As I researched this market to try to make sense of it for our sellers I looked back nine years to find information that I thought you mind find interesting. Here are the statistics I noted (all from the South East Minnesota Association of Realtors) for the city of Owatonna. This information includes sales data as reported for all sales that took place in Owatonna with any property listed or sold through a participating Multiple Listing Service member (all local real estate brokers).
Year # of homes sold Days on Market (sold properties) Average sale price
2001 455 64 $126,501
2002 467 69 $139,167
2003 487 63 $149,362
2004 492 75 $161,330
2005 505 91 $172,647
2006 436 97 $172,606
2007 400 128 $170,851
2008 297 129 $159,437
2009 322 117 $143,461
2010 YTD 182 116 $129,687
These numbers tell the story of what we have been experiencing for the last few years. We thought it was bad in 2007, and certainly didn't realize at that time how bad it would get. If we maintain the same pace that we've achieved so far this year we will probably see sales under or just a little above the 300 home mark (a 40% - 45% decrease from 2005) and average sale prices around $130,000. As you can see from the numbers, we haven't hit an average sales price below $139k since 2002. At least in 2008 when we were below 300 homes the average sale price was $159k.
We don't expect the real estate market to rebound quickly. It will hopefully start to improve soon, and it appears that it could be sluggish growth at best for the next two years. As you are well aware, the issues holding the market back are problems that no one of us can repair - it will take significant work to rebuild the damaged consumer confidence, and to provide sustained job growth to bring homebuyers back into the market.
The best that many potential move-up (2nd time) buyers can hope for is to continue to pay down their mortgage so they can afford to sell their homes when the time comes for them to move. That stumbling block (they bought in 2003 - 2007) and owe more on their home than what they can sell for - forces them to stay put until their circumstances change. That factor has taken so many of our usual buyers out of the market. The move up buyer fueled most of our robust sales from 1996 - 2006 - and now most of them aren't in a position to move.
One other factor that we've found affecting potential home buyers is the number of people who have been sidelined from the market for at least 3-5 years because of a home foreclosure or other derogatory credit issues. These are definitely issues that we've not had to face before - and especially on such a large scale.
What can we do to ease this depressed market? We are trying our best to be patient - as painful as this is for many sellers, we know that it will ease. We look for the positive and try to accentuate that whenever we are talking with potential buyers - the interest rates are amazing and home affordability will never be this good again. Home ownership IS a good investment for the long run - many people were caught in the shorter term situation. Homes sellers will have to face the unfavorable market by being as competitive as they can be with their pricing and home condition. It's imperative to position your home in order to compete with the other homes in the market and "WOW" the buyer with value. Homes need to appeal to "today's" buyers who have so many very nice homes to choose from. Their wants, needs and expectations are different from the buyers we may have seen in the past. On the plus side for many sellers is that if they are purchasing they are able to benefit from this down market as a buyer - so in many cases it may be in their best interest to sell - even if they have to bite the bullet on their price. Chances are they can make that it when they buy.
As always, please call or e-mail me with any questions and if you know of anyone who may be looking to purchase a home please send them my way - we've got great houses to choose from!
Copyright 2010
Lynn Johnson, CRS, GRI, MBA
Owatonna Real Estate Pros
Coldwell Banker Home Connection
507-390-6109 cell
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