So how bad is it?

herusJune 14, 2010

Every day there is news about the real estate market. Maybe it's just me who thinks so, but so much of it is conflicting. There are the doomsayers who warn of an impending crash (what-this past one wasn't crash-y enough?). Then there are the optimists and tea-leaf readers, who say this or that points to the market getting better, is on the road to recovery, etc.

To be sure no one is singing O What a Wonderful Real Estate World. Most everyone, even the optimists, acknowledge it will be a slow and sometimes difficult recovery. The doomers, otoh, are crystal-balling 40% drops or more from CURRENT levels.

This community is somewhat in touch with the action in the trenches. So I thought I'd ask: what's it like out there? We have had our home in GA on the market for approaching 3 months. We had an offer that didn't work for technical reasons, although the price and other terms were agreed upon.

We have had two or three repeat lookers besides this and feedback is always top-notch (beautiful home, xlnt condition, shows very well, etc). Some (not all) say the price *may* be a touch high, others say it is competitive (these are the showing realtors who I call a day or two later) but I would think the presence of an offer (and one near-offer) indicates it isn't too far off the mark. Still, we are getting a bit anxious (I know, 3 months isn't that much in today's world), and although we have averaged a little over one showing a week, I am acutely aware that the end of summer is not that far away. I am told the market dries up faster than a prune in Arizona once school begins... true? We really want to be out of here by then for about the same reason, that our dtr can go to the new school when it starts. How does July/August typically look? Is there a certain amount of relo action or is June pretty much the caboose end of the train?

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In the end, what the market's doing is only theory and doesn't address your one particular sale. If you're getting anxious and know you're on the high side price wise, lower the price (by a reasonable chunk, not a 'shaving's' worth, which won't make a statement. Price is almost everything and if you want to sell, bring it down.

    Bookmark   June 15, 2010 at 5:23AM
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Real estate, like politics, is local. I'm not sure you are going to get a fair appraisal of your market from the net opinions of a nationwide and more group.

It also depends on what you are selling. We will be putting our old place on the market soon. Yesterday, I searched our local MLS to see what the competition would look like.

There were 374 listings in the zip code, but only two with five or more acres, which is what we have. This is in a rural area, and I expected to find many more listings of homes with 5+ acreage. So, it looks like there isn't much competition, if you are looking to sell a house with five or more acres, but not so, if you just have a house and a lot for sale.

    Bookmark   June 15, 2010 at 6:43AM
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If you are not planning to move too far, you may want to ask whether your daughter can start attending the new school this fall, even if you haven't moved yet. Our school requires a copy of a purchase agreement, but once we gave them that, they let our daughter start in August, even though we didn't move until January.

    Bookmark   June 15, 2010 at 9:02AM
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Yes I know RE is local and I wasn't really asking for specific info on that, just kinda to get a feel for what various markets are doing (and I know they could be different).

creek-side, like your house ours has a special feature, as it is the only brick home on a lake in the area. There is another on the same lake but it's not brick and the synthetic stucco hurts it bad (kiss of death in this area), yet it's priced higher than ours. It too is still on the market, having been listed only a couple of weeks after ours.

We had another showing yesterday with great feedback but the buyers are not ready. While we are considering a price cut (already done so from 675 to 650) to 635K, not sure if this will generate enough excitement, but at that point it's cutting very close to the bone, after figuring in expenses and negotiations.

    Bookmark   June 15, 2010 at 10:08AM
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Small town within commuting distance of DC. Low end of market, say $300K, doing OK, higher end properties languishing even with steep reductions. The "move up" market simply isn't there.

    Bookmark   June 15, 2010 at 11:14AM
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Entry level homes are still selling well. Mid market, less so. Upper end, not at all. Typical DOM for mid to upper end is measured in years, not days, and involves significant price drops.

One example is the home of the developer of the subdivision that sprang up behind ours. He's been a successful builder and has a lot of money, but he began that subdivision at the wrong time. He became cash strapped and he put up his home for sale to alleviate the situation. 2 years ago, the price was 1M, which is upper end for our area, but not upper upper end if you know what I mean. 2 years later, the home was down to 500K with no takers and he's gone into bankruptcy and the bank now owns the subdivision and his home. It's a nice house, and a LOT of house for 500K, with barns, a pond, and a throw down gorgeous house on the lot. But, 500K is the upper end of the "middle" and there weren't even any buyers at that price. Yet, one of his previous subdivisions of modest homes in the 150K range has an average DOM of around 90 and is holding it's values well. The lower midrange (225K) subdivision he began 2 years ago has 4 houses complete in a 160 home development, and is in limbo.

