Real estate agents may have 35 days to get their sellers to price their homes right. After that, buyers are going to become even more scarce.
Don’t get too excited about today’s jobs report. It’s the October report – the one where the government revises the previous months’ data – that REALTORS need to prepare their sellers for. Especially if past revision reports are any indicator.
[Update 9/2: Since the jobs report was released this morning, and the numbers show a net gain of zero new jobs, we’ve revised the next paragraph from a small decline in jobs to “holding steady” at over 9% unemployment. – MF]
It’s simple. Monthly jobs reports are notoriously unreliable: estimates, riddled with data holes like under-reporting by small businesses, subtractions like “striking workers” and government math (need we say more?). Should you feel comforted that the September report [held steady at about 9% unemployment], savor it now. Because they remain unconfirmed rumors until finalized, by revision, a few months from now, when we’ll see that it’s likely more jobs were actually lost.
Besides: After years of recession and stubborn unemployment, the only numbers that matter to most buyers are how many people at their dinner table still have a job.
Why does this matter to real estate professionals, and their sellers? Because October’s report will contain the revisions for the summer reports. And while it seems that consumers are becoming increasingly inured to all economic reports – about manufacturing, about interest rates, about housing, they have a very clear understanding of the jobless situation. It almost doesn’t matter what Case-Schiller says, what Mark Zandi guesstimates, that John Paulson encourages, or the National Association of REALTORS reports.
When the October revisions come out, potential home buyers are going to say: That’s what I thought!
For perspective, consider the June 2011 revisions. Bloomberg reported,
Further bad news from the latest jobs report: the government revised its payroll data for the previous two months to show that 44,000 fewer jobs were created in April and May than had been previously thought.
The unemployment rate increased for the third straight month, reaching its highest level since December 2010. There are more than 14 million Americans who are looking for work but can’t find a job…. Both the jobless rate and the number of jobs created in June failed to match analysts’ predictions. [emphasis added]
That’s why we think real estate brokers have about 35 days to help their sellers get their prices, conditions, and most of all, motivations, right. If the October report significantly revises the third quarter jobless data, home buyers might just decide to hold off for the rest of the year. Traditionally, home purchase activity slows over the November and December holiday season anyway. But if already jittery consumers have their suspicions about the “recovery” confirmed by the October revisions, it could call a start to the triple-dip in the housing sector.
Some real estate professionals might say that any revisions won’t matter, because real estate is “local” and some markets have remained steady throughout the recession. In fact, we believe that, too, mostly, with one important exception: Five years into a housing bust, and three into a stubborn recession, consumer confidence is national. Whether it’s up or down, it is “local” everywhere. You can find the numbers yourself: consumers’ confidence in legislators, the government’s handling of the economy, the direction of the country. It would be unwise to confuse local housing market data with the national consumer sentiment, which reaches every television, radio and internet connection collectively.
Since real estate sales always require a buyer, confidence seems more important than other data points. Certainly, low interest rates have had no effect. It remains a jobs situation. Sellers can feel anything they want about their home, their price, the future. But if buyers don’t have confidence in their job security, wage growth, savings and future – or if their past concerns become validated by revised reports – it really won’t matter. Buyers have choices: As we’ve seen, many can wait, often longer than sellers can. The October jobs report might encourage them to wait longer.
So start the clock. Show your sellers this article, if you like. Get them to think like buyers before they think like sellers. And make the right moves now. There’s still a whole month to make things happen.