When not chatting with and problem solving for my kids (now all young adults) we still are in the real estate business. And boy is that an ever interesting business to be in! March and April saw sales picking up, with pending sales in Pleasant Hill averaging one a day, giving us a flavor of a normal market rate of homes selling. But the news....negative, negative, and more negative! it is hard for us Realtors... and let me tell you why.
We see homes priced at what are bargain prices compared to the height of the market two years ago: 10-20% less! For instance today I dealt with two properties on the market as short sales, meaning the asking price is lower than the existing loan on the property and for that home to sell the bank has to agree to settle for a payoff short of what is owed. One property sold for $510,000 two years ago and is now priced at $350,000. That sounds like a big discount and is in fact 30% off its height but the buyers who looked at it said, well, it needs a new roof and some paint and carpet, which should be deducted off the $350,000 asking price so we want to buy it for $275,000. That is SO common, to think like they do! To ignore the fact the asking price is 30% off the height of the market and to discount it further for work needed.
The other property I showed is listed for $499,000 in a $600,000+ neighborhood, where houses are now selling for mid-$500K's. But this house? Trashed by current tenants it is being devalued by the day, lower and lower, as the weeds get higher, the kitchen and bathrooms get beat up more and time goes by. Offer? My client wants to get it for $340,000! Forget the fact $499,000 is already a bargain for a four bedroom home on that street in that neighborhood; she wants $150,000 off the price because she will need to remodel/repaint/re-landscape AND expects prices will drop another 20%! Can't say I blame her!
That is the crux of the problem! Some economists say we are a year away from this market bottoming out; further depreciation is inevitable! But a month ago many had predicted the market was bottoming out this year, this summer in fact, so buyer's were comfortable jumping in, snapping up bargains on the market. Now the buyers we meet are stepping back, they read the articles, they hear the news, and know the negative predictions, they don't want to buy and then lose 20% of their equity; who would?
This is the toughest market. Luckily there are realistic motivated sellers who will do what it takes to sell in this market. Luckily there are motivated buyers who will work hard to find a well priced property, knowing they are buying for the long haul and if prices dip a bit more they are confident they will come back in the coming years. Sales are being made and will continue to be. But it is not easy; not easy to be a seller now, not easy to be a buyer and not easy to be a Realtor....but it is doable. Diligence, hard work, honesty, integrity, working smart, all play into surviving this economy and this market.
I think some great deals are out there and in two or three, five years those of us who did not buy in '08 will look back and say "why didn't I??!!"
Love to hear your comments!