Like the rest of the country, Kansas City is waiting to see what the investigations into some major banks foreclosure practices will show. Hundreds, if not thousands, of listings in the Kansas City Metropolitan Area have been pulled off the market pending the results of these investigations. The initial effect on the Kansas City Real Estate Market is a decrease in inventory lsited on our Heartland MLS.
For some sellers, the action is a reprieve giving them more time to find a way to keep their homes. For others, the suspension of foreclosure activity means that they will not be able to close on the home they were set to buy. I have spoken with buyers who determined their best move is to withdraw from the real estate contract to purchase and choose another property - one which is not owned by a bank.
What will happen if the banks are found guilty of fraudulent activity? The potential implications are immense. It is possible that some banks will be unable to survive the costs of the investigations. The loss of revenue and fines could be crippling. If a major bank folds, how many millions of people will be affected?
Take a look at activity in the Kansas City Real Estate Market over the last decade. In September of this year (2010), 1,864 homes were sold across Metro KC. In September 2009, 2,801 homes sold. Go back to the height of our market in 2005; 3,481 homes sold that September. In September of 2000, 2,387 homes sold. The number of sales is down this September - even before the bank scandal came to light.
What about the Average Sales Price? Average sales price actually went up or stayed the same in some Kansas City neighborhoods. Values in the areas with the high ratio of REO's and Short Sales did not increase in value.
So how are we doing in Kansas City? As always, that depends on your specific location and circumstances. People who have lost their jobs or had health, or other issues, causing them to fall behind in their mortgage payments may be able to get the banks to work with them on a mortgage adjustment or accept a Short Sale on their home. People wanting to sell homes in the most popular neighborhoods (those least affected by the downturn) will be okay. They will have to be competitive when marketing their home, but they can move.
What about buyers? Are there people buying homes in Kansas City? Yes, there are. Buyers in Kansas City today are taking their time in choosing a home. The buyers are listening closely when I go over the buying process with them. They are very interested in my analyses of comparables and market statistics. They are also paying close attention to my recommendations regarding submitting offers and negotiating strategy.
One trend I noticed earlier this year is continuing: buyers in Kansas City are spending less than they qualify for when choosing a home to buy. They are being careful not to overextend themselves - just in case. A married couple qualifying for a $600,000 mortage may only want to spend $300,000 on a house. That way, if one of them is downsized out of a job, they will still be able to handle their mortgage payments without dipping into savings. Single buyers are also cutting their price range to accommodate potential financial changes.
What about sellers in the Kansas City Real Estate Market? People wanting to sell their home and buy a larger or smaller home are proceeding. They are happy to be able to buy homes that they wouldn't have been able to afford 5 years ago. Homeowners being transferred for work are still selling. Serious sellers are paying rapt attention and following through when I go over the home preparation prior to our marketing launch.
Testing the market in the current environment is not an option and most sellers seem to understand this. When only about 10% of the housing inventory is selling, you need to be competitive from the very beginning. Though we do have some For Sale By Owner properties in Kansas City, most homeowners recognize that they need the professional advantage to get their homes sold for the best price in this climate. Discount brokers are making a killing off the homeowners who try them before calling a full-service agent to sell their home. I feel bad that the homeowners lose money and precious market time before calling, but what can I do if they don't ask for help?
Kansas City Real Estate Agent ♫♪ Maria Morton ♪♫
KANSAS CITY REAL ESTATE WITH REALTOR© MARIA MORTON
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**Views expressed in this blog post are not necessarily those of Heartland MLS, Prudential Kansas City Realty or any other company. Any opinions offered on this blog are those of Maria Morton.
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