A Master of Fact

by Doug Love

I visited a self-proclaimed real estate expert to get the real story on the market. His quotes appear in magazines, newspapers and the blogosphere.

“I understand you’re quite the prognosticator,” I said.

“I simply assess the facts and data available to anyone,” he said. “I examine the information subjectively, thereby allowing me to analyze trends and market directions which might be overlooked or misunderstood by others. However, you are welcome to refer to my work as prognostication.”

“Thank you,” I said. “So what’s the real story on the real estate market?”

He inhaled deeply, and prognosticated:

He told me California home prices have surged by double-digits, and some of his “constituents” are voicing concerns about the market entering into another period of “uncontrolled upward-trending” real estate prices.

“Based upon my surveys and research, conditions of price movement will continue upward, but in a more modest fashion,” he said.

He said the housing market and loan financing conditions are undoubtedly healthier than in the mid- 2000’s, before the housing market deteriorated. Loan financing requirements are “inherently more discriminating” now. Home buyers are showing up with bigger down-payments than when the market was at its peak. In general, fewer buyers are able to get a loan with zero down-payment.

“Cash buyers are involved in the market in great abundance,” he said. He expects that trend to continue, which is bad news for buyers with loan financing, because the cash buyers tend to prevail in multipleoffer bidding wars, which are commonplace in today’s market.

“I am in alliance with my respected colleagues who predict the overall economy to continue to improve slowly but steadily,” he said.

I noticed on the bookshelf behind him a crystal ball and a Magic Eight-Ball; and on his wall a dart-board with Yes, No, and Maybe printed on it rather than numbers.

“Novelty gifts from my more jocular associates,” he said.

I asked if he thought interest rates would go over six percent in the next twelve months.

“Ah,” he said, “the ultimate question.”

He reached behind to his bookshelf and handed me the Magic Eight-Ball. I turned it over and saw words floating in the inky interior:

“Reply hazy. Try again.”