We are pleased to announce the addition of a page here on Dothan Home Search specifically dedicated to our area schools. When you visit dothanhomesearch.com/schools, you will see a map of area schools, and be clicking on a specific school location, you'll get some general information as well as a couple of links to school test scores, demographic information, and reviews. The page is not quite completed, but we are adding more schools and links daily until it is.
The link to the page will show up on the sidebar under the "Inside Dothan Home Search" section of links.
Is there school information you would like to see missing from this page? Let us know by leaving us a note below and we will look into adding it!
The January slide has continued into February, with February sales dropping over 24% from February, 2008. The number of homes sold was up 50% from January however. Overall, home sales in the Dothan real estate market are down a full 25% for the first two months of 2009, compared to 2008.
Pending sales have leveled off as well, although the total number is still significantly higher than it was three months ago. With spring arriving and the new $8,000 tax credit for first-time home buyers, I do feel there will be an upturn in the numbers soon.
Not surprisingly, the $110,000 to $160,000 price range is currently the most active. The upper end market has picked up some as well, with seven sales over $300,000 in the last 45 days.
I have to say that I didn’t see this big of a drop-off coming. We have been very busy around our office, so I assumed everyone else was too.
As far as national market trends go, the Dothan area is typically 12–24 months behind the national trends. If you read our monthly inventory report earlier this week, you saw that while the number of homes for sale here in the Dothan area is climbing, the number in most other areas is declining. And while median price was falling over most of the country last year, Dothan remained stable. That being said, I think we are reaching the point where price is going to have to come down to move the mountain of inventory we have accumulated.
A week or so ago, we talked about the three different types of home buyers , and gave you some information on each one. Today, I want to look out how each buyer looks at your home when it hits the market. Now you've probably heard somewhere that the first three weeks of a listing are the most important. The truth is, it is only during those first three weeks that you have a chance to capture all three buyer types.
Home buyers are ready and prepared, are you?
We know these folks are sitting on ready, and are waiting for the right house to come along. They are monitoring the MLS daily and watching several real estate websites. Their agent is hopefully doing the same thing. A house cannot hit the market and these folks not know about it. They will analyze the information and look at the pictures. Then they will call their agent to schedule a showing. If it fits, they'll make an offer; if it doesn't, they'll move on.
Within a couple of weeks of listing, every ready and prepared home buyer will have seen information on your home. If they haven't, they either aren't ready and prepared, or they need to fire their agent. After the first three weeks, you have lost your chance to sell to these buyers.
The deal makers
These are the buyers that are looking for what they consider a good value, or "deal". They can and likely will pull the trigger as soon as they find it. They want to buy, so they are watching the MLS and the various websites as well. They might even watch it closer than the ready and prepared buyers, because they are motivated by price, and to find the deal they are looking for they have to know what homes are selling for. Once your house hits the market, the vast majority of these buyers will also see it within the first couple of weeks. If it is not positioned at a price they consider to be a value, they move on quickly.
After the first few weeks, you have lost your chance to sell to these buyers, unless they happen to still be around when you reduce the price at a later time. That is a subject for another post.
We just decided we want to buy a house
They've just started looking. They may or may not be working with an agent. Be thankful for these folks, because one of them will be the one that buys your home, since the ready and prepared ones have moved on. The good news is, these buyers are entering the market all the time.
Here is an easy way to visualize this. Picture a dam, and that the water behind the dam is buyers. The dam breaks when your home is listed, and the rush is on. You are flooded with potential buyers. As soon as the initial flood is over however, the volume of water (buyers) is reduced to a slow, but hopefully steady stream. You can’t put the water back behind the dam, so you will never have that big pool of buyers again, once the first few weeks of the listing are over.
Our market statistics bear this out. The average days on market for homes sold in Dothan in 2008 was 146 days. Around 40% of homes sold within 90 days, which is a time table that would make sense if the home was bought by a ready and prepared buyer. Again, they are prepared to buy when the right house comes along. Another 40% of homes sold took over 135 days to sell.
The conclusion? If you can’t reach a ready and prepared buyer with something that sets your home apart from all the rest, or you can’t offer a dramatic price to the “dealers” at the time you put your house on the market, be prepared to wait.
The number of homes for sale in the Dothan area continues to rise, moving up almost 5% in the last 30 days and up over 8.5% since the first of the year. Across the nation however, inventorylevelsaredropping. Dothan has always lagged behind the national trends, so this isn’t totally unexpected. Although, such a sharp rise in a short amount of time is a little worrisome.
Absorption rate
Even though the number of homes for sale in Dothan has increased, pending sales are still relatively stable, which means the absorption rate, or the number of months it would take to clear the market if no more houses were listed, has moved down by a couple of months. There is currently 15.92 months of inventory on the market here in Dothan.
Here are inventory and absorption rate numbers for several areas around the Wiregrass.
