplace. I can almost hear Denny Crane's thoughts on that......as painful as they may be.......

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

Henry Paulson's Magic Act

This week Secretary Paulson did what many thought would happen and what many hoped wouldn't happen.

He changed the game.

In announcing this week that the bailout was not going to support distressed mortgage assets to stabilize the housing market, good old Hank picked up that giant crystal ball known as the American economy and shook it up. Now instead of having a bailout that our good friend Jim Cramer promised us could potentially pay us back in full, we have a quagmire that most certainly has encouraged every conceivable entity from the City of Detroit (and others) to General Motors to ask for a personal bailout. In essence our friend Mr. Paulson has taken the bailout and started moving it around under the three cups much like the carnival barker. Many had hoped for calm after the passage of the bailout. Many had hoped for stability. Nope. Now we have just about as much fear and loathing as a financial market could have. Pardon my curtness but what it in the hell were they thinking?

I have said numerous times over the last month I'd give anything for the stock market not to go up or down more than 100 points per day over an entire week. So much for that pipe dream.

In Today's New World of Real Estate stability sells. Fear and uncertainty do not. While many of us hoped that with the presidential election behind us there would be hope and a desire to move forward in our country, what we have is another step into the muck that will most certainly be with us for years to come. With the October home sales stats due out soon, we're going to get a first hand glimpse of exactly how far into the muck we've stepped.

Of course my national trade organization has smiled and sailed happily along with chief economist Lawrence Yun proclaiming this week that Indiana was primed for a quick turnaround based on housing affordability and good employement rates. This was the same clown that told us in January of '08 that things would be better by the summer of '08. Mr. Yun I'm begging you ....just stop talking. As our mothers told us often in our younger years, if you don't have something nice to say.....

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

Why is anyone surprised?

Last year about this time when we were dangling on the edge of the financial chasm, many of us in the real estate industry were raising the red flags about the housing market. Yes, there were some Realtors, real estate companies and trade organizations (read: National Assn. of Realtors and National Home Builders Assn.) that were still, uh, shall we say shading reality because they were simply too afraid to shoot straight. They were afraid that if they told you the truth that it would all become a self fulfilling prophesy and it would make the markets worse. They did you a terrible disservice by not telling you the truth.

I would have preferred we just get the bad news out there and get past it. The sooner you as a consumer know the facts, the sooner you can deal with them. Oh no, we couldn't possibly do that. It may discourage someone from signing a listing agreement, buying a home or taking a job transfer which would require either or both of the first two from happening. So in the Fall of 2007 we were in the midst of a vast oversupply of inventory and a looming credit crunch and yet some just kept saying they were expecting a turnaround by mid 2008. As a result homeowners who had their homes on the market held out hope that things would get better this year. They delayed making price adjustments and artificially inflated what consumers would be have to pay for a home. Consumers spoke loudly and clearly:

"We will not buy that which isn't an incredible value and even then we're not going to jump without giving it a lot of thought"

That was in June. By August the fear and increasing rate of decline had escalated the buyer's tolerance level. Now, we're almost in total stagnation with where the markets are. Frankly there is incredible clarity in Today's New World of Real Estate at this moment in history.

If you are a seller and hope to get to the closing table, you had better be a fire sale or take your home off of the market. You will only hurt yourself by burning days on the market in an environment where cash is king and buyers are God. If you are a buyer, understand you are in this for the long haul. Real Estate is still a GREAT long term investment. Buy with care, pay incredible attention to lot and location and look ahead past the next 24 months and you will recognize what I've been saying for the last year:

Those that purchase now will look back in five years as having made one of the best investments of their lives.

That is unless Nancy Pelosi chooses to give another speech about who's fault this all is. Then all bets are off.

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

Why We SHOULD Pass A Bailout Plan!!

I am a free marketer. I don't believe in theory in bailouts. Having said that, I hope that everyone listening gets the message that we MUST fix this massive problem that has come out as a result of the housing market crash or else.

To get everyone on the same page, from early 2005 to late 2007, there were roughly 14,000,000 mortgages written in the U.S. Of those about 7,000,000 were subprime. As that's occurring oil goes from $60+- a barrell to $140 a barrell, inflation storms in, the economy begins to tank, more and more homes get foreclosed on, lenders go under, investment houses go under and voila....here we are...and here's what is going to happen if we don't pass some type of bailout:

1) Foreclosures are going to skyrocket. (Government takeover would save millions of homes from foreclosure).

