In case you missed my previous post on The Forgotten Real Estate Inventory from last week, you should know that it might just have identified the newest catch phrase in the real estate industry.
The real estate industry has used the same terminology for years to describe home sales. It is not often that we "learn something new" in an industry that is as old as home sales in Tallahassee and beyond.
Prior to the "Forgotten Real Estate Inventory," the most recent catch phrase to hit the real estate industry was "Shadow Inventory," which describes all the homes that are being held back from the market but are either bank-owned assets or owned by people who are seriously delinquent on their mortgage payments.
Another fairly recent "new term" in the real estate industry is "short sale," which wasn't something many of us really used until masses of upside-down home sellers started to hit the housing market in 2007.
New Real Estate Industry Catch Phrase
But we needed something to describe all of those homes that were not part of the known inventory, and not part of the shadow inventory, that consisted of recently "failed to sell" homeowners. Last week's article showed this VERY LARGE group of future inventory is, for the most part, totally unknown by the real estate industry across the country. And why does this matter?
Because we are seeing the known inventory drop, and real estate professionals and builders might begin "licking their chops" for new inventory needs. Should builders begin permitting and expect an expansive 2013? Will the real estate industry see a shortage of supply?
The answer in every market is unique to that market, but not as much as most in the real estate industry would believe. The answer in Tallahassee is an emphatic "No!"
We have a backlog of measurable supply that far exceeds any potential demand for the next three years. Simply put, values will continue to fall for years to come until we exhaust the known supply of homes, the shadow inventory of homes, and the forgotten real estate inventory.
Real Estate Industry Must Understand Market Information
Last week's article generated a lot of discussion from readers, and specifically real estate industry folks from around the country. Many chimed in with some great insight, but it was disturbing to see how many people chimed in with thoughts that demonstrated their total ignorance of their local market situation.
It is readily apparent that most people in the real estate industry do not measure what is happening, and because of this they have skewed views of what is going to happen in their local markets. Even after the incredible collapse of the housing market, there are still those that will stand up and say "not in my market."
To that I say "Prove It."
Don't be so quick to point out how your area is different. Do some work and prove it.
Try doing what I have done. It takes a lot of work, but my customers deserve the best information that they can get, because the decisions they are making to sell a home in Tallahassee now, or buy one now, is one of the more important decisions they will make in their lives.
No longer should people rely on a nice family member who works in the real estate industry. Bad advice, even from loved ones, is still bad advice.
Find the professional in your local real estate industry who measures market activity and who can give you the tough advice that you need. You will save a lot of money when you know what few of your competitors know (other people selling a home or buying one in the market in which you live.).
If you want to know the top agent in your local real estate industry, just drop me a note and I will put you in the safe hands of somebody who truly measures and knows the housing market.
Joe Manausa, MBA is a 27 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.