a housing market blog site from russell shaw of realty one group
Single Family Home Sales Year to Year Comparison by Price Range. When comparing single family homes sales by price range for October 2007 to October 2008, homes sales have boomed in the under $200,000 price range. Home sales in every other category have declined.
Special thanks to Fletcher Wilcox of Grand Canyon Title Agency for the data.
Your house as seen by:
Just kidding. Really. But I hope you enjoyed seeing it. 🙂
Our grandparents and their grandparents have all seen this movie before. It only seems new.
Thanks to Benn Rosales of AgentGenius for finding this jewel.
And yet the earth continues to spin on it’s axis. Perhaps we will survive even this? 🙂
The emotion of fear is a gradient scale that starts at simple, garden variety “worry”, at the lowest level and goes up to a high level of terror. At the highest levels of fear the body will literally shut down. The emotion of fear is built-in to the body from a long time back as a survival mechanism (the fight-or-flight response). If you have a mental fear the body will respond. Any real or imagined threat to survival can produce this response. However, possibly having less money (which is a survival point in the current society) is not likely to cause death. But many people will get a mental and physical reaction to being laid off, fired or receiving less money that is not much different than if life itself was about to end.
If there was ever a question about stock market prices ever being based on anything other than greed and fear that question had to have been answered in the past two days. Oh-my-god-congress-didn’t-pass-the-bailout-bill-sell-everything. Good-news-it-looks-like-they-will-work-it-out-my-stock-is-valuable-again.
Good grief.
This isn’t the end. The four horseman are not mounted and riding – I make that statement fully realizing that folks wearing suits who are on TV or work for the Federal Government are saying this is the worst possible situation. Blah, blah, blah. In case you missed it over at Bloodhoundblog, see this for a good laugh.
This is only about money. Money that was spent by people who didn’t earn it and who didn’t have it. One of the primary laws of finance is that income must be greater than outgo. Sounds simple. So simple it is routinely ignored: by individuals, companies and governments. The United States is the richest, most powerful nation on the face of the earth. More so than any nation has ever been in all of recorded history – even Rome, when all roads lead there. And yet, our country – with all of it’s riches and all of it’s resources has been spending more than it has been earning. The current “meltdown” is just the house of cards that was there all along, falling down. You can’t lose what you didn’t have. We haven’t “lost something” so much as we discovered we didn’t have something. To paraphrase Winston Churchill’s statement on democracy, the bailout is the worst possible solution, except for all the others.
Some say if we don’t do the bailout we could have a depression. Not a recession, a depression. Truth is we could have a giant recession or even a depression if we do the bailout. And I’m writing this to make you feel better. It is just money. That’s all, money. No matter what happens, it isn’t the end of life as we know it. You want to survive. Me too. A simple way to accurately predict how a person will behave or fare in the future is to look at their past pattern. How did they do before? How do they tend to handle things? Do they tend to screw things up no matter what? Or do they tend to land on their feet – always finding some way to make things go right? That is always the ultimate test of any being: The ability to MAKE things go right. Not “are things right? The ability to make them right. Don’t you usually so just that? So what makes this all that different? The suits from the government and TV yip yapping about this mess like they know what they are talking about? If they knew what they are talking about we wouldn’t have this mess.
No no. It isn’t that I have faith in the people “fixing” this – it is that I have real faith and confidence in man’s survival drive – your survival drive. Something really bad? September 11th, 2001, New York City. Yet, here we are. If you insist on having something awful to worry about at least have the good sense to move it off of the subject of money. Money does not equal life. Worry about (I’m not really wanting you to do this!) World War III. This small little planet is composed of an anarchy of nations armed with nuclear warheads. Potential mid-east conflicts alone could bring about the end of life as we know it. If you must concentrate on “something awful” – use that one. But let me suggest, if you have managed to make it through the past few weeks without losing sleep over that one – skip the bailout, as well.
