When will the market recover?
I hate to say it but I think we are a long way form turning the corner. I am a Broker in Michigan and we have been in rough economic shape for a couple years now. We've been dealing with REOs before most agents in the county even knew what an REO was and I think the rest of the country has got a lot of catching up to do. I pulled a bunch of stats from the MLS this week and here are the numbers in my market. (which is a nice shoreline, blue collar community about an hour north of Detroit.)
Prices have slid 18% since 2006...in 2006 the average sale price was 153,000, it dropped to about 139,000 in 2007, and in the last 90 days it dropped to 126,000.
REO's make up 34% of our current sales, they were only 18% in July of 2007, based on the number of properties we have in redemption I think we will see REO's make up 50% on our market by yearend and I expect prices to drop another 10%.
From what I hear the peak sub-prime purchase and refi mortgages are set to adjust this spring which means the banks will get those back in late 2008, early 2009 and then it will take a few months to liquidate those properties. Basically, I don't think things will stabilize until mid to late 2009.
If that's the case, we won't see any appreciation until 2010 and it will probably be 2015 until we are back to 2005 values. I'm telling my sellers to forget every conversation we've ever had regarding values and for most a 20% price reduction is in order. If they can't do it, they might as well make plans not to sell or find 25K to bring to the closing because it's going to be along time before things get better.
Just my opinion based on the numbers. I'd love to hear what other think.
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