Monday Morning Numbers 3/22/10

It's getaway day for us - heading out for a vacation - which means that everything hit the fan late last week, and we're cleaning up some details today before we leave for about a week and a half. So let's get after it:

Active Listings: 72

Contingent Listings: 41

Pending Listings: 64 (36.2% of the inventory)

New listings: 9

Months of inventory: 4.3

Click here for an updated price per square foot chart.

Barely any movement in these numbers this week. 4 of the 9 new listings were REO's with a couple of short sales. Nothing to see here, move along...

And with that, I'm done blogging for a couple of weeks. We'll have very limited contact with the "real" world while we are away, so I'll get things caught up for you when we get back. I'll leave you with this:

Yeah, mon!

So you want to buy a house? Good. Here's the scoop.

Last year, I had written an article for buyers in this market titled Surviving the Feeding Frenzy. The advice in that article still holds today. Market conditions for buyers haven't gotten easier in the past year, perhaps it's even tougher today to get through this process. It's gotten to the point now where we're seeing multiple offers on short sales pretty frequently, where 30 months ago, you could barely get showings on these properties. Crazy days, just flat out crazy.

In the handful of years I've been in this business, I've heard just about everybody talk about having to get a little bit tough with a listing client, trying to get them to get realistic about what it takes to get their house sold. We call it the "Come to Jesus" talk. Sorry if anyone takes offense to that - it's an technical industry term.

In recent months I can't even count the number of times that I've talked to my fellow agents about their frustrations with trying to get their buyers into a deal. It's become common for us all to have to write offers on 4, 5, maybe more houses before for a buyer before we get one accepted. And it occurs to me that maybe the people we ought to be having that talk with now are our buyers. So if you're out there trying to get in on this market, sit down and listen. I'm going to be direct with you, and you might squirm a little if this gets too close to home.

To my thinking, there are three distinct kinds of buyer prospects that we deal with. In many, maybe most cases, we see people go through all of these phases. Sometimes they start a little further up the chain. Sometimes they drop out before they get there. Here they are:

The Tourist

These people want to go out and see property, but they really don't want to mess around with talking to a lender and getting prequalified. They'll call around various offices looking for someone to give them information on specific listings. But you know what? These folks are spinning their wheels, wasting their time and ours until such time as they make enough of a commitment to find out what they'll really qualify to buy, and what the payment they have in mind will get them. Once they do that, they move on to...

The Shopper

Now we're making some progress. They've talked to a lender, and they're comfortable with the numbers. This is good. But the education process in this market is still ongoing. Just about every agent I know worth his/her salt will sit down with these buyers and lay out for them what they should expect to see in their price range. And we'll tell them that we're in a tight inventory market, and that buyers are having to compete for properties. And they'll nod their heads in what appears to be some gesture of understanding. Then we'll go see some homes, and they'll insist that we write an offer 10% below asking on a house that is priced well below recent comps and already has 3 offers on it. They're working on the advice of a friend who bought a house 3 years ago, or they saw some article in the paper that said that we're going to see some big tidal wave of foreclosures, or some other piece of less than current or accurate information. This can go on for one or two offers, or maybe more. Sometimes, they try this approach once or twice with one agent, then figure that they'll have better luck with another agent, and do the same thing. I've encountered people who have gone through three different agents. Eventually, when they figure out this isn't working, they graduate to...

The Buyer

These folks are serious. They want to own a home, and they'll do what they need to do - within reason - to get there. They understand the realities of the market. They'll answer our calls and emails when we find a property that might be right for them. Sometimes they'll even call us about a new listing before we've even had a chance to see it on the MLS. They know that they need to move - right now - on a good home if it fits them, and they make time to go see it with us. They'll write competitive offers based on comparable sales. These people end up owning homes.

Don't get me wrong - I'm not saying that there's anything wrong with the first two types of buyers. We've had plenty of good clients who started out as Tourists and wound up as Buyers. It's simply an education process. If you're looking to buy a home, and you'd like to just skip past those other time consuming and sometimes painful phases, here are a few points of advice:

Trust your agent. You have to trust someone. If your cousin Steve has been through several real estate transactions in the past couple of years, he might be a good resource, but otherwise I'd be looking for better advice. Maybe the talking head on CNBC actually knows about the value of a house in the North Village, but probably not. Look, I'll freely acknowledge that every profession has some less than stellar examples. Ours is no different. But in the 4+ years that I've been in this business, the vast majority of the agents that I've ever dealt with are quality professional people who are genuinely concerned about the best interests of their clients. It shouldn't take you long to be able to figure out if you've found a bad apple, or if you just don't click with someone. By all means, if that's the case, find someone else. But I'll tell you this - people have an amazing ability to find what they're looking for. If your mindset is that real estate agents are a bunch of sharks who are only looking at you as a commission check, I'll just about guarantee that's what you'll wind up finding.

