It's a Buyer's Market - Or Is It?

By
Real Estate Agent with M Realty

My last post had quite a heated debate on Active Rain (which I dig BTW).  How do you educate clients about when to buy?

I did some research for a client tonight. The findings are important to share with readers here.  If you are a serious buyer or seller, this information is telling.  Please stick with the tedium of the stats because the story it tells is meaningful.

My particular buyer is looking in Mission Viejo between $450,000 and $550,000.  He wants a single family residence.  With that criteria, I hit the MLS looking for a picture of where we really are.  He's not alone.  His buyer profile is one of at least 3 buyers that I'm working with at the moment in South Orange County.

As many of you know, I'm the last person to jump on the 'Hurry Buy Now' band wagon.  However, if you are in this price range in South Orange County - this is speaking to you.  What did I find?

There are 40 Active single family residences currently listed in Mission Viejo between $450,000 and $550,000.  How do those breakdown?

  • 19 are short sales (BTW - refer to my posts on shorts sales to understand the challenges with these sales)
  • 4 Bank Owned
  • 17 are supposedly equity sellers.  Upon further reading of the agent remarks in the listings 2 more of these are actually short sales and 1 is bank owned.

So, what does this leave us?  14 Traditional, Equity Sellers?  I should add 5 of these 14 are 55+ communities.  There are really only 9 equity sellers in my client's search criteria out of 40.

It then becomes important to analyze the recent resale activity.  I pulled sales from the last 30 days with the same criteria - Mission Viejo, single family residences, $450 to $550.  Here are the stats:

  • 21 Sales
  • 6 Bank Owned
  • 3 Short Sales
  • 13 Traditional Sales (one 55+ community sale)

No rocket scientist needed here.  This is out of balance.

If you are not a numbers person, it's okay but just try to stick with me here - 52.5% of the Active Inventory are short sales, but last month only 14.3% of the sales were short sales.

12.5% of the Active Inventory is bank owned, but last month 28.6% of the sales were bank owned.

And most telling, 22.5% of the Active Inventory are equity sellers (not to include senior communities), yet the sales from the last 30 days indicate that 51.1% were traditional sellers.

I'm actually not a numbers guru.  I love reading.  I love writing.  But, I also love logic and this should speak volumes to you.  The sellers that don't have to sell have chosen not to; they've heard the message.  Buyers that have been fence sitting or have had affordability problems, have found that it is indeed their time.  Demand does exist.  The inventory may actually be lacking.  Do I hear - supply and demand?

Just to temper my enthusiasm, let's look the sales prices.  No question - these are some other stats to consider from the last 30 days with that same criteria:

Short Sales - Sold at 98.29% of asking price with an average days on market of 143.  The average price per square foot was $253.09.

Bank Owned - Sold at 101.55% of asking price with an average of 16 days on the market.  The average price per square foot was $263.06.

Traditional Sellers -Sold at 97.38% of asking price with an average of 34 days on the market.  The average price per square foot was $323.09.

I will suspect that the knee jerk response is that traditional sellers are overpriced on a per square foot basis - but look at the demand.   There's a reason these are selling.  They are in superior condition (sometimes by a lot) and you can actually submit an offer to a live body, that has real emotion, and a desire to sell.  What's the value in that?

So, if you think it's a buyers' market, think carefully and ask for the stats.  You need more than a cursory overview.  You need to drill down into the makeup of what it means to get a clear picture of the marketplace.

This is one picture of the OC marketplace, but from what I'm seeing, in certain pricepoints, it's not isolated.  Thoughts?  I'm open to our interpretation of these numbers.  Let's hear it.

 

Most of this originally posted on OC Real Estate Voice.

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Groups:
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Diary of a Realtor
Tags:
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Rainmaker
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John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

I like the fact that you put this post together at 2 am.  You were going to make your point on the number no matter what time of day it was.  :-)  Quite a bit of thought and details went into this email.

Nov 24, 2008 11:46 PM #1
Rainmaker
149,102
Krista L. Walker
Coldwell Banker Pro West - Medford, OR
Oregon- Homes & Real Estate for Sale

I like your term "equity sellers".   Your numbers on number of sellers - REO, short sale, and equity are similar to ours in the non-Ashland area.

Nov 26, 2008 08:22 AM #2
Ambassador
2,353,432
Robert Vegas Bob Swetz
Las Vegas, NV

Very interesting!

"Happy Thanksgiving to you and your family"

Nov 26, 2008 09:38 AM #3
Ambassador
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Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

I LOVE statistics and knowing your market is the only way one can survive right now!  I use the term "equity sellers" also!  In our area "equity sellers" do get a little higher price per square foot too just because of the ease of the transaction.  Not an insane amount but a noticeable amount!

Dec 06, 2008 06:12 AM #4
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