One more indication of how the real estate market is different than the stock market showed up in two recent stories from California, one of the nation's formerly hot housing markets that has turned decidedly lukewarm over the last year or so.
Unlike stocks in 2000, when, a few months after the peak nearly everyone could look and see that the tide had turned, today, more than a year after prices peaked in much of the state, the outlook for many has not yet changed.
According to this report in the Press Telegram in Long Beach the other day, the number of realtors in California is now at an all-time high.
When talking on the phone with Tom Pool you can almost envision some spooked character in a B-movie waiting out a zombie invasion in a boarded house.
"Our licensee population is still going up, even though we're in a transitioning market," the California Department of Real Estate spokesman said.
It may sound ghastly, but for the last year people continued to mob the real estate industry despite the market downturn.
About one in 70 Californians is now a licensed Realtor.
As of December there were more than 521,000 licensed Realtors in California, according to the DRE, which issues licenses.
That's an all-time high. The previous high was during the end of the last real estate boom in the early 1990s, when there were 375,000 licensed agents in California.
Before the most recent housing market surge, the number of licensees had dipped to 297,000 by 1998, according to the DRE. The historical level is 300,000.
But when the housing market began to take off around 2000, so did interest in residential real estate.
As of this time last year the number of licensees topped 470,000. In the past year, after the market turned south, more than 50,000 people earned their licenses.
Donald Trump and his ilk can be thanked for much of the continuing interest in real estate careers during a period when the word "transition" fails to properly characterize the events on the ground.
Contrast the previous report with this story in yesterday's LA Times and you'll see there's a great disconnect between the mood of many Californians and the latest market data.
The number of Californians defaulting on their mortgage loans is rising rapidly, according to figures released Tuesday, providing striking evidence that more people are at risk of losing their homes.
Default notices jumped 145% in the last three months of 2006, accelerating a trend that began in late 2005 as home sales started to cool.
It was the largest number of default notices in any three-month period since 1998.
Analysts said the increase was not worrisome — yet. But if the number continues to escalate, it could drag down home values in certain communities, they warned.
"So far, this isn't alarming," said John Karevoll, chief analyst at DataQuick Information Systems, which compiled the data. But if default notices "keep going up at this rate, it could get nasty fast," he added.
The slope of that curve should be very alarming. That's the whole purpose of an alarm - to warn you in advance that something bad may be about to happen. To say, "So far, this isn't that bad" would have been far more accurate.
While the number of default notices per quarter is still not far away from the historical average, looking even better in percentage terms when factoring in the population growth over the last ten years, the pace at which they are accelerating amid flat home prices (according to the official statistics) should be great cause for concern.
What should be extremely alarming is that during the fourth quarter of 2006, there was a 595 percent increase in the number of homes that actually went into foreclosure versus a year ago.
Most homes that enter pre-foreclosure (the initial notice of default when the owner falls behind on their mortgage payments) never enter foreclosure proceedings either because the borrower catches up on their payments or sells the place. With so many new homeowners putting little or no money down and expecting rising prices to cure any financial ills, the situation has changed dramatically.
In fact, a year ago, foreclosures as a percent of pre-foreclosures were only 6 percent.
A year later, this has risen to 16 percent!
Little of this seems to have affected the outlook of those aspiring to real estate careers. The combination of ever-upbeat real estate industry professionals and a mood that is very slow to change should make the reversion of the California real estate market to more realistic fundamentals a long, drawn out affair.