Chief Purchasing Officers

Women are the CPOs (Chief Purchasing Officers) of American households, and are rapidly gaining in gender status as the nation's top wealth holders. According to Tom Peters and other experts monitoring the American marketplace, women now make 83 percent of all consumer buys, including 94 percent of home products, 89 percent of vacations, and 75 percent of all decisions regarding the purchase of the largest investment most of us will ever make -- a house.
As women have increased their earnings, built their own businesses, weathered divorces, widowhood, and taken charge of family bequests, they've grown more independent and wealthy. IRS data indicates women comprise 39 percent of the top wealth holders in the U.S., a category defined as adults with total assets of $625,000 or more. That adds up to some 2.5 million women with combined assets of $4.2 trillion. Significantly, 42 percent of the women in this group will be single or widowed, according to the IRS, by the year 2050.

The IRS notes that this will result in the transfer of an estimated $41 trillion from seniors to the next generation composed mainly of Baby Boomers. Since women tend to outlive men by an average of 5 to 7 years, according to the US Census Bureau, even more wealth will be concentrated in female hands.

But the newest wrinkle in female buying power is young, single women across the country who are fueling a new wave of home buying that is far ahead of their male counterparts. The National Association of Realtors (NAR), in a study released last month, reported that young women in the 25-34-age bracket bought 1.76 million homes in the period from July 2005 to June 2006, accounting for 22 percent of the market. That's up from 14 percent a decade ago. The number of single men buying homes stayed flat at 9 percent during the same period.
Reasons for this buying trend -- according to various research experts and confirmed by my own experience include:
· Women are surpassing men in higher education degrees (According to the U.S. Department of Education, 57.4 percent of women enrolled in colleges eligible for federal student aid in 2003-4 compared to 42.6 percent of men.)
Women are already successful in their chosen careers, and their earning power is higher than it's ever been. “Among 25-34-year olds -- key home-buying years.
Young women are more concerned these days about building an early nest egg and becoming financially independent in the event Mr. Right doesn't come along.
Equally important, in my opinion, is that women are also more willing to trust their instincts and “go for it” when they see a smart investment than they have in the past. However, during 30 years in the real estate business, I've witnessed a behavior pattern in women that I find ironic and counterintuitive. Despite their increased education, discretionary purchasing power, and instinct for what constitutes a wise investment, many women -- particularly those in the 34 – 45 demographic -- feel compelled to discuss their buying decisions with men in their lives. And women are frequently dissuaded from going ahead with what later proves to be a good investment, often to avoid bruising the ego of a spouse, Significant Other, or other influential men in their lives.

Nevertheless, I'm encouraged that women, led by their younger cohorts, are finally getting over that emotional bump in the road to profitable real estate investment and financial independence -- needing a male opinion.

NIMBY

The majority of Americans prefer to keep land undeveloped. But they're not necessarily as altruistic as you might think. Although nearly three out of four who participated in a recent survey said they oppose new development in their communities, they are more likely to be concerned about their own pocketbooks than the environment or even simply keeping things the way they are.

The survey by the Saint Consulting Group, a firm which specializes in land-use politics, found that twice as many Americans actively oppose development as support it. No surprise there. Why? More than a third said they wanted to protect property values, while just 11 percent desired to protect the environment. Almost 29 percent said they wanted to preserve the character of their communities.

One trend is the importance voters place on a political candidate's position regarding new development and growth. More than nine out of ten say it is a key issue when they decide on who to vote for. Three out of four respondents gave local elected officials no better than a "C" when rating their performance with regard to development. And 66 percent indicated local government does a "fair-to-poor" job on planning and zoning issues. That's up from 61 percent in the first study.

Cynicism over the approval process also is growing. Last year, 70 percent said the relationship between local officials and developers make the permitting process unfair. This year, 75 percent said it is inequitable. Development has become a clear political issue.
According to the survey, though, "NIMBYism" is alive and well in America. NIMBY stands for "Not in My Backyard," and it is a popular rallying cry among developers who argue that anti-development factions want it both ways -- not here but over there. The very projects (people) oppose would probably be all right someplace else.

The most dreaded forms of development are landfills, quarries and power plants, all of which drew a 75 percent of greater "no, not here" response. Wal-Mart was opposed by 68 percent of those polled, up from 63 percent a year ago -- even though most said they enjoyed the "big-box" experience. Casinos were opposed by 67 percent. Single-family housing is the most widely acceptable form of housing. Only 6 percent of those polled were against it. Apartments were opposed by 34 percent, down from 48 percent last year.

Grocery stores are more acceptable than office buildings and large shopping centers, though resistance to all of these forms of commercial development was less in this year's survey. People who lived in rural areas were more actively opposed to any development than people who lived in the suburbs or more urban areas. Older neighborhoods opposed development more than new residential developments.

Cost and Value

The difference between the cost of a home and its current market value, have little in common. I spent some time last night attempting to explain that concept to a couple whose mortgage was higher than the current market value of the property. They had purchased the home 18 months ago and now needed to sell. “Well, Ken we certainly are not going to sell our home for less than we paid for it.” “Well, then you have a choice to make, you can choose to sell or not but no one in this market is going to pay you $100,000 over your home’s current market value.”

Frequently when showing properties to buyers, they will ask me what the seller paid for their home. My computer has access to that information along with the amount of the mortgage and any home equity loans on the property, however, I have found that the information has little bearing on what price the seller will accept for the home.
If a buyer can purchase a home below what it sold for a year earlier does that make it a good deal? How about if a property is priced below a previous appraisal? No, especially if the appraisal was for a refinance rather than a purchase.

Cost of a thing is what is paid for it, in terms of money. Cost of an item can be easily defined. Value is intrinsic. Value is relative. When an item’s value, exceeds market price a buyer will buy. Paying $2 for broccoli isn’t worth it for me but I will pay $3 for a beer with free popcorn.
A new web site, featuring nearly 500 homes, points out the dynamic difference between cost and market value. Flippersintrouble.blogspot.com shows homes in Sacramento that are all priced below what the sellers paid for them, some as much as $100,000. So does that make them worth so price? Maybe. So if you have a few minutes take a trip over to our local flipper’s blog. It is another good reason that real estate should be considered a long-------------------------------term investment.