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Category Archives: foreclosure

Gwinnett Market Impressions…

Friday, 06 April 2012 08:00
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Gwinnett County Historic Courthouse, Lawrencev...

Gwinnett County Historic Courthouse, Lawrenceville GA (Photo credit: Wikipedia)

I won’t have the March sales figures for Gwinnett County for a few more days, but I do have a few thoughts on what I have seen from the Listing numbers I pulled down on the 1st of April.

Listings are down.  And that is weird.  VERY weird.  Not just down year over year… that isn’t weird at all.  But they are actually down from month to month.  And in this market, that doesn’t happen (although I can’t really say that now… because it just happened).  Looking back over the last few years, listings tended to bottom out in January… March would be up over February, April over March.  We’ve been going down for the last two months instead.

Of course, I still hear the media and a LOT of other real estate agents telling me about the “coming wave of foreclosures” just waiting for the banks to decide that they should release them.  If they had the “shadow inventory” everyone is talking about, they would be releasing it.  For this market, there wouldn’t be a better time.  Listings are down and this is when sales are generally moving up.

Looking back at the last year only confirms this.  We’ve seen Absorption Rates under 6 months in most of the segments with the dropping inventories.  (Translation: This isn’t a shocker…).

What does all of this mean?

Map of Georgia highlighting Gwinnett County
Map of Georgia highlighting Gwinnett County (Photo credit: Wikipedia)

I think we are seeing a bottom for some segments… specifically homes priced under $200,000 to $400,000 (I don’t know exactly where the line is… but homes under $200k are solid right now… homes over $400k are looking pretty shaky still).  Could prices erode further? Absolutely.  But I think that without a change for the worse in the economy, we are probably at the bottom of those properties here in Gwinnett County.  The higher price ranges might be bottoming or might not… but I have a lot less certainty over $400k.

There is actual competition for properties at the entry level.  Multiple offers and homes selling over list price.  The homes that are priced “right” are getting snapped up.  Over-priced houses are still languishing on the market, though.  But a couple of years ago, there was hardly a “priced right”.

 

Now we just need to get the higher priced segments moving again…

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Foreclosures v. the Rest of the Market

Monday, 05 March 2012 08:00
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DSCN2908

DSCN2908 (Photo credit: lane.bailey)

RISMedia just posted a story a few days ago citing stats that 24% of all real estate sales nationwide are foreclosure.  That is down slightly from 26% in the 4th quarter of 2010.  And a little more striking piece of news was that short sales were up by 15% from a year ago while REO (foreclosure) sales were actually down 12% from a year ago.

As a real estate agent, I look at the stats a little different than others might.  To begin with, I would have thought that the number would have been higher.  Of course, there are local variations… and I think that in Gwinnett County, there is a significantly higher percentage of sales that are foreclosure related.

Looking at local listings, in many of my market area segments, more than half of the available listings are foreclosure or related (pre-foreclosure and short-sale or institutionally owned).  And a higher percentage of the sales would be foreclosure related… often because the prices are more attractive.

But overall, I think that this bodes well for the overall health of the local real estate market.  As foreclosed inventory depletes, more normalcy can be established in the market.

Of course, if you are a buyer, that means that you might want to jump in while the prices are still depressed and the mortgage rates are bouncing on the bottom.  Feel free to give me a call to take a look.  You can see my local market reports here.

 

Lane
garagehome [at] gmail [dot] com
678-200-5895

 

 

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Wayback Wednesday… Price ≠ Value

Wednesday, 29 February 2012 08:00
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This was actually one of my favorite posts… and oddly, I wrote it around the time of our last Leap Year.  However, it is possibly even MORE true now than it was then, back during the beginning of the crash, as things were unwinding.  At that time, foreclosures hadn’t accelerated, banks weren’t too worried about getting their inventory through the system, and they were still thinking THEY were the ones in control of their market.

English: To Let in Dover As the estate agent w...

Image via Wikipedia

There is a HUGE misconception among real estate consumers.  Many want to connect “price”, like the asking price from the seller, and “value”.  They feel that if they can buy a property for 10%, 30%, 80% (whatever) off of listing price, that they have a “great deal”.  The problem is that there isn’t a magic number that makes a property a “deal”.  As highlighted in the original post, the lower priced property in a subdivision, with the same floorplan and amenities, might not be as good of a deal as a higher priced property.

As I mentioned at the beginning, it may be more true now than it was four years ago.  Then we were seeing some foreclosures, but they weren’t making up half of the market.  They were on the fringe…  Now, they are often the bulk of the sales.  But more importantly, sellers have capitulated…  And because of that, sellers knowing that they have to compete in the price arena with banks and short sales, they have priced for a fight.  The bonus is that they are often homes that AREN’T loaded with the possibility of hidden issues.  They haven’t been sitting vacant for months or years on end.  They often don’t have a myriad of “deferred maintenance” issues (that’s real estate agent speak for “not able to keep up with the maintenance”).

