THE BUST IS OVER!
July 15, 2012
Now I don't want the seller's in our local market to start getting giddy and giving each other the high five, that is hardly what this headline is about. I don't think it would be a wise strategy to wait for the market to come back before selling your home unless you were born after 1990 and have a good deal of time left. But the good news is that we have a changed market, a market with slightly more activity, a market where home prices have stopped dropping at a quickened rate and that is very good news. Across the country as well as here in Southern Oregon we are seeing multiple offers in the low price ranges, under $200,000, if the property is a deal. In the Rogue Valley the mid ranges are just beginning to show slight activity and the high end market, over $900,000 has recorded only 1 sale in the past six months. However, a number of my listings in the higher ranges have just started to have a number of showing requests over the past 3 weeks.
For a number of months in a row we have seen countywide pending sales exceed the 2011 numbers by 17% on the low side in March to as high as 40% in June. As inventories decline we are seeing the number of available properties per buyer shrink to 4. This is a great time for sellers to sell their homes and it is also an excellent time for buyers to buy, I think the best ever. So my message to sellers right now is this is not the time to play hard to get. Another way to say this is "make hay while the sun shines." It is important to keep in mind that we have a very, very long way to go to fully pull out of this and any number of local or world situations could cause the market to retreat once again.
More good news comes from HousingPredictor.com which forecasts that although housing prices in much of the country will continue to decline there are a few cities that are forecast to have housing price increases. Medford, Oregon and surrounding communities are forecast to have their housing prices increase 13.9% over the next 5 years. You can read the article here: http://www.nuwireinvestor.com/articles/five-best-real-estate-markets-for-2012-2017-59404.aspx
As reported by David Wessel of the Wall Street Journal in his article of July 11, 2012:
“Economists aren't always right, but on this at least they agree: A new Wall Street Journal survey of forecasters found 44 believe the housing market has reached its bottom; only three don't.
Housing is still far from healthy despite the Federal Reserve's efforts to resuscitate it by helping to push mortgage rates to extraordinary lows: 3.62% for a 30-year loan, according to Freddie Mac's latest survey. Single-family housing starts, though up, remain 60% below the 2002 pre-bubble pace. Americans' equity in homes is $2 trillion, or 25%, less than it was in 2002 and half what it was at the peak. More than one in every four mortgage borrowers still has a loan bigger than the value of the house, though rising home prices are reducing that fraction slowly.
Still, the upturn in housing is a milestone, a particularly welcome one amid a distressing dearth of jobs. For some time, housing has been one of the biggest causes of economic weakness. It has now—barely—moved to the plus side. "A little tail wind is a lot better than a headwind," says economist Chip Case, the "Case" in Case-Shiller.
From here on, housing is unlikely to drag the U.S. economy down further. It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses. "Manufacturing had led growth and construction had lagged," JPMorgan Chase economists said last week."Now the roles are reversed: Manufacturing growth has slowed as private construction comes to life."
Plenty could go wrong. The biggest threat is a large shadow inventory of unsold homes, homes which owners won't put on the market because they are underwater, homes that will be foreclosed eventually and homes owned by lenders. They have been trickling onto the market, slowed in part by government efforts to delay foreclosures; a flood could reverse the recent rise in prices. Or the still-dysfunctional mortgage market could get worse. Or overly zealous regulators or a post-election change in government policy could unsettle mortgage lenders or home buyers.
But the housing bust is over.
Saturday, April 14, 2012
I am not one of those Realtors that is always gung ho on the market telling you now is always the best time to buy regardless of what is going on. If I feel that pricing will continue to decline, I will tell you that. I may encourage you to buy, but I will make sure that we negotiate your purchase price to where the market is going.
I now feel that today, right now, is the most perfect time to buy that I have seen in years. Here is why: For March 2012 (this was also true for February) we are seeing pending sales increase 17%, inventories decrease by 21%, the days on market time has decreased by 10%, the list vs. sales price has gone up 3%, the number of homes available to a buyer has declined by 29.8% (that is huge) and the months supply of homes for the lower end has decreased a whopping 42.8% from 7.6 month's supply to 3.6 month's supply (huge again).
I am a numbers person and those numbers tell a story. So should you buy? In the words of Napoleon Dynamite " Heck, yeah!" The lower end market, under $250,000 is very fast right now. For the first time in years I am experiencing multiple offers, homes going quickly and buyers missing out that didn't position themselves correctly when writing an offer. Buyers and Sellers always seem to use laser like focus to hone in on that $2500 at the tail end of the purchase price. We have $250,000 or $200,000 that we are working with and they act like that last $2000 is what their offer is all about. It isn't. They really need to step back and see that as a buyer if they really like the property, it is in good condition, good location and that it will give them many years of enjoyment, why would you walk away from it when you can borrow that $2000 at under 4% and for $9 a month you can live where you want to live? I realize for investors and rental properties the numbers need to be where they need to be to fit your investment formula, but for an owner occupied home, take a wide perspective.
You can't even buy a pizza for $9. Just saying. And for the sellers that refuse to come down that additional $2000 on their price to a qualified and willing buyer, what are you thinking? Even if you can make 6% return on that 2000, it would take you 25 years to make $3000 off it on straight interest. Never, ever, ever in this market or even in a great market leave several hundred thousand dollars sitting on the table in the hopes of making under $5,000. It is not smart and it is not worth it so that you can feel smug at dinner parties telling your friends how you squeezed that last $2000 out of someone. Instead tell the story of what a fair deal everyone got and how great you and the buyers felt and what a wonderful transaction it was. Oh, and how happy you are to move forward with your lives rather than being in the group of sellers that still have not got the memo and are lingering on the market year after year. It is a much more joyful story and people like joy.
Last few points on why this is a perfect time to buy. When the lower end starts moving like it is and we are seeing more investors and cash buyers coming into the market, which we are, we know that the middle range will follow this trend. So get going, call me, call your Realtor, get your check book and let's get into the real estate market.