Sold
Active
Absorption
Area
February
3/15/2008
Rate (months)
Dothan (northwest) - Midland City
19
181
13.9
Dothan - Southwest
21
333
16.9
Dothan - Northeast
4
42
14
Dothan - Southeast
14
120
14.4
Headland
3
46
27.5
Rehobeth - Taylor
2
75
22.5
Wicksburg - Pinckard - Newton
2
28
12
Slocomb - Hartford - Geneva County
3
36
27.1
Abbeville - Newville
0
28
84.9
Ashford - Cottonwood - Gordon
2
56
28
Columbia - Webb - Kinsey
1
29
12.4
Keep in mind that the absorption rate is based on a three-month average of sales.
While I'm not inclined to put people, in this case home buyers, into definite, immovable categories, it is important in our business to look at these things and try to help our seller clients determine how to use the information to their advantage. Sellers need to not only know how we attract buyers (marketing plan), but also what appeals to different types of buyers. I saw a presentation this past week that put all home buyers into one of these three categories, so I thought I would talk a little about each of them.
Type 1 - Ready and prepared to buy
These are by far the favorite type of buyer for both agents and home sellers. These buyers have their financing lined up and ready to go. They don't have to finish a lease or sell another property before they can close. They are ready to move as soon as an acceptable property is located. When the right house is found, their mentality is "What will it take for us to get this home?" Type one buyers respond to pricing but are not necessarily motivated by it. They look closely at the intangibles of a property to see if it fits the needs of their lifestyle, and they are often willing to pay a little extra for things that are important to them. These buyers often create competition with other type one buyers on the same home.
Unfortunately for home sellers, there is no one attribute your home can have to make it appeal to all these buyers in your price range. Condition and curb appeal are very important. You've got one shot at these buyers, and that is in the first two weeks your home is listed. If your house doesn't have what they are looking for, they move on.
Type 2 - Want to buy
These are the value buyers. These are the ones looking for a "deal". They do want to buy a home, but will always try to determine what a house is really worth to them. And they won't pull the trigger until they are satisfied that they are purchasing something at or below its real value. They will make offers below the perceived market value. Folks early in the home buying process can be this type of buyer before becoming a type one as they get closer to a target move date.
As with the type one buyers above, a home sellers best shot at these buyers is when the listing is new. The difference however is that these buyers are more motivated by pricing, which means that homes with no justification for a premium price (perception of value) are not going to get much of a look. Subsequent price reductions can interest these buyers down the road, but only if they are aware of it and have not moved up to a type one.
Type 3 - Just entering the market
These are the folks that have just decided they want to buy a house. They are typically neither prepared nor ready. Their question is always, "Where do we start?" If they are motivated enough, these buyers will end up being type one buyers in a relatively short amount of time. The rest will end up as a "Want to buy" home buyer. This type buyer is entering the market all the time and are sparked to do so for a variety of reasons, including a for sale sign in the yard of a house that really appeals to them.
Once the first two or three weeks of a listing are history, and the ready and prepared buyers and the want to buy buyers have moved on, these are the buyers a home seller is left with.
Do all home buyers absolutely fall into one of these three categories? Of course not. But the vast majority will, and a working knowledge of what appeals to and motivates home buyers is essential for home sellers in today's market. We will spend some time in the coming days talking about how home sellers can use this information to their advantage.
Part of the new economic stimulus package just signed by President Obama aims to stimulate the housing market. This post is not to debate the merits of the plan, or even this specific provision of it. The purpose of this post is to give you, our Dothan area home buyers, the information you need to be able to take advantage of the $8,000 tax credit. Here is everything you need to know.
Who gets to use it?
First-time home buyers are eligible. First-time home buyers are defined as the folks who have not owned a home in the three years prior to purchase. In addition, the credit begins to phase out for purchaser’s making over $75,000 ($150,000 joint return) a year. The credit disappears at the $95,000 ($170,000 joint return) income level.
What kind of house can you buy?
Any single-family residence that will be used as your primary residence is eligible.
How much of a tax credit will I get?
The credit is for 10% of the purchase price of your home, up to $8,000. For any home under $80,000, you would get a 10% credit. Over $80,000, and the credit is the full $8,000.
How does this tax credit work?
Basically, this credit goes toward your Federal income tax bill for the year. So, when you fill out your tax return early next year, you will be able to deduct this credit from the income tax you owe. Look at your tax return for 2008, or, if you haven’t completed it yet, look at your return from 2007. Look for the line that shows the total tax you owed (Line 61 on Form 1040, Line 37 on Form 1040A). You will get to deduct 10% of the purchase price of your home, up to $8,000, off of this amount. There will be a line in the “Payments” section of your return to do this. If you didn’t owe that much in taxes, then you get whatever is left as a refund! Keep in mind that when we talk about taxes owed, we are talking about your total Federal income tax bill, not any amount that comes up in the “Amount You Owe” line of your return.
Do I have to pay it back?