My take from that is that serious price cuts in the mid to upper end will be needed to be able to get a sale, and even then, things aren't a shoe in. "Special appeal" properties aren't garnering above market price for those additional amenities. They're lingering on the market because they refuse to take the lead in chasing the market down and suffering the consequences.

If you want to sell by the end of summer, then cut it to 599 NOW, and be prepared to go to 550 to really move it in time. Sadly, that may not even be enough cuts with a nervous market.

    Bookmark   June 15, 2010 at 12:38PM
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The market is pretty hot where I live in Northern California. May sales of $1 million+ homes increased 70% from a year ago. It's not uncommon to see multiple offers on houses. I get 2-3 calls every month from real estate agents wanting to list my house. They tell me inventory is quite low at the moment.

One thing that concerns me is the invisible backlog of Alt-A mortgages that are about to be reset. Some areas have had relatively low foreclosure rates; I'm afraid that the number of foreclosure will jump as the mortgages start rolling over from their teaser interest rates to higher market rates.

    Bookmark   June 15, 2010 at 3:17PM
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Well - in my area double median is probably taking 6 months to sell. Median probably 2 months. That actually is pretty typical historically although not the 2003-2007 that everyone compares to. The prices on the high end are just below what build cost would be and down 20% from peak probably. We actually have pretty moderate inventory.

The thing I also see is that no one wants a problem house - there are enough good houses at decent properties. That being said, the corner house on a busy street just sold and I personally would never want to live there. It was on the market for less than 2 months and double median price for our town.

    Bookmark   June 15, 2010 at 3:39PM
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According to the LA Times, SoCal median home prices were up 23% in May compared to a year ago. Even considering the expiring tax credit, 23% is a bunch.

Somebody is buying.

Here is a link that might be useful: LA Times Article

    Bookmark   June 15, 2010 at 5:25PM
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I like the comment about real estate being like politics - it's local.

We are being told that in the central Ohio area, the market for sellers is dismal. I'm sure, for some folks this is the case.

However, I listed my home last Tuesday. After 4 showings in the first two days, I had a contract on it on Thursday with another prospective buyer writing a back-up contract last Friday. This is for a 40 year old, mid-market, smallish ranch. The contract price was only 1.5% less than my original asking price.

Obviously, I priced it right for the market, it was in move in condition and clean clean clean inside and out. The selling price was 22% higher than my purchase price 10 years ago. Not a stellar return but much better than some I've seen.

The home I purchased two months ago was higher end. It was on the market for two years. I squeezed the seller and we settled on a price 35% less than his original asking.

Anecdotally, there seem to be small signs of a recovery in my area. But higher end properties still seem to be a tough sell.

My two days on market experience is very unusual here.

    Bookmark   June 16, 2010 at 7:53AM
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Just wrote a long post that vanished. I hate that!

We were a seller in a small city in SC. The upper end market is dismal and it took 1 year for us to sell our home. We sold for 90% of what my realtor thought was a very low list price. There are 20 other houses for sale in our neighborhood and we are grateful to have gotten out when we did. The other sellers are not going to be very happy when they see our sale price on the comps.

We are moving to a small resort area in SE GA that I have posted about before. The market is even more dismal than where we sold. The only things that are selling have greatly reduced prices. The paper is FILLED with "Notice of Sale Under Power" classifieds, which means prices are going to fall further. We are going to wait to buy unless we find a real bargain.

    Bookmark   June 16, 2010 at 9:41AM
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I'm the Boston suburbs, and the market is pretty good here, except perhaps for very high-end properties. Just out of interest, I follow the local market, and whenever I see a house that would tempt me (if I were actually looking), it sells within a couple of weeks. The only thing that seems to hang around for a very long time are homes priced above $2 million, or homes obviously over-priced.

    Bookmark   June 16, 2010 at 8:17PM
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