Real estate professionals would be lost without statistics. Records of sales volume and price in their local markets, the number of homes for sale, the sales price of individual properties — all are all vital in helping sellers price their homes and buyers negotiate the best deal.
But statistics say more about the past than they do about the future. The numbers can lag behind weeks or even months, and the first indications of what many in the industry are hoping to see — renewed buyer interest — may not be captured by any statistic. Brokers and agents will see increased traffic to their Web sites and more phone calls, e-mails and pages long before the results of that activity show up in closely watched statistics.
To get a grass-roots feel for whether that’s happening, last week Inman News Publisher Bradley Inman posed this question on the Inman News blog: “What is happening out there? The market is turning UP, we hear from our sources. Were the bears wrong, are buyers ringing you up, asking for listings and combing the Web probing your inventory? If so, we want to hear from you NOW!”
The post sparked dozens of comments, which can be read in their entirety (and commented on) here. To make it easier, we’ve rounded some of the best (non-anonymous) posts and organized them by region.
Although anecdotal, many of these responses show optimism about the potential for a turnaround. Some who wrote remind us that all markets are local, and that many areas have not seen a downturn.
In areas where times are tough, there’s a familiar refrain: the reason homes aren’t selling is because sellers haven’t come to grips with the fact that price appreciation has slowed or reversed. If interest rates go up, expect that to be an even bigger issue as buyers find the same monthly mortgage payment buys less house
Many of the most pessimistic posts were left anonymously.
One observer in the Washington, D.C., area said, “You have got to be kidding me. Are things turning up? … We just came through the most spectacular and speculative real estate boom in the history of the world, prices went up 100 percent or more in most urban areas, and the market has given back maybe 5 percent in those areas, and you are asking if the market is done correcting and things are turning up?”
Low interest rates encouraged speculation, the post continues. The media “helped people catch real estate fever; and it built on itself like a Ponzi scheme. The whole thing was without merit.”
Now, the anonymous poster said, “We have a lot of inventory to work through, which is still growing and will continue to thanks to increasing foreclosures and speculators dumping more and more property on the market; and in most urban areas there is two to five years of new supply still coming on in the overbuilt condo market; and interest rates are expected to go up this year. That does not sound like a recipe for a real state recovery.”
But most of those who identified themselves were optimistic, if not upbeat, about their local markets.
Andrew Waite, publisher of Personal Real Estate Investor Magazine, said advertising sales and contracts with real estate vendors can “predict a lot of forward behavior,” as can subscription trends.
“We have broken records in both categories in (the fourth quarter of 2006) and into the first issues of ’07. Life is good and getting better,” Waite says. “The illusion is looking at a highly inefficient market and trying to apply economic metric that fit commodity markets. It does not work.”
What others around the country are saying:
Catherine Myers, a certified residential specialist with Alain Pinel Realtors, in Walnut Creek, Calif., says things are looking up in Contra Costa County, east of San Francisco. “I’ve had more Web inquiries at my site www.diablovalley.net this week than I had in all of December,” Myers says. “My listings are getting showings, a stale listing got an offer, and our office had one of the best Decembers on record. I think as the December numbers start to filter out to the public it may spur these reluctant buyers into action. No, the sky is not falling, and if we can sell off some of this stale inventory we’ll be in great shape for spring. There are some great deals out there now.”
In nearby Berkeley, Ira Serkes of REMAX Bay Area reports putting two homes on the market in December, which were “well presented, well marketed, (and) well priced. We received five offers on one, and nine offers on the other. So, I’d have to say that it is (and has always been) a normal market! Well-priced homes sell, others don’t!”
South of San Francisco in the heart of Silicon Valley, San Jose-based Michelle C. Carr-Crowe, owner of Judy Carr & Associates Inc., says she has 35 pre-approved families who want homes in the neighborhood she specializes in, but there are only five homes available there.
“Unless truly motivated, potential sellers want to wait and see how someone else does rather than spend the time and effort to prepare to sell — only to sit unsold,” Carr-Crowe says. “Roughly one-third of those are move-ups (meaning they’ll sell when we find the right home), one-third will buy only a specialized property and neighborhood … (and) one-third are hoping for special bargain (prices from 2002), and the last tenth are still refining what they want/need.
