When does Optimism become Denial?
As careful observers have long expected, the Billings housing market has really turned. Year-over-year prices are down, sales are down, inventory is up, construction is down, unemployment is up. All signs seem bleak for the housing market.
But for the most part, industry professionals seem oblivious to all these things. Yesterday's headline in the Billings Gazette was It's Time to Buy, Says Billings Area Realtor. A few quotes:
Twyla Best, president of the Billings Association of Realtors and a Realtor with Montana Real Estate Brokers, said January was cold and snowy, keeping buyers at bay.
"People were waiting to see what would happen with the stimulus package, interest rates and the tax credit," she said.
..this market probably won't see the sharp price corrections many other cities are suffering.
"We're such slow, steady Eddys, we saw the prices go up, but we never took the ridiculous appreciation other cities had," she said.
These quotes are next to a sidebar showing -47% sales and -11% prices already in Billings.
Believe it or not, I'm an optimist. I like to look on the bright side of things. But I'm also a realist. Choosing to be blindly oblivious to clear economic data indicating a downturn is not optimism-- it's denial.
And there's plenty of denial going around these days. This article is oozing with it. Unfortunately, it is not oozing with hard data or thoughtful analysis.
Veteran realtor Laura Odegaard said most of those troubles are in Bozeman and Kalispell where families were purchasing second homes. "I see that we're in a normal market," she said. "Billings seems to be cushioned for the rest of the state."
She added that it may actually be safer to invest your money in a home rather than the stock market. "If you're wanting to buy a house, now's the time," she said.
"If your home does sell, you're not going to see it sell for less in the coming year than you did in the previous year," [MSU-B Economist] Rickard said.
Here's my list of the Seven Steps of Billings Housing Denial:
1. The U.S. housing market is fine
2. The coasts are in trouble, but the Mountain West is fine
3. Many states are in trouble, but Montana is fine
4. Bozeman and Kalispell are in trouble, but Billings is fine
5. Some parts of Billings are in bad shape, but Ironwood is fine
6. Less desirable parts of Ironwood are in trouble, but my block is fine.
7. Uh-oh.
And, what do you know? Speaking of the "troubled" city of Bozeman, they seem to think things are just fine there as well.
And David Smith from the Bozeman Area Chamber of Commerce said the city is faring well compared to many of its neighbors.
New businesses are setting up shop and existing ones are expanding, Smith said.
...
“I get to be optimistic and forward looking,” Smith said. “Nowhere else in the state are they talking about building schools.”
Hope springs eternal, it seems, or at least until housing hits rock bottom. Keep watching for it.
By the way, take a look at the sidebar link on the first Gazette article. Compare to my previous post on this page. Almost seems to bear a resemblance. Hmmmm!
If anyone is using RSS, let me know if it's working for you.
RSS working great, thanks Doug. It's funny watching Billings going through the exact same sorts of arguments the rest of the country went through a year or two ago.
I want to add I don't think the masses are buying the spin, all the comments on that article were negative, many of them comparing Realtors to car salesmen unfavorably.
I agree that the Billings Housing Market is in denial. But let's look at this from the Realtors perspective-they have to put a positive spin on the market or place their commision based incomes
in jepardy. We must understand that to become a Realtor a college degree is not required, just the ability to pass a simple test and a valid drivers license to shuttle buyers from house-to-house. On the average, Realtors are not highly educated individuals, and thus lack much of the training, knowledge, and sophistication to understand the enormity of the current economic crisis, which is now considered the worst since the Great Depression. Did the Great Depression reach Billings? Or did the majic force-field of a self-proclaimed autonomous local economy
sheild Billings from the hard economic times of that era as well?
You're right Anonymous, but I think the fact that Realtors always make over optimistic forecasts is very short sighted and hurts them a lot in the long run.
Making these forecasts hurts their credibility, lowers their public standing and decreases their influence. At the same time such silly rah-rah predictions have little to no effect on the market at this point. They're selling what little credibility they have for almost zero return.
On the other hand if they had the guts to say "yea, the market is cliff diving," especially to their sellers, they could speed the lowering of prices, increase sales numbers (and thus commissions), help end the downturn sooner, and become more respected, rather then the used-house salesmen and women that they are now.