Via GurusBlog, I came across an interesting follow-up to my post, Dead Pledges and Dead Pools. Don Piso has apparently confirmed that they closed 25% fewer operations during the 1st quarter of 2007. It’ll be interesting to see what they report about Q2 2007.

Don Piso is one of the biggest residential real estate groups in Spain. They have very deep pockets, as they are owned by Ferrovial (one of Spain’s richest companies). Their brand is one of the strongest and most well-known in the sector.

So if they are suffering 25% drops in sales, one can only imagine the challenges that local neighborhood agencies face. I’ve already recounted a bit about my experience, and each day I see that more of my former real estate collaborators are being forced out of business.

Current market conditions are challenging, to say the least.

Now it’s all about survival of the fittest. Those agencies with the resources to withstand these tough times will survive. Everyone else will die.

The reasons put forth by Don Piso to explain their crisis mirror my own experience:

• Mortgages are harder to get and more expensive when you get them, because interest rates have increased and it’s generally harder to convince banks to grant mortgages to interested buyers.
• Neither buyers nor sellers fully appreciate market conditions, making it more difficult to reach an agreement as to price. Buyers believe that prices will fall. Sellers believe that prices will continue to rise. There’s little middle ground.

Nonetheless, despite a 25% decrease in sales, Don Piso’s representatives still hope for a “soft landing”.

Maybe it’s a “glass half-empty/glass half-full” thing. In these tough times for real estate agencies, a bit of optimism doesn’t hurt. Plus with Ferrovial behind you, I suppose few landings are going to be very hard.

But I’m sure that the other agencies that can’t count of Ferrovial’s support have a slightly different perspective.