Epicentre

Announcer: Reports continue to flow from the outer colonies of plastic and wood structures being erected on front lawns. Debate rages in the local communities regarding the how and why, but one consensus has emerged - this isn't good for real estate prices.

Lady stands in front of house.

Lady: I don't know where these signs are coming from, but I want it to stop. I've got one either side of me and the longer they sit here the more I can feel my home value going down and we've only got 10% equity in this thing. We had 15% but we took some out to buy a new boat and BBQ.

As the bad news piles up, much to the chagrin of the real estate industry, who have effectively now lost control of the media, the bubble boys are furiously comparing notes - trying to understand where the epicentre is.

Don't discount Tasmania's ability to punch above its weight. Right now in Tasmania, real estate signs are appearing like the plague cross did in 1400's Europe. Real estate agents are hammering so many signs into front lawns they could actually be considered tradesmen, but given the state of the market they're less likely to put on florescent safety gear and a hard-hat, they're more likely to put on a pair of Depends.

Why? Yesterday, by my humble calculations, the north-west city of Burnie crossed a dubious milestone, a 40% increase in listings. Time frame? Ten months.

Cheap houses, expensive houses, dumps, mansions. All sitting, while the days on market continue to tick over. The real bitch of it? Besides being unable to sell your house, is being a real estate agent in this situation. The vendor has just watched a boom over the last 10 years, where house prices have doubled, trebled, quadrupled and they don't get to participate in it? They don't get to toss their red hot potato on and walk away with untold riches?

That's the reality vendors now face. And agents and their industry have to get through to the house selling public, the very people they've sprayed with UP UP UP propaganda at every opportunity, that things are DOWN DOWN DOWN. That last 8-10 years will become 8-10 years again, not an endless, centuries long boom, that began after the black plague was conquered in the middle ages and stretched to 2010.

Lending figures low, listings high, the smart agents will quickly realise a unsold house equals no commission, adapt, level with the vendor and point out the facts. It's the only way to move a house now, because if prices stay sticky and those listings get worse, the carnage will be untold when vendors all clue in at once.

The bad agents will bitch and moan, ignore the distortion between prices and incomes; ignore the massive private debtload; ignore the amount of houses currently sitting vacant and ignore the investors are cashing out with their profit. The bad agents will then look for scapegoats, like yours truly and anyone else who pointed out the obvious. They still won't be able to hold the jockstrap of this douchebag who attributed the 2007 US slow down in sales to people like Peter Schiff:

The primary cause of the recent (and temporary) slow down in this market, in my opinion, is due to the piling on of media and pundits that must feed the fears of their readers on a daily basis in order to stay in business. Schiff's prediction of a 50 percent decrease in O.C. home values is beyond ridiculous. Despite what Schiff and other fear mongers predict, the law of supply and demand hasn't stopped working and the whole world still wants to live in Orange County.  

As Schiff said, "When everyone in real estate is waiting tables (or in jail) and your neighbours think you are crazy for even considering real estate, then it will be time to buy."


I'll take that as a leading indicator.