The Stuff Recessions are Made Of
So I picked up the Sunday Star Tribune — Saturday, when the early edition is out — to proof the splashy new ad for my new listing in St. Louis Park. To maximize exposure, I always instruct the copy setters to make my ad headline three type sizes larger, and to place it first in the classified section it’s scheduled to run in (they’re organized by city). Of course, I pay a premium to do that, but I’ve found that it’s worth it — that’s what full-service real estate sales is all about.
I needn’t have bothered. My (extremely prominent) ad is the only ad running in the local city section. This despite the fact that there now exactly 364 other residential properties for sale in St. Louis Park (a suburb of 50,000 on Minneapolis’ west border).
This is no doubt a commentary on the decline of newspaper advertising; last year, Edina Realty decided — correctly I believe — to drop its Star Trib ad page to focus on its own branded Web site. However, it’s also a testament to the state of the market. Early April is usually the height of the Spring market in the Twin Cities. In previous years, one would have expected to see 15-20 ads, minimum, where my solitary ad appeared.
Clearly, realtors are pulling back on their marketing budgets. Fewer print ads makes the newspaper smaller, which reduces demand for newspaper staff, which results in layoffs and further crimps demand for toothpaste, cars — and real estate.
(Note: given the dreary, non-stop rain in the Twin Cities today, one might reasonably guess that realtors held off on open houses today because of the weather forecast. That would be plausible, except for the fact that the ad deadline was Thursday, when the forecast was for merely mediocre weather).
Just as every expansion benefits from a virtuous cycle, every recession is aggravated by the foregoing vicious cycle.
Assuming that we are currently in a recession, this will be the 12th (give or take) since World War II. There will undoubtedly be a 13th, 14th, and 15th. They typically last from 6-15 months; then, as surely as Winter (eventually) yields to Spring, the economy begins to grow again.
In the meantime, the silver lining for would-be home buyers is selection and pricing. To a person, I guarantee you that the realtors trying to sell those 364 St. Louis Park listings are impressing upon their clients the need to price right, from day one. That means coming on the market below the competition.
Thereafter, every 30 days or so that their home doesn’t sell, those same owners are being urged to reduce their price. Where sellers would have put up a fight even 2 years ago, with all the negative media about real estate, they’re now obliging.
The result is a lot of marked-down property selling at extremely attractive prices.
If you’re fortunate enough to be flush right now, it’s a great time to shop for a house!