Home > Blogs > Ronald S. Accornero > Ron's Blog

Making sense of this market!

By Ronald S. Accornero

Real Estate Agent with OC Signature Properties

September 20, 2010 11:03 AM

When you read the news, you see headlines like, "Real Estate sales down 25% from the same time last year or "Real Estate prices now at 2003 levels" These typical headlines really do not tell you much about what is really going on in the Real Estate market. You have to look not only at the number of sales, but the value of the sales as compared to a year ago. For example, there were 39 sales in 2007 and 49 sales in 2008 in Villa Park. This makes you think that the market is improving, but when you look at the value of the homes you see more sales at the $600,000 to $800,000 level than you saw in 2007. In other words prices are falling and because of the REO properties and short sales which are the only properties selling. These sales have created a new comparable which is determining the real value of the market. Many of the homes currently listed in the area will have to drop their prices approximately 15% in order to interest buyers in making an offer on their property. It is real easy to raise prices, but it is very difficult for sellers to lower their prices. Sellers have got to realize the value of the current market if they are serious about selling their homes.

Buyers are getting a message from the media that prices are falling and there are good real estate buys in the market. When they visit homes in the area the buyers are not seeing the falling prices. They are waiting for these homes to be priced competitively. When they visit REO properties and short sale properties they are seeing the reduced pricing. At the current time REO properties represent 85% of the sales in this area. Non REO properties or regular sales represent on 15% of the homes being sold at the present time. Does this tell you something about the market? I offered on a REO property for a client last month and the property sold for $90,000 over the list price and there were 20 offers on this particular home. Would you say that this is a slow market? I am seeing lots of buyers, but they are waiting for an exceptional buy. To sell your home in this market you have to compete with the REO market. As I said earlier, 85% of the homes sold are REO properties. These are the only comparables to work with to establish future prices. This article applies to homes in the one million range and not homes in the $500,000 range which are currently moving.

I think that the time is very near when we will see this 15% drop and the market will start to see sales again. That will be the time when you want to have your cash available and be ready to buy some of these properties. Real Estate is where you want to be putting your money in these times of financial instability

entry to Villa Park

Re-Blog

Featured

Comments(17)

Comment

Show All Comments

Sort:

Alan Bruzee

Long & Foster Real Estate, Inc. - Rockville, MD

Everyone wants to buy a bargain! They are willing to pay more for it sometimes too.

Sep 20, 2010 11:05 AM

Yvette Chisholm

Associate Broker - Rockville, MD 301-758-9500

You can't look at an individual house and expect that you can go in and offer 20% less because that is what you've heard on the news.

Sep 20, 2010 11:06 AM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Good analysis. It's hard for consumers to undersand market dynamics since they relate everything to their own limited experience.

Wishful thinking plays a huge part in their thinking too.

Sep 20, 2010 11:09 AM

Jon Quist

REALTY EXECUTIVES ARIZONA TERRITORY - Tucson, AZ

Tucson's BUYERS ONLY Realtor since 1996

Real estate has to be explained as extremely local in nature, down to neighborhood by neighborhood, and from one side of the street to the other.

The media headlines are just that, headlines. they can't and won't tell you much of anything.

Sep 20, 2010 11:34 AM

Michael J. Perry

KW Elite - Lancaster, PA

Lancaster, PA Relo Specialist

It's an extreme great time to be able to buy a house !!! Selling one is a whole nother matter!

Sep 20, 2010 11:39 AM

Chris Olsen

Olsen Ziegler Realty - Cleveland, OH

Broker Owner Cleveland Ohio Real Estate

Hi Ronald -- Wow, 85% of offerings are REOs. That is huge. Most of our local submarkets in the burbs are under 10%, serving to illustrate why all real estate is in fact local.

Sep 20, 2010 11:46 AM

Melissa Zavala

Broadpoint Properties - Escondido, CA

Broker, Escondido Real Estate, San Diego County

Each market certainly has a different percentage of REOs, doesn't it seem? Where is Villa Park?

Sep 20, 2010 12:09 PM

Gregory Bain

Mezzina Real Estate & Insurance - Little Egg Harbor, NJ

For Homes on the Jersey Shore

Funny. A year ago agents were complaining here on AR that buyers were beating up the poor owners making "ridicules" offers. Today those bad buyers are proud owners of homes that are under water - not worth what they paid for them.

I'll go out on a limb and state that prices will fall more than 15% before we get to the bottom of this mess.

Sep 20, 2010 12:45 PM

Tamara Inzunza

Realty One Group Capital - Alexandria, VA

Close-In Alexandria and Arlington Living

Oh, to buy a home for $400,000 today that was sold for over a cool mil a couple of years ago. Where's that market I wonder???

Sep 20, 2010 01:01 PM

Scott Baker

www.eHomeReports.com Coldwell Banker Realty - Liberty Township, OH

Realtor Homes for Sale Cincinnati/Dayton Ohio

Buyers are getting mixed messages. Prices are low, but they are going to go lower. Interest rates are great, but wait for the bottom before you buy. So when they do make an offer, it is probably just going to tick off the seller.

Sep 20, 2010 01:11 PM

Patricia Aulson

BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH

Realtor - Portsmouth NH Homes-Hampton NH Homes

Good post....nice photo. Is that your house?

Sep 20, 2010 01:12 PM

Robert Jarvis

Keller Williams, Chicago, IL - Chicago, IL

MBA

and then they ask, "How come I can't bid much lower?" or "I can't believe these people want that much money!"

Educate in the begining, and refer back to what we discussed... :)

Sep 20, 2010 01:28 PM

Chris and Maria Jeantet

Shasta Living Real Estate - Redding, CA

Top Realtors in Redding CA

Whatever camera you're using, it's a good one, that's one of the clearest photos I've seen posted on AR...it's like being there.

Sep 20, 2010 01:59 PM

Ross Therrien

Prudential Verani Realty, Londonderry,New Hampshire - Londonderry, NH

Realtor, Broker Associate

Not only does it have to be a good deal the buyer needs to like it. Showed 2 properties this weekend, very similar floor plan etc. One was an REO 15K less than a resale. Resale was is much better shape, the buyer made a successful offer on the resale. Not even with the price difference and possible flexibility of the REO price.

Sep 20, 2010 02:55 PM

Bruce Brockmeier

Internet Marketing Consultant to REALTORS® - Yorba Linda, CA

Coached By Crouch

At the current time REO properties represent 85% of the sales in this area.

Which area are you referring to? Villa Park? Or all of Orange County?

Sep 20, 2010 03:42 PM

Dean Watkins

Douglas Reatly - Associate Broker, CDPE, HRC, ePro - Fort Meade, MD

Real estate is the place to invest right now. My 68yr old dad is taking a reverse mortgage on his waterfront home to invest in more property!

Sep 21, 2010 12:41 AM

Tammie White, Broker

Franklin Homes Realty LLC - Franklin, TN

Franklin TN Homes for Sale

Wow, that is a large a lot of REOs. Thankfully, not experiencing that here.

Sep 21, 2010 04:52 AM

Making sense of this market!

Comments(17)

Ronald S. Accornero

Real Estate Resources

Recent Posts

Additional Information