The question, what turns your dial isn’t nearly as important as who. Who turns your dial? And hopefully, the answer to that question – at least most of the time – is you.
| Most Expensive | 2008 Avg. Sales Price | Most Affordable |
2008 Avg. Sales Price |
||
| 1 | La Jolla, CA | $1,841,667 | Sioux City, IA | $133,459 | |
| 2 | Greenwich, CT | $1,787,000 | Jackson, MI | $134,325 | |
| 3 | Beverly Hills, CA | $1,777,475 | Akron, OH | $135,780 | |
| 4 | Palo Alto, CA | $1,740,333 | Canton, OH | $139,667 | |
| 5 | Santa Monica, CA | $1,653,333 | Grayling, MI | $141,000 | |
| 6 | Santa Barbara, CA | $1,599,667 | Minot, ND | $142,000 | |
| 7 | Newport Beach, CA | $1,546,250 | Arlington, TX | $143,775 | |
| 8 | San Francisco, CA | $1,513,181 | Muncie, IN | $144,250 | |
| 9 | Boston, MA | $1,493,750 | Killeen, TX | $145,812 | |
| 10 | San Mateo, CA | $1,366,475 | Eau Claire, WI | $147,300 |
One of the most interesting and useful comparisons for national home prices is no doubt the annual Coldwell Banker Home Price Comparison Index. It isn’t the average or median price in these cities: this one provides an apples-to-apples comparison of similar 2,200 square foot, four-bedroom, two-and-a-half bath homes in 315 markets across the United States, plus other areas and countries.
Remember, all of the prices you are looking at here are for similar homes – the only real variation being location. A similar home in La Jolla ($887 a square foot) costs almost fourteen times as much as one in Sioux City, Iowa ($60 a foot). Wow. It looks like it is: Location, location, location.
Here is a link to an article showing various tables and graphs from Market Watch.
Would you be better off if you waited a bit for the market to “hit bottom”? Or is now is now a good time to buy?
It depends.
It depends on several factors: do you need a home now? Can you comfortably wait? How you will know the bottom happened? What if interest rates went up as prices were at their very lowest?
There are so many economists (and other people who also don’t know) making specific predictions on what is going to happen and when, that one thing is obvious: they can’t all be right. Most of them don’t agree even on how they define, “bottom”. I would add the obvious fact that not one “professional predictor” ever predicted the run UP in prices back in 2005. Not one. Not one single economist predicted the run up in prices – it was only after it was happening that they all started “explaining things”. It is for this reason alone that I tend to ignore most of their predictions now. They don’t know.
What is known is that the absolute bottom on prices can only be known for sure 4 to 5 months after the fact. It isn’t possible to be certain at the time. Will some people manage to have actually hit precisely the bottom? Yes. But if they claim to have done it intentionally it is a pretty safe bet that they are knowingly lying or are running on pretended knowingness – as it is very unlikely to causatively “time the market”.
Some think the absolute bottom is 6 months from now. Some investors think it has already occurred. What I know is that the biggest winners of this market in years to come will be the ones who bought while they could in the “window of opportunity”.
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If you are a buyer the correct answer (simple version) is the one that gives you the most bang for your buck. Based on what you wanted and needed (location, school district, price range, number of bedrooms, number of covered parking spaces, etc.) You would first sit down and figure out what was it you needed (that you could afford). Then you go shopping. You want to only look at those homes that meet your specifications with regard to price range, and that have all (or at least a majority) of the features you really have to have.
There are few “perfect homes” and there are usually going to be concessions. Few get everything they wanted. But most won’t settle unless they get most of what they wanted. In this market they don’t have to. So the buyer goes shopping and looking over the relevant properties in the area they want to live in they pick the one that gives them (when compared to all the others they could have purchased) the nicest house for the least amount of money.
This is the system in use by home buyers today. It was the same system used by home buyers when I entered the business in 1978. I suspect it was the same system in use in 1958, as well. I am very confident it will still be the one used in 2058. Which one gives me the most for the least?
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If you are a home seller you have a huge advantage over the athletes who compete in the Olympics: you don’t have to beat out every other home seller around in order for you to completely win. All you have to do is to know (or hire someone who does) where the “water line” currently is for a house like yours. Fishing with your bait out of water makes little sense, just as pricing your home so low that you wind up leaving money on the table that could have been yours.
No house is the “right house” for everyone. But any house – properly priced and properly marketed – can be the right house for someone.
The Homeowner Rescue Bill Rescues Fannie and Freddie Investors. I don’t see any other groups being rescued.
Normally I don’t find it difficult to disagree with President George W. Bush about pretty much everything (save the curvature of the earth and that humans should breathe oxygen). This time it is different. Bush had to have been ashamed to have signed it. Just look at how it is buried on this page. Arizona Senator John Kyl was one of the 13 dissenting votes. Kyl even called a close Realtor friend of mine here in Arizona to explain why he could not vote for it – that it was simply an awful piece of legislation. It is supposed to help save 400,000 people from going into foreclosure. If that was really the purpose, considering how much it will cost (800 billion dollars), It would have been a lot cheaper to have a lottery and simply select the 400,000 supposed lucky ones and just buy their home for them.