Carr-Crowe said her buyers are pre-approved and can make significant down payments of $100,000 to $400,000, but “are conservative and concerned about the market and buying too much house/mortgage.”
The last home she sold “was aggressively priced,” and she received 15 offers, selling as-is for nearly 10 percent over the $898,000 asking price. “I’m just looking for more sellers!” she says.
Elizabeth Weintraub reports “a buzz stirring” in the Sacramento housing market.
“It takes buyers a while to get moving, and often I see a lull between market changes and action, but buyers are beginning to venture forth,” Weintraub says. “Interest rates are low, inventory isn’t as high as it will be in April, and sellers who are willing to wheel and deal are making deals.”
In the last two weeks, she’s received three calls on two pending sales. “When was the last time that happened? Those buyers asked to be put on a waiting list for similar inventory. Guess I better get busy and take more listings! The holidays are over. It’s time to get back to work,” Weintraub says.
Weintraub says that while 2007 may be the Year of the Boar in China, she’s calling it the “Year of the Buyer. I predict buyers will rule all year long.”
If a home hasn’t sold after a few weeks, it’s priced too high, Serkes says.
Down in Southern California, Linda Slocum of Vintage Sotheby’s International Realty in Valencia said the housing market in the north end of Los Angeles County seems to be stabilizing.
Many of the bigger price decreases in the area were due to unrealistic pricing in the first place, she said — like homes with comparable sales at $775,000 priced at $950,000.
“Some builders are having trouble selling new construction, but most of these are not in the most popular sections of town,” she said. “Lennar didn’t have much trouble cashing in on $1.3 billion recently for the sale of their majority interest in the largest upcoming development in the region, Newhall Ranch. Much of the funds for this came from CalPERS,” a retirement fund for government workers.
Also in Valencia, Bob Haas of Pacific Real Estate Network he doesn’t see a recent trend other than “the typical end-of-year flurry.”
“As I see it, we have the press still saying the sky is falling, most sellers still overpricing, buyers are still sitting waiting for the bottom without understanding that if (interest) rates go up 1 percent … their payments will increase dramatically” even if prices come down 10 percent.
Buyers base their purchase decisions on “monthly payment and the interest-rate terms, and conditions on home loans over the past two months have been fantastic and continue to be very good while the market allows the buyer to negotiate an extremely aggressive price,” Haas writes. But “the press has done a terrible service to the public buy not informing them of these facts.”
Haas predicts the next round of price reductions will be driven by higher interest rates, “which by all financial indicators (are) coming, it is just a matter of exactly when and by how much.”
Charles Ritz of Tarbell Realtors in Rancho Cucamonga, Calif., says business is slow in the Inland Empire region east of Los Angeles.
There are fewer homes in escrow and more on the market than in resent history, Ritz says, and prices have been dropping in the past couple of months by 1 percent to 2 percent.
For prices at the lower end, Ritz recommends having the “seller offer at least 2.5 percent to buyer’s agent and the home will sell quickly.”
Sally Daley, broker-owner of Daley & Company Real Estate, says buyers still control the Vero Beach market, even after last year’s 20 percent price correction. There’s been wholesale investor pullout, Daley reports, “with a whopping two to three years of inventory on our barrier island, as many sellers continue to price their homes to pre-correction levels and buyers say ‘no.’ “
Slow market conditions in the Northeast United States — a key feeder market for the barrier island’s second-home-buyer segment — “clog our market with buyers from equally slow areas ready and willing but unable to buy until they sell up North,” Daley says.
But Daley reports a big uptick in buyer interest on the company’s Web site as buyers “get off their proverbial fence of indecision.” Prices have moderated up a bit from their low after last year’s big correction, “but it is still a great time to be a buyer here!”
Spring is traditionally the strong season for sales, but a return to normal inventory levels could also depend on action by the state’s new governor on “the insurance and property tax elