I'll finally go on record as admitting that I'm ready for Spring. This month seems to drag on a little - with the promise of Spring, yet it seems that we'll be right back to Winter tomorrow. We've noticed a bit of a lull in the buyer activity - this weather may have affected their interest in looking right now. Come on, Spring!
Anyway, instead of just looking at sales activity since the first of the year, which doesn't really give us much to go on (26 homes sold in an average of 119 days at an average sale price of $105,612 which is 88% of the original list price) I pulled up the data from October 1st, 2010 through today. By looking back a little further we find that our average sale price moves up a bit (but is still less than the average for all of 2010) to $115,548. I guess what is most notable is the average list price of the current listings (on the market - not sold) which is $168,537. That number is much lower than the typical average list price of current listings - as a matter of fact it has dropped by $20,000 from the end of 2009 when the average list price of active listings was $187,256. Since 10/01/2010 we've seen 89 homes sell and have 156 homes currently on the market for sale. That provides us with a 9.17 month absorption rate. I suspect that we'll see more homes coming on the market in the next coupole of months which may drive that rate up.
I'd like to put a positive twist on that and state that it's because the homes on the market are closer to what buyers are purchasing, but the unfortunate truth is that we have more foreclosure properties and short sales which drive down the pricing. Many of the higher end home sellers (above $200k) have chosen to sit out of this market, or have tried selling but have not been successful in attracting a buyer in this market.
Why is that? What has happened to the move up buyer - have they become extinct? This particular 
market has not performed like history had shown us as people move through the demographic changes in their lives. When they start out they purchase the 3-7 year house that gets them into home ownership with the intent of selling and buying their next home as their family expands. But what we've seen is that those potential buyers are the ones most impacted by the current market's erosion of any equity they hoped to build during the time in their first home. As a matter of fact, they no longer have any equity and are now in the very difficult position of knowing that their home is not only worth less than what they paid for it within the last 8 years, but they in fact owe more on their homes than they can sell them for. This is epidemic and is the primary reason that the move up buyer has put any thoughts of moving to their next home completely out of their minds.
We've witnessed, on so many occasions, the once unthinkable - sellers bringing thousands of $$ to close the sale of their home. This is obviously a tremendous hardship for people and a decision that is typically brought on by a sale of necessity, i.e. divorce, job transfer, financial strain. The pain of not moving forward is greater than the pain of finding $15,000 to bring to closing.
Okay, that's where we've been, but where is the market headed? UP! UP! UP! Or is that just my wishful thinking? As you know, this is not a local or micro situation, it's a macro issue - one that the best economic minds are grappling with - trying to find a way through this sluggish market. Does that mean we're going to just sit back and wait for things to turn? Not at all. We continue to beat the bushes, contacting past clients, friends (and basically everyone we know), in person, via automated e-mails of our listings, newsletters, social media, heavy internet exposure (youtube, facebook, twitter, linked in, blogs, virtual flyers, two different multiple listing services and all relevant real estate websites) to find the elusive buyer. Please know that we continue to network tirelessly to find willing and financially able buyers.
What can sellers do? Present your home in the best possible condition (make repairs, clean!, update) and at the most competitive price that is absolutely possible. Remember, many of the successfully sold homes involved sellers who, through their intense motivation, had to reach the pain threshold (worse to stay than sell).
We're in this together, and I would love nothing more than to reach a successful outcome for every seller I work with. Working together, we can see this through. As always, please let me know if you have any questions or if you'd like to discuss anything at all relating to the sale of your home.
Lynn Johnson, CRS, GRI, MBA
Owatonna Real Estate Pros
Coldwell Banker Home Connection
507-390-6109 (cell)
507-451-8080 (office)
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