With 37 years in some facet of the real estate industry, the last 20 as a Broker, I have seen plenty of ups and downs.  I value statistics: they can help us understand where we have been, where we are at and, perhaps, where we are going.  Unfortunately, with the precipitous fall of the overall economy these last 3 years, we are on uncharted ground.  Statistics available in 2006  did not tell us how bad things were to become.  Sure, we have seen Recessions every 10 or so years, however, this one is global and has many elements not part of the smaller recessions of the past. 

Everyone is hoping for good news on the economy.  It is hard to know who to believe as there are so many voices on both sides of every real estate statistic that comes out.  I looked up quotes about “statistics” on Quotationspage.com and my favorites are:

There are three kinds of lies: lies, damned lies, and statistics.
Benjamin Disraeli (1804 – 1881)

Facts are stubborn things, but statistics are more pliable.
Mark Twain (1835 – 1910)

Statistics: The only science that enables different experts using the same figures to draw different conclusions.
Evan Esar (1899 – 1995), Esar’s Comic Dictionary

As to the Recession and it’s effect on real estate: I believe that we have rounded the corner!  The reality is that the corner is not going to be as short as many would like.  In 1990, when we had a similar recession, prices went down about 15-20% over a year, leveled out for a year or two and then started moving up nicely by 1994.  In this Recession, we have dropped continuously for over 3 years and have yet to fully level off in all price ranges.  Lower priced homes have generally hit the bottom.  However, more expensive homes, outside of  urban areas like Seattle, are still experiencing declines.  The farther away from job centers, the higher the decline and the longer the recovery time.  Declines of 30-40% are not uncommon.

The good news is that Pending sales, contracts written and not closed, have been way up the last several months.  Much of this is a result of buyers taking advantage of the Federal Homebuyer Tax Credit program.  These positive statistics are factual.  However, the interpretations many in the media make from them are not always right.  It was a huge shock to almost everyone when closed sales in December took a huge plunge, perhaps the greatest since the Great Depression. 

One of the biggest reasons for this drop is that many sales, half or more in some markets, consist of “distressed” property sales.  These are mostly the “short sales” one hears so much about.  This is when the seller owes more than the home is worth and the lender agrees to take less than is owed on the mortgage in order for the closing to take place.  The dirty secret here is that some national statistics have shown that as few as 20% of the short sales written ever close!  It is not uncommon for offer after offer to be written on the same home only to have each one fall through at the last minute.  This is the reason that lots of pending sales do not translate into closed sales!

Bottom line:  we are doing better, but we must be ready for a slow and steady recovery.  There are plenty of good buys in real estate out there right now.  In fact, homes that are clean, well-staged and priced well elicit multiple offers again!  This is clearly the sign of a changing economy and in areas where multiple offers occur, that prices have bottomed out. 

Do not let daily, weekly or monthly statistics, that are sure to show ups and downs, rule your mood.  We had an unsettling ride down but it is now time to turn our faces to the future.  Times are tough, but we are in far better shape than our Grandparents were at the end of the Great Depression.  They fixed it and so can we!