So, Now What??

The last couple of weeks have been very interesting to say the least. I've covered the sales market activity for a decent amount of time now and there is a clear trend forming.

There are many factors that lead the trend and many are out of our control. I believe more buyers were created in years past because of the easing of lending restrictions, especially in the boom years. At one point during the boom it was very difficult to find a house available on the market that fit the buyers needs. Buyers were left with little choice and were all to willing to settle for a house and pay higher than market value simply because they had to find a house.

Builders and developers worked hard to fill the niche created by the surplus of buyers by buying land, developing, and building homes as fast as possible. This continued after the market began to turn. Now as a result there is surplus inventory of new homes available on the market, but the easy to obtain financing is not as available as it once was.

Also the run up in prices could be contributed to speculators and 'flippers', we all know by now what the term 'flipper' is in the realm of real estate. This was just another factor. People simply bought a house with the idea that they would resell it a short time period later for profit. Speculators continued this practice as well as the market started to turn for the worse. Now they may be in a bad position and could suffer huge losses.

Most of the above was happening on a national level, but we saw this activity here locally as well.

There are current local markets that aren't suffering as much as say Las Vegas and Phoenix, but since Kingman is right smack in the middle of those two communities I'm not surprised we are having some of the same difficulties they are experiencing.

To make matters probably worse locally, we have a politically unstable situation that will likely add to the softening market. Comments heard at a recent City Council meeting included such things as... I'm paraphrasing... there won't be another nail in a two by four as long as a certain city employee is still in his position. This remark was made by one citizen perhaps speaking for a well respected banker involved with construction loans. Now I don't know if all bankers that deal with construction loans feel the same way, but it was a powerful comment especially if it ends up being true.

Another political fireball is the efforts of a local community group that says they're NOT anti-growth yet seem to fall on an anti-growth position each time they raise their voice. They've recently set out to stop a land use change on potential commercial property that could attract more investment money and development of things that this community could use. They don't agree at this point that infrastructure improvements are needed and would rather halt the project in question (the TI at Kingman Crossing) until they feel their own needs are addressed (jungle gyms).

They've also stated publicly that they are concerned about the value of their property as in they don't want to see it go down. What they may not realize is that they are probably adding to the negatives in the market and thus will suffer right along with the rest of the community when it comes to property value by taking such a strong stance against possible development.

What our local market really needs are some positive signals. It would be nice just to know if the Wal-Mart distribution center will become a reality in this area. That alone would signal more jobs coming to the community. Obviously the amenities that Kingman has to offer (such as shopping, easy access routes, etc.) play a role. If the Kingman area continues to fight such improvements then it is likely that the investment dollar that can bring jobs and other benefits will stay away, and you can only guess what kind of impact that will have on property value over and beyond what we've seen on the national level.

I'm going to ask a couple of bloggers in other markets (markets that are relatively in good shape) to comment on their observations and how it may be different for them because of the political environment and other possible reasons. I'll share that information when I get response.

For now though there are some things that this community can control in the current market. Getting our political house in order is probably the most important.