By Spencer Marker
All my beliefs are based on the numbers that I share with you every month and I see them continuing to improve. It does not feel like the market is getting better every day but the truth is in the numbers. I believe that we will see the same trends continue as investors and first time buyers get into the market. This will keep the lower end of the market hopping. The higher end will continue to plod along but eventually we will see more and more move up buyers as the inventory gets gobbled up on the lower end. During the 4th quarter I do not see pricing changing significantly in the lower end and I expect to see some drops in the higher end of the market. There is surplus inventory in the higher end and those that have to sell will lead the market down in price. There is enough demand in the lower price ranges that will will probably not see that occur. All that being said there are some things that could set us back a bit. The first is the tsunami of foreclosures that the powers that be say is coming in the fourth quarter. I was one that underestimated the extent that the foreclosure mess was going to affect our market so I have to give credence to those that say this is coming because they were right last time. BUT, I do see our demand in our LOCAL market exceeding any other market in the country and I think these homes are getting sold now as short sales prior to them going to foreclosure. So, in the spirit of going "out on a limb" I am optimistic that we are through the worst of it and our market is strong enough to absorb what foreclosures we do get and not have them flood our market again. A lot of what is driving the 1st time buyers is the tax incentive of $8000 to buy your first home. That is slated to go away at the end of the year. It is an effective tool that is working so I would hope that it would be extended but you never know. Rising interest rates, more restrictive lending programs, inflation, even rising home values all could have an effect on our marketplace but I do not see that happening. Our local economy is strong and getting stronger, our unemployment is one of the lowest in the nation and we are one of the best areas for job creation. I am confident that the worst days are behind us and we are moving forward. As our market continues to unfold I will as usual keep you informed.
Friday, August 14, 2009
Front Lines
Ok, it is official, we have just finished the July stats and we have now seen 12 straight months of improving market conditions. It may not seem that way but it's true. The town home market is on fire and our inventory is turning over every 2 weeks. We currently have 51 town homes on the market and we sold 103 in the month of July. Great numbers! We are seeing fewer homes coming on the market, which in this market means we are getting fewer foreclosures listed than last year in the corresponding months. The percentage of available properties that are "distressed" sales has dropped to around the 30% mark, which while is not great is better than the 70% mark we had seen. Certainly a vast improvement. We are seeing multiple offers on all the best values and this means that in many cases the prices have escalated up over the list price so as those homes close it should start to affect our pricing in a positive way. The single family sector is not doing a swell as the town home market but it is doing better than the previous years and continues to improve. There are currently 48 homes available and we sold 33 in the month of July. In other words we are turning that inventory over every 6 weeks or so. The under 500K price range is where all the action is and the over 700K market is the slowest of the categories. There has been increased activity in the higher ranges primarily driven by relocation but with the town home market moving so quickly there are finally some move up buyers back in the market. Appraisals continue to be the biggest hurdle as they (and the lenders)fail to recognize that our market has "bounced". By bounced I mean we have hit bottom and bounced back up to more realistic numbers for our area. New appraisal guidelines, while well intended and frankly a good idea, are just not being implemented properly. Until this is worked out it will continue to be a challenge and effect pricing. After all is said and done, though, our market is doing okay; homes that are priced competitively, in good condition and on a nice lot are selling quickly. Homes that are not, don't. If you are on a bad lot then you cannot ask what a home on a good lot is getting. If you have deferred maintenance (poor condition) then you cannot sell for what a a home in good condition is getting. If you do not have the same features as other homes in your price range then you must complete in a lower price range. At the end of the day price cures all ills. Banks know this, which is why foreclosures sell for less than the rest of the market and as long as there is nothing pushing the buyer to buy and there are plenty of homes to choose from buyers are only cherry-picking. Buyers are still controlling the market although that is changing in the lower price ranges. I will, as usual, keep you informed as our market continues to unfold.
Ok, it is official, we have just finished the July stats and we have now seen 12 straight months of improving market conditions. It may not seem that way but it's true. The town home market is on fire and our inventory is turning over every 2 weeks. We currently have 51 town homes on the market and we sold 103 in the month of July. Great numbers! We are seeing fewer homes coming on the market, which in this market means we are getting fewer foreclosures listed than last year in the corresponding months. The percentage of available properties that are "distressed" sales has dropped to around the 30% mark, which while is not great is better than the 70% mark we had seen. Certainly a vast improvement. We are seeing multiple offers on all the best values and this means that in many cases the prices have escalated up over the list price so as those homes close it should start to affect our pricing in a positive way. The single family sector is not doing a swell as the town home market but it is doing better than the previous years and continues to improve. There are currently 48 homes available and we sold 33 in the month of July. In other words we are turning that inventory over every 6 weeks or so. The under 500K price range is where all the action is and the over 700K market is the slowest of the categories. There has been increased activity in the higher ranges primarily driven by relocation but with the town home market moving so quickly there are finally some move up buyers back in the market. Appraisals continue to be the biggest hurdle as they (and the lenders)fail to recognize that our market has "bounced". By bounced I mean we have hit bottom and bounced back up to more realistic numbers for our area. New appraisal guidelines, while well intended and frankly a good idea, are just not being implemented properly. Until this is worked out it will continue to be a challenge and effect pricing. After all is said and done, though, our market is doing okay; homes that are priced competitively, in good condition and on a nice lot are selling quickly. Homes that are not, don't. If you are on a bad lot then you cannot ask what a home on a good lot is getting. If you have deferred maintenance (poor condition) then you cannot sell for what a a home in good condition is getting. If you do not have the same features as other homes in your price range then you must complete in a lower price range. At the end of the day price cures all ills. Banks know this, which is why foreclosures sell for less than the rest of the market and as long as there is nothing pushing the buyer to buy and there are plenty of homes to choose from buyers are only cherry-picking. Buyers are still controlling the market although that is changing in the lower price ranges. I will, as usual, keep you informed as our market continues to unfold.
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