Of course, that isn’t always the case… but the message is just as true now as it was then, pay close attention to the total cost, not just the price tag… or the discount on the price tag.  Look at the value.

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Wayback Wednesday… Over-Pricing and Under-Offering

Wednesday, 18 January 2012 08:00
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If there were two issues I’d have to put at the very top of my question pile, there would be the ones…  In the original post, I started with the Sellers… so we’ll start with the Buyers this time.

Buyers want a great deal.  We all understand that, and as a real estate agent, I’m supportive.  Even the Sellers get it.  But there are two problems.  The first one I wrote about in a couple of years ago, here.  Buyers, in their zeal to get a great deal, offer too low to start with.  The find a property where the price has been cut to the bone, and then they offer WAY lower.

The problem there is that the seller, whether institutional, or a “regular” seller, doesn’t see the low-ball offer as being serious… then they attach the same feeling to the buyer that made the offer… they aren’t serious.  And the seller, if they send back a counter offer, reply with a counter offer that shows that… like maybe knocking $100 off the price.  Negotiations stall.  That doesn’t help them get the house… and it wastes everyone’s time, including their own.

A few years ago, when I originally wrote the post, there was blood in the water, so to speak, and it was still an issue.  Now, especially at the entry-level end of the market, that is NOT the case.  It is actually a Seller’s Market for homes that are priced well.  I am seeing an increasing number of listings selling for VERY close to list price within days.

Sellers want to get the most from their house.  It doesn’t matter if they are a corporate seller or someone moving to take advantage of a job opportunity… or even a seller doing a short sale.  Of course, just as the sellers aren’t terribly concerned with the needs of the buyers, buyers don’t really care about the needs of the seller to get top-dollar for their property.  And buyers aren’t looking at many over-priced properties. 

They know which properties are over-priced, too.  More and more, I’m seeing buyers that are VERY sophisticated in terms of knowing the value of a particular property, usually before choosing to look at it the first time.  If it isn’t priced within a few percent of where it should be, they probably won’t even look at it.  Not 10%… not even 5%.  More like 2-3%, closer on higher priced homes.

The end result, is that the home sits on the market for a while with few, or even no viewings, much less offers.  After a while, the sellers reduce the price, but by then the home is stigmatized.  The price drops more.  In the end, the home sells for less that it might have sold had the original price been more competitive. 

 

What about short sales?

They are the new wrinkle.  And I didn’t really address them the first time around.  But some similar rules apply…

Sellers, price realistically for the market.  Don’t worry about what the bank will accept, worry about a price that will get an honest contract.  Realistically…  Not too high OR too low.  Anything else is a waste of everyone’s time.

Buyer, offer realistically.  A rule of thumb I use on short sale offers is that if the offer isn’t going to be within a couple of points of the list price, don’t bother.  If the list price is insanely high or low, don’t bother.  If you can’t afford to sit on the offer, waiting as much as six months for the bank to get their act together, don’t bother.

I know that is harsh, but it is reality.  I actually have a partner that is VERY successful at getting short sales sold.  It isn’t easy or fun for anyone…  But, it might beat the heck out of some of the alternatives for the seller, and offers great opportunity for the buyer.

What Can “Fix” Housing?

Friday, 18 November 2011 08:00
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There are still a few politicians, and a lot of real estate professionals talking about the government “fixing” the real estate market.  But the question is…

Is there a way or a role for the government to fix the housing market?

We’ve seen a substantial tax credit for purchasing a home, both for first time buyers and for existing (hopefully) move-up buyers.  And we’ve seen calls for more of the same.  But at the same time, there are a lot of experts that don’t think that the tax credits created many sales that wouldn’t have happened without them.

Even $8000 isn’t that much of a motivating factor for someone to make a $150K+ purchase.  And most of the people that took advantage of the tax credit were only hastened by the tax credit, not created by it… in other words, they would have purchased the home anyway, only their time-table was altered… in many cases, only by a couple of months.  Looking at past sales, it is obvious when the credit expired.  Sales increased at a rapid pace, and then dropped precipitously as the credit expired.  Sales remained well under par for many months after the credit expired.  Some economists estimate that the $8000 tax credit had a cost of over $44,000 for each sale it “created”.

There are other ideas floating around on Capitol Hill about ways that the federal government can spur housing sales.  And there are a lot of folks… especially in the halls of the National Association of REALTORS® that feel that housing needs to come back in order for the economy to rebound.

I think they have it backwards.  In order for real estate to rebound, people have to feel secure with the job market.  How can someone be expected to make a 30 year plan (getting a mortgage, for example) when they are worried about their job in the next few months?  So, focusing on job creating, especially by smaller businesses, and removing impediments to starting or expanding small businesses would do wonders.  Instead of tax credits focused on housing, tax relief for people starting businesses would do more for the housing market.

What do you think?

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