Saturday, June 28, 2008 at 07:04AM
An Orderly Descent
It was noted on the last post that the lower-end market has been on fire lately, with recent closings 125% higher than last year. The foreclosures/REOs are leading the way, and in markets like Oceanside's they are beating each other down on price. The demand has been incredibly strong though, with many investors competing with owner-occupants to gobble up the good buys.
Here is how the foreclosure agents are doing, compared to last year:
Agent
2007 Closings
2008 Closings YTD
#1
#2
#3
#4
Totals
They have almost surpassed last year's production in less than six months, primarily selling the cheaper homes - ones that many thought would struggle to get financed without subprime loans available. Fourteen of those above were buyer sides, here is how their closed listings break down by price:
Price Range
2007 Closings
2008 Closings YTD
$0-100K
$100-200K
$200-300K
$300-400K
$400-500K
$500-$600K
$600K+
The foreclosures/REOs are leading the price squishdown, with the higher-priced homes dropping down into lower categories as needed. Accordingly, the sales are racking up - there is NO SHORTAGE OF DEMAND these days. There are lots of buyers in the marketplace, waiting for the real plums, the good-looking houses with an attractive price on them.
I've already closed as many this year as I did last year, and had SEVEN new pendings this week alone. Four of the new pendings were from my REO group that recently listed, and the other three were the detached condo on Tallus Glen, the short sale on Calle Arquero that fell apart earlier in the week that I got a full price all-cash offer in to take it's place, and a Downey Savings REO that was originally listed for $510,000 that my buyer got for $300,000.
What's more intriguing is that we had multiple offers on five out of the six listings that went pending, and what seemed like hundreds of phone calls from buyers and agents. One mentioned how he had made offers on behalf of his client on over 20 houses and couldn't get one because they were selling so fast and so high. Two other stories on listing agents getting buried, one had 20 offers on a house I think was on Baywood, the other had 18 offers on a house on Johnson.
It goes to show you, there's nothing that price won't fix!
Jim the Realtor
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Reader Comments (12)
So there really are just two groups who can benefit from this "price it right" mantra: non-distressed sellers and the banks. Jim, have you seen any non-distressed sellers listen to your sage advice? I've been looking for that "well priced" home for a few months now, and it seems to me that non-distressed owners have been holding firm.
There is a 3rd group that benefits... the agents.
Was the title supposed "orderly descent?"
It doesn't surprise me that sales on distressed properties are becoming more energetic as the prices become more realistic, or that non-distressed owners don't feel pushed to lower their prices. What does surprise me is that non-distressed owners are even bothering to try to sell homes.
Unsure,
There has only been one guy that both listened and was motivated enough to follow my advice - my listing in the Ranch. It has been a struggle showing it because it's tenant-occupied, so we tried out my 30-day listing idea. Put a great price on it, and if it doesn't happen in 30 days, extend the lease and try again when they leave.
We'll be back in February on that one.
But I agree, there are very few if any regular sellers who are willing to drop their price early and often to find what the market will bear. Hang in there, the fourth quarter of this year will take out those unmotivated sellers, and we'll get down to business then.
Thanks Aztec, for the obligatory crack on agents. For those who think agents should get paid less, you are getting your wish. I closed one yesterday for $75,000.
Thanks Gene, one of these days I'm going to try out that spell checker!
I don't think that the non-distressed sellers are that aware of market conditions, and are happy to wait and see. Wasn't it Robert who said it will become a regaular right of passage every year - sellers will take down their holiday lights and put up the for-sale sign for another go-around.
How often do your hear sellers make comments like:
"There just aren't any buyers?"
"Nobody's buying"
"I can't understand why nobody is looking at my home?"
Rarely does it occur to people that it could be their price. Once on the market, the sellers convince themselves that their price is right, and dig in for the fight. But the buyers aren't fighting, unless the list price looks hot.
How many of those REO buyers are re-sellers (aka flippers)?
Tallus is a flip - I'll tell you the story once it is closed.
I Really hope lot of them are knife catchers..
I will select home from the resellers aka knife catchers vs. Option ARM resetters next summer..
Waiting patiently from 2003. Not really in hurry till 2010.
This is probably the first instance of honest good news in near 2 years. We've discovered some market clearing prices.
That's what I meant - just an orderly decent market-clearing!
I'm going to change my typo to 'descent', as intended, but I think it screws up the subscribers - we'll find out.
I'll second the comment that there is no shortage of demand.
We've been watching certain markets for many years, and are finally seeing some that are priced in the 2000-2002 range. No doubt, there will certainly be demand at those prices -- and there is LOTS of demand. See, Jim, that's why my guess at March sales was so high...I was making predictions based on what was going on "on the street" and was too early for the numbers to come through. ;-)
While some areas are really getting close to "pre-bubble" pricing, we still have a long way to go as the ripple effects move up through the market. We're still holding off because the recession might be much longer and more severe than most people expect. That might change the fundamentals (i.e.: rent decreases).
It's certainly an interesting market to watch!
It's great to see the combination of price drops and sale increases on the lower end. My gut feeling is the higher end will lag but follow suit over the next two years as alt-a's impact that market.
Any info on how many people are putting 20%+ down compared to the bubble years? I have to hope these are more responsible people moving in than the last round. Even investors are welcome as long as they put money down and plan to stick around and rent out.