But that really isn’t the purpose at all. It is the Fannie Mae – Freddie Mac Bail Out Bill. That is why Bush signed it. He accepted all that other crap so he could do what he had to do to keep Fannie & Freddie afloat. Fannie & Freddie are the Big 2 of the secondary mortgage market. Most any lender (Bank of America would be an exception, Countrywide would not have been) would completely run out of money to loan in about 30 days. So the loans are packaged and sold to these two companies – who then go back to Wall Street again and again to replenish their money supply. What I don’t understand is why (in the final form it passed in) the National Association of Realtors backed it. Unless we are to assume that anything that gives any Realtor anything is “good” – no matter the cost, this one just makes no sense.
My office already has had sellers who need to do a short sale either take their home off the market or fail to let agents and buyers show their house. No need. The government is here to help them. If foreclosures are estimated to be in the range of 5.5 million between now and the end of 2010 how does “fixing it” for 400,000 solve anything? And don’t be surprised if there aren’t 400k people (not counting FNMA and FRE stockholders) who get helped at all. I predict less than half of the estimated 400,000 will have anything other than foreclosure or a short sale occur.
The change that will hurt the Phoenix market the most is the complete elimination of the AmeriDream and Nehemiah programs. Effective, October 1st – they are gone. Currently, those seller-funded down payment assistance home sales account for about half of all the homes being sold here. As a taxpayer, I can totally agree that there was a problem with seller-funded down payment programs (they have 4X the default rate of other FHA loans). But was now, of all times, when it had to go away? Homeowner Rescue Bill. Really?
You’re a seller in today’s market. What does it take to get your house noticed 
with all the other houses out there for sale? Short answer? The very same thing it takes in any market.
Or sure, in the market we had three years ago the average busboy or cab driver could have sold a house. In fact, many of them did and are now back to doing what they did prior to the market going wild. What is funny is that even in that market where a home seller could just put their home on Craigslist or pound a sign in the ground and from either of those actions, find their own buyer (at one point, in less than a day) – it still wasn’t the same as what we did for the seller. I understand that this can come across as self-serving but in most cases that seller cost themselves about 40k (estimated average loss in the Phoenix area) by “saving the commission”. They found A buyer. At that same time, the top agents were “finding” around 25 buyers per house. Really. This created a bidding war and drove the price of the house up. Way up.
This market isn’t that market. Now, the balance between sellers and buyers is completely reversed. Now, we have more sellers than buyers and it is going to be that way for a while.
So, is now a “good” time to buy? Is now a “good” time to sell? Well, it depends: if you are a first-time buyer the important question is how would your house payment compare with what you are paying right now in rent. Are the prices going to continue to slide? Maybe. There is no YES or NO answer to that question because it depends on the price range and the part of the valley. Some areas will not have any further meaningful price declines. Some will. My counsel to a person currently renting would be to see how the payment (using only a 30 year fixed rate loan, thank you) would compare with projected rent increases. You can make that type of comparison here.
What if you are a local home changer? You live here now and would be buying another home here. Then it makes NO difference what the market is doing. If the market “went up” it does not help you. If the market “went down” it does not hurt you. The only significant variable in this instance is interest rates. Interest rates moving up or down does make a difference – but not the prices of the houses.
Selling and not buying another home? Better to sell now or wait? The real answer depends on the location of your home (the one thing you can not change). To give a specific (as in correct) answer requires doing a supply – demand analysis of the immediate neighborhood. It doesn’t take long for us to do and is the only way to give you a real answer to that question.
What does it take to get your house noticed (the only way to actually get top dollar) is effective marketing. Literally letting agents and buyers know that the house is for sale. Can a sign on the property cause a buyer to call? Sure, but the only people who will see the sign are those people driving down that street. Same for an open house and in today’s world you can have an “open house” 7 days a week, 24 hours a day with a virtual tour. So having the house on the internet is vital but isn’t enough. Anyone can put any house on a web site (just about every home for sale today is on one or more web sites) but that isn’t enough to get the home viewed or sold. There must be the right kind of traffic to that web site. The right kind of traffic. People looking for homes because they want to own one. Do enough of that last one, and have the home priced correctly and it will sell. It doesn’t have to take a long time either – even in this market.