Be realistic. Look at the comps when you are evaluating a property, so that when you make an offer, you'll know where you stand. Sometimes you have to keep in mind that the list price is not necessarily reflective of value. That can work both ways - we still have some overpriced listings out there. But more often than not in this market, we're seeing aggressive pricing strategies that are resulting in multiple offers over list price. Well over half of the properties that sold in our market in the past year sold for at or above list price.

Don't be afraid to compete. One of the things that I've heard frequently is "I don't want to get into a bidding war and overpay." Don't mistake multiple offers for an auction. Here's what I advise all of my clients when we are looking at a multiple offer situation: Don't assume that you're going to get a chance to negotiate. Know what your best offer is for that property, and make it up front. Maybe the seller will come back to all the potential buyers and ask for "highest and best" offers. Maybe they'll just take the one they like best and run with it. If you make your highest and best up front, you can always just resubmit it as such if/when they ask for that. If you don't, and they wind up taking another offer without a counter, you might wind up kicking yourself later.

Keep your eyes on the prize. There's a reason - a very good reason - why you are going through all this. Between prices at incredible levels and interest rates bordering on obscene, this is the best buying opportunity in years, even with the lack of inventory. Maybe prices will go lower, but if you've been reading this blog, you know that I don't think that's likely. Maybe interest rates will go lower, and maybe you'll wake up tomorrow and look out the window and see a swarm of flying pigs. So hang it there, and do what you need to do to get the job done. In the end, persistence pays in a big way. Persist.

Monday Morning Numbers 3/15/10

Got a busy crazy day ahead of me, so let's get this out of the way early. Here are the numbers for this week:

Active Listings: 72
Contingent Listings: 39
Pending Listings: 63 (36.2% of the inventory)
New listings: 8
Months of inventory: 4.2
Click here for an updated price per square foot chart.

We had a big jump in pending listings this week, and a slow week for new listings resulting in a slightly lower inventory. I think that the push is officially on for buyers who want to get in on that home buyers tax credit before it expires at the end of April. Later this week, I have some advice for buyers in this market that I'm going to share. Tough love, actually. Make sure you come back to check in on that.

On a whole different topic - I started a Yahoo group for NCAA tournament picks. I spent all of about 10 minutes last night plugging in my picks for the brackets. Some years I do really well at this, and some years I suck at it. Come on in and join the group and see which kind of year this one is...

Focus On Newer Construction

This week our newer construction homes are back up on the agenda. For a definition of the homes we're discussing, go back to take a look at the first post I did on this segment last year.

Our inventory of these homes is higher than it was when I last reported on them back in November. We're up to 9 active listings on the market. Somewhat surprisingly, none of them are REO's. Considering that this segment has been very heavy on distressed properties, that's noteworthy. 6 of them, however, are short sales. I keep expecting to see short sales gain market share and REO's lose some, so this might be an early indication of that. Or it could just be a fluke. We'll have to wait and see.

Sales activity has been somewhat light. We have 4 contingent listings (3 short sales & 1 REO), and 3 pending listings (2 SS/1 REO). In the market as a whole, we've had more properties either contingent or pending than we've had active for several months now, but this segment is slightly skewed the other way. As I've pointed out before, this isn't our most active segment overall. The entry level house market is on fire. When you move up in price, things are still moving much better than they were, but not quite like the sub-$200K house segment.

We've only had 4 sold units in this segment in the past three months(1 REO/2 SS/1 Trad). That equates to about 10 months of inventory if you include the contingent listings as I do in my normal calculations, compared to around 4 months in our total market. On a small number of closings, it appears that prices remain pretty flat on these homes.