No. Not for any home bought after January 1, 2009 and before December 1, 2009. There is a recapture clause, which states that if the home is sold within three years of purchase, the entire amount of credit is recaptured on sale. This applies only to homes purchased in 2009.
Any way you look at it, this is a pretty sweet deal for home buyers. We’ve got a strong team of REALTORS® waiting to answer your questions and help you find a home.
As expected, the number of homes for sale in Dothan has moved back up this month. As of this past Monday, there were 1012 houses listed for sale in the Dothan MLS, up from 979 in January. Inventory levels are seasonal just like sales are, so we expect this number to move up even more, although how much is hard to predict.
Absorption rate We have already talked about how pending sales are up significantly right now, but that rise has yet to translate into any increase in the number of homes sold (more on home sales next week). The absorption rate for February rose to 18.4 months. Basically, what this means is that if no more homes came on the market, it would take a year and a half to sell everything, based on current sales numbers. This month we are going to look at absorption rates based on price range instead of area. This table shows the number of months of inventory in the respective price range.
Sold
Active
Absorption
Price Range
January
2/6/2008
Rate (months)
$50,000 - $99,999
8
155
11.6
$100,000 - $149,999
7
237
19.2
$150,000 - $199,999
10
233
21.2
$200,000 - $249,999
7
86
15.2
$250,000 - $299,999
4
108
27
$300,000 - $399,999
2
94
94
Over $400,000
0
67
-
To say the housing market in Dothan in the $250,000 price range is slow might be an understatement. To say the market in homes priced over $400,000 is dead is not a stretch at all.
There were 13 permits issued in January for new homes to be built, which is coincidentally the lowest monthly figure since last January. Activity ramped up in February and March of 2008, so we will see if that happens again this year. Interestingly, there have been only a couple of permits issued where the valuation was over $300,000 in the past few months. Charles pointed out in last week’s Dothan real estate inventory report that this price range is basically dead in our area right now, new home market included.
There are currently 233 new construction homes listed for sale in the Dothan MLS, up over 7% from last month. Well over half of those listed are in the $100,000 to $200,000 price range. There were 12 sales of new construction homes in January, with an average price per square foot of $110.96 and average days on the market of 159 days.
If you have an interest in building or purchasing a new construction home, give me a call or use the contact form. As a Certified New Homes Specialist (CNHS), I have extensive training in the new home market and would be happy to consult with you on your real estate needs.
There was a fairly significant 20% drop in year over year home sales in the Dothan area for January. Last year, there were 63 homes sold in January, compared 50 this year. This number also represents the least number of homes sold in a month since way back in 2000. Looking at the pending sales chart for the last three months gives us some reason for optimism however. Pending sales have trended higher the past few weeks, which should mean that February and March sales numbers will be higher. There are segments in the Dothan real estate market that are struggling. The upper-end of the market (homes priced over $300,000) is really slow right now. In fact, there has only been one home sold in Dothan priced over $400,000 since the first of November; a short sale we had listed that was pending for nearly eight months. But sales in lower price ranges are down too, although the disparity is not nearly as graphic.
There hasn’t been much movement either up or down in the number of homes for sale in the Dothan MLS over the past several weeks. Single family houses for sale peeked around 1,030 in early November, but have since settled back down to around the 1,000 mark. Considering that an increase in inventory during the fall is very common, it looks as though the top may have been reached. We will know after the first of the year, when another surge upward could occur.
Absorption rate
A big fall in the number of homes sold in November (more in the sales report coming next week) lead to a rise in absorption rate. Refreshing everyone’s memory, absorption rate is the number of month of inventory currently on the market at the current sales pace. In other words, how long it would take to clear all the homes for sale on the market if no more were listed.
The absorption rate for December is up to 12.67 months, the highest since at least 2000 or 2001.
Here are inventory and absorption rate numbers for several areas around the Wiregrass.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
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Here is an easy way to visualize this. Picture a dam, and that the water behind the dam is buyers. The dam breaks when your home is listed, and the rush is on. You are flooded with potential buyers. As soon as the initial flood is over however, the volume of water (buyers) is reduced to a slow, but hopefully steady stream. You can’t put the water back behind the dam, so you will never have that big pool of buyers again, once the first few weeks of the listing are over.
While I'm not inclined to put people, in this case home buyers, into definite, immovable categories, it is important in our business to look at these things and try to help our seller clients determine how to use the information to their advantage. Sellers need to not only know how we attract buyers (marketing plan), but also what appeals to different types of buyers. I saw a presentation this past week that put all home buyers into one of these three categories, so I thought I would talk a little about each of them.
Part of the new economic stimulus package just signed by President Obama aims to stimulate the housing market. This post is not to debate the merits of the plan, or even this specific provision of it. The purpose of this post is to give you, our Dothan area home buyers, the information you need to be able to take advantage of the $8,000 tax credit. Here is everything you need to know.