2) As foreclosures escalate, fewer people buy refrigerators, carpet, couches, new roofs, etc.

3) Unemployment goes double digit....at least 10-12%.

4) As foreclosures mount, Americans who own homes could lose 30% of the value in their properties. As an example, in Carmel, a fairly affluent area, there are currently 223 foreclosures. If there's no bailout, the preforclosures numbering about 450 would fall into foreclosure and triple the number of those for sale. That would affect every sale and price point in Carmel and frankly every area of our country. Every price point would be driven a long way down and it would take years, perhaps a decade for it to recover.

While you may not be in favor of a government bailout, this is serious stuff. Don't waste your breath blaming on any one political party or individual because it's MUCH MUCH deeper than that. If we do not act, it's going to be a very ugly time in our country's history.

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

Lehmans and Fannies and Bears. Oh My!

For most people, the failure of Bear Stearns, the reorganization of Fannie Mae and Freddie Mac, the failure of Lehman Brothers,the sale of Merrill Lynch and or the survival of AIG is more than a bit confusing. Wall Street and quasi governmental lending instituitional failures have little resonation here in the heartland, but they should.

Right now, the crisis of confidence in the American financial markets is the overwhelming challenge in Today's New World Of Real Estate.

Selling homes is about one thing: Getting the Money. Right now getting the money is becoming more difficult by the day. Every failure at any magnitude erodes the belief that consumers and investors have in bank liquidity. That makes getting money that much harder for the average consumer. That makes selling homes that much harder. That makes value recovery that much harder. That makes any of us in the business of real estate that much crazier.

Make no mistake: It absolutely affects everyone involved in the real estate business.

While things will stabilize from what they are as this is written, the psychological affect will linger long after the fact and potentially be an instigator in future bank health. How many more will there be? How much tougher will it get in the credit markets because of the newest failure (Lehman)? If AIG fails in the next week what other bad news will that propel into reality?

Essentially it all summarizes what I've been saying for the better part of a year. If you are a seller, you had better price aggressively and get out. We are close to the bottom but there's far too much instability to trust things will improve before mid 2009 and then only in guarded measure. If you're a buyer, the time is right both in value AND in terms of interest rates, now hovering in the upper 5% range which can no longer be taken for granted.

Fasten your seat belts......it's going to be wild ride that's not for the faint of heart.

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

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.

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)

A Look Ahead....
Rarely has it been so difficult to glance forward into the real estate crystal ball as it is today. There are enormous challenges ahead both statistically and psychologically if the market is to improve. Famed motivational guru Tony Robbins was on the Today Show last week and predicted that every generation has it's defining moment of challenge and that this was ours. So be it. If you are involved with real estate in any way, here are a collection of thoughts on where we may be heading....

Supply of homes
This issue isn't going away anytime soon. Nationally and locally about 1 in 3 homes sold is a bank owned property with that percentage going up from about 23% in 2007. Think about it. 1 IN 3. Bank owned homes are overly competitive with normal resales, they wreak havoc on existing values by dragging down comp sale info and are still rising in their numbers. This may change in 2009 but not this year. In addition there are still plenty of resales that are non bank owned that must be absorbed by the market for the supply - demand line to improve.

Interest Rates
Conventional rates have gone from 5.8% in February of '08 to 6.75% as I write this on 7/26/08. Forget what the Fed will do because the market has already done it. Rates are up, will probably inch higher and will be a long term negative on the market. The only way to defeat this would be to buy yesterday. The other side of this is that rates are now dependant on an applicant's credit score. Perfect score and you may end up at 6.75%. Have a ding or two and you may end up at 7.5% for the same loan. Again, another readjustment in the market that will provide a challenge.

National Economy - What it all means
We may not be in an overall recession but it certainly feels that way. Many would argue we are certainly in a housing recession/depression as it sits today. This is not going to be a short term dip. This retreat in the housing market has all of the potential of being a 2-3 year problem to resolve and in some micro economic markets and price points, it may run much deeper than that. Still, what it means is that now more than ever consumers MUST make good investment decisions regarding real estate. Those that do will recognize significant appreciation and value growth over the next few years. This is not like the good old days when all you had to do was buy anything when the market was at the bottom of the cycle. You still must make good decisions regarding a purchase and if you do you'll reap the rewards. If you choose poorly you may simply be acquiring a static investment that you'll end up being the caretaker of over the next few years rather than one who reaps it's benefits.

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