I think that the price point for newer homes is one of the reasons that we've seen slower activity, but part of it has to do with what type of inventory we're looking at. While the activity over the past three months has been slow, we saw much more robust activity in the three months previous to that with 11 sold units (5 REO/3 SS/3 Trad). When you have more REO's, you have more sold units. They are usually priced aggressively, and you don't have to play the short sale waiting game. In our market as a whole, when we start to see REO listings drop off, our sales drop off as well. That's going to be true for a little while, and that's a topic for another post. I don't know that the demand changes a lot, it's just that there isn't as much that looks attractive to buyers.

Next week I'm going to freshen up some advice that I wrote last year to buyers trying to get some traction in this crazy market. You are definitely not going to want to miss that.

Monday Morning Numbers 3/8/10

Happy birthday to me! I'm officially a little older as of today, but I stopped keeping track of it in years a while ago. Now I'm to the point where I just count up the aches and pains when I wake up in the morning. Some days I'm only 23, some days I'm 75. Let's look at some numbers that I can actually make some sense of:

Active Listings: 76
Contingent Listings: 43
Pending Listings: 54 (31.2% of the inventory)
New listings: 12
Months of inventory: 4.6
Click here for an updated price per square foot chart.

There's a fine line between being in a groove and being stuck in a rut. Numbers that have been as steady as this for a few weeks kind of straddle that line. For a couple of weeks recently I noted that our new listings were dominated by traditional sellers, but that things reverted to "normal" last week. Yeah, I know, define normal... Well this week, only 1 of those 12 new listings was an REO, and only 3 were short sales. If we hadn't had a run of traditional listings on the market in the past month or so, I"d hate to think where our inventory would be right about now. I'm still not sure that activity will hold up, and if it doesn't, we may find ourselves looking at active listings dropping off sharply in the next month or so. Just in time for the last minute crush of buyers trying to get in on that home buyer tax credit that's set to expire. This could get interesting.

Later this week, I'll take a fresh look at newer construction resales in our market.

And yet another REO update

Here we go again with another look at REO activity in our market. It's been an interesting couple of months to watch the foreclosure segment of our market.


We've been seeing a slight slowdown in our foreclosure filings in the past few months. You'll see the trends in this chart - all of the indicators that I use to forecast upcoming REO listings in our market have dropped off. I don't have the numbers on February filings just yet, but it looks like both our default filings and trustee sale filings are close to the same level this month they've been at for the past few months. It looks like we only had 21 properties go back to the bank in February. Our unlisted inventory of bank owned properties has held steady between 55-65 units for several months, and we're in the low end of that range right now. I'm expecting that to start to head down a little in coming months.

In the early going this year, it looks like REO sales are still accounting for about 60% or so of sales. That's been a pretty constant number for quite some time. Also a constant number is the percentage of new listings that are REO's. So far for the first couple of months of the year, about 39% of our new listings have been REO's. That is almost exactly where that number was for the first two months of last year, and close to the 45% that we saw for the entire year of 2009. Again, however, the current foreclosure numbers make me think that we'll start to see a little bit of a decline here in coming months.

Looking ahead, I don't see any reason to think that we have any dramatic movement in the REO segment of our market. I expect that we'll see some decline in the numbers of foreclosures over the next few months, and a corresponding decrease in these homes on the market following that. I can't say for sure what we'll see late this year or into 2011, but I have a feeling that we're going to start to gradually see short sales gain in market share as banks start to be more proactive in that arena. Resulting from that would be fewer REO's. The total percentage of distressed sales last year was around 75%. I don't have any reason to think that will change. But I wouldn't be surprised if sometime in the next year or so, we see short sales surpass REO's in the number of sold units.

Monday Morning Numbers 3/1/10

Good morning once again. How much of the Olympics did you watch? I saw it in fits and starts, but I made a point of sitting down for yesterday's men's hockey gold medal game. That was supremely entertaining hockey, although heartbreaking in the end. Anyway, let's get into this week's market stats:

Active Listings: 78
Contingent Listings: 42
Pending Listings: 54 (31.0% of the inventory)
New listings: 14
Months of inventory: 4.5
Click here for an updated price per square foot chart.

Pending listings are up a little this week, and we had quite a few new listings. Remember for the past couple of weeks I was telling you about how we had more new traditional listings than anything? Not so much this week - 3 of the 14 that came on this week were traditional. We had a flurry of new REO listings come on late in the week, which ate into our backlog of unlisted bank properties. I don't expect that to continue for long, simply because there aren't enough of them to sustain that level.

Speaking of REO's, later this week I'll be updating REO activity in our market. That's always interesting reading, so make sure you come back for that.