Notes from The Top Agent Conference


Recently, I attended the Coldwell Bankers Presidents Club annual meeting in Scottsdale, Arizona, which the company convenes each year for the top 100 Agents and Coldwell Banker senior management. I thought I’d highlight some topics discussed regarding the current state of the real estate market and what we can forecast for the future.

Everyone who reads the major periodicals, or is buying or selling in this market, knows the housing market is in a decline which began in the third quarter of 2006. The statistics are clear on that. In my opinion, however, the media has sensationalized the actual situation by not taking a larger, more historical view of the market, and by focusing on the markets, such as Las Vegas, Los Angeles, Denver where declines in home values are dramatic.

As it pertains to the Chicago market, we have not seen the dramatic appreciation of 30%-50% that has been experienced in some of these markets in a 12 to 24 month period. Rather the Chicago market took over ten years to see its property values appreciate 89% and has only just seen its first decline. Jack Spear, on NPR’s “All Things Considered” broadcast, referred to the market as “in the midst of a substantial correction” and based his observation on the following data:

“The Commerce Department reported that in October 2006 the median price for a new home fell 9.7% from same time YAG. Existing home sales fell 2.5%.”
“The National Association of Realtors is forecasting a drop in home sales at around 8% in 2006, another 2% decline next year.”

However, I think it is very significant that in 2005, 40% of all home sales were investment properties or second homes. That will skew the numbers.

In terms of overall effect on the economy, the major concern is that people will stop spending. Money has been cheap and people have used their home as an
ATM. They have borrowed against their equity for spending on cars, trips and other luxuries. The Federal Reserve Bank Chairman, Ben Bernanke, has said that the weak housing market could “shave a full percentage point off the annual growth rate over the second half of the year”. However, this perspective has been countered by other forecasters who point to other things in the economy that may offset a decline. Namely, energy prices are coming down and U.S. exports are starting to turn up. Additionally, the jobless rate is not increasing and finally, people are now convinced that interest rates are not going to be increased any time soon.

What does this mean for buyers and sellers currently in the market? Well, 2007 is going to be a year of adjustment with prices reflecting a downward trend. By year end we hope to see the market stabilize. In the short term, there are buyers and an excess of inventory. The inventory is getting showings and open houses are busy. However, buyers do not have the sense of urgency that we were accustomed to in the past several years. If we use the first quarter of 2006 as an indicator for 2007, the “pipeline” is full which is likely to result in a burst of buying activity beginning the first of the year. In 2006, the “spring market” began in January but did not sustain itself through the 2nd quarter. Key to the North Shore market moving is an increase in sales activity in Chicago proper, particularly in the lower to midrange properties. As prices continue to adjust, this should stimulate that market and have a positive effect in 2007.

In conclusion, I’d love to discuss these issues from the perspective of buyer and sellers and discuss how I could help you with your real estate needs. Please fell free to contact me via email at mindy.shea@cbexchange.com. Additionally, if you know someone who would be interested in contacting me, I always appreciate your referrals.


MN, 12/13/06