For the full text of the article referenced here, use THIS LINK. The focus of the story is the the sea change in the local real estate market. I don’t know if there is much for buyers to rejoice, other than the fact that there are more choices than there have been. But buyers have to be patient and smart to sort through the sellers and figure out what properties are priced to sell.
The subject of the news article purchased their home for $354,500 in 2001 and is now “slashing” their asking price to $629,900 would net nearly $50,000 per year of ownership. While that figure does not take into account maintenance and possible upgrade costs, what other investment in 2001 would have yielded that type of return? Especially when you consider that 80% of the investment was financed at 6%, and the interest paid was tax deductable.
So the seller didn’t make an additional $100,000. So what? It was never his money to begin with.
The most important components of this article are on pg A10:
1. Median Price is Lower: Yes, that happens when more lower priced homes are on the market
2. More Homes Are On The Market AND Prices Are Higher Than Last Year: Yes, that happens when properties are overpriced…..they don’t sell.
Generally, properties have been priced too high since early this year. The market began flattening in late 2006, but it seems many sellers had it in mind that they were entitled to 1% monthly appreciation in spite of this fact. Thus sellers that got around to putting their homes on the market by May or June of this year were, for the most part, already 5-6% above the market. Coupled with the media blitz concerning the mortgage business that has spooked many buyers and those same sellers are, in many cases, now priced 10% above the market.
Expectations. It is interesting to observe sellers reaching for money that was never theirs. While the last 4 years have provided greater appreciation than I’ve seen in my 23 years in the business, it still isn’t enough. Why? Expectations. Never mind the fact we should feel blessed that our local market is not going backward as many parts of the country are, that we actually have buyers that want to buy, that our region is creating good paying jobs. We are incredibly fortunate to have an economic climate that will allow home sellers to sell and get on with the next stage of their lives.
If you, or anyone you know is sitting on the market, wondering what to do, and if the property condition is the best that it can be, here is a way to judge your pricing: showings.
If you are getting 0-1 showing per week, you are priced way too far above the market;
2-3 showings per week, you are closer, but still too high to get offers;
consistently getting 4-5 showings per week, you are close enough to get offers. If no offer is forthcoming within two weeks there is likely a property condition issue. It could be a barking dog, a dead tree, the neighbor’s car up on blocks, mildewed caulking around a bath tub, crooked cabinet doors, dirty or dated light fixtures. Every detail counts. Miss one and that could be the cause of no offers.
A recent problem we’ve run into are wide angle photos that many real estate agents are using to enhance the appearance of properties on-line. Wide angles are fine, but not when they make homes, rooms, and yards look twice as big as they are. The net effect is a lot of showings and no offers when buyers see that the property details are much smaller than represented on-line.
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