Putting foreclosures into perspective, plus 2nd quarter home sales in Fairhope, Alabama
The latest epidemic, the latest outbreak, is not on our tomatoes. It's on our foreclosure-fevered brains.
The symptoms:
■ Worry that the foreclosed house in your neighborhood is going to bring down property values.
■ Worry that the foreclosured house down the street will sell before your house sells.
■ Worry that your offer on that "deal-of-the-century" foreclosure won't be accepted.
■ Worry that you will have to flee in the dead of night to avoid the neighbors as your house is foreclosed on.
Really, the only one in trouble is the person with the last symptom.
Most appraisers and Realtors differentiate between a foreclosure and a normal sale when valuing property, so unless your street is lined with foreclosures, you're OK.
If there is a foreclosure down the street, yes, it's likely to sell before yours.
And if you are in the market for a foreclosure, I have one question: Is it really the deal that you think it is?
On the Eastern Shore, foreclosures represent 1%-2% of all the houses for sale. They also represent 5% of all houses sold.
There are many other, better deals out there than a foreclosure, which is often in terrible shape, may require plenty of cash to rehab, and carries the risk of an undetected (read: expensive) problem that no one imagined.
There is also a Right of Redemption, allowing the owner to buy back the property if he is able during the first year after the foreclosure.
The only surprising thing about today's foreclosure market is where it is happening: Stillwater in Spanish Fort. Rock Creek in Fairhope. The Woodlands at Malbis. TimberCreek. Some of these are a result of builders going under as the housing market has slowed.
Short sales are sometimes the precursor to foreclosure: A bank will accept an offer for the mortgage amount, or less, in order to avoid foreclosure. There are a few of these out there.
At the beach, there are 22 condos advertised as short sales and 46 foreclosures out of some 2,200 condos on the market.
Many of these are very good deals.
Agents who list foreclosures say they are overwhelmed by the number of offers on these properties.
These agents have virtually no sway in negotiating the offer. This is performed by an asset manager, who is also overwhelmed and doesn't care about anything but the bottom line.
This asset manager may also have a protocol in how much can be accepted in the first two weeks on market, the first month, two months and so on. So sometimes, it's a matter of timing on who gets the property.
I can provide a list of foreclosures. Just email me.
During the second quarter, Eastern Shore home sales were down 32% from the same period a year ago; a year ago, sales were down 15% from the 2nd quarter of 2006. All in all, the number of homes sold is almost half of what it was two years ago.
Statistically, average sales prices are still holding up. But the Baldwin Multiple Listing Service also shows that 570 home-sellers on the Eastern Shore reduced their asking prices at least once - and many did more than once - during the 2nd quarter.
We are still faced with prohibitive insurance rates, tight credit, oversupply of inventory and national financial woes.
Nonetheless, the average sales price rose from $308,019 in the 2nd quarter of 2007 to $320,510 during the 2nd quarter of 2008. However, only 227 homes from Spanish Fort to Point Clear were sold, compared with 331 homes during the same period last year.
More homes sold during this quarter than the 171 homes sold from January through March. But it was a typical springtime bump.
Here are the stats by community:
Fairhope/Point Clear: 76 homes sold, down 40% from this time last year when 124 homes sold. Average sales price was $415,410, compared with $346,400 in the 2nd quarter of 2008. Sellers took on average 6% off the list price in order to sell. And the average sales time increased from 170 days last year to 221 days. There are 611 homes on the market here.
Daphne/Montrose: 65 homes sold, down 46%, from 121 homes in the 2nd quarter of 2007. Average sales price was $311,085, down from $323,424 this time last year. Sellers took on average 3% less than list price last quarter. Average selling time was 138 days. There are 387 homes on the market.
Lake Forest: 36 homes sold, which was the same as last year. Average sales price dropped from $174,769 to $165,105. Sellers took on average 3% less than list price. Average time it took to sell was 145 days. There are 117 homes on the market.
Spanish Fort: 40 homes sold, compared with 50 in the 2nd quarter of 2008, representing a 20% decline. Average sales price was $268,372, compared with $274,173 last year. Sellers took on average 4.5% less than list price. It took on average 145 days to sell. There are 135 homes on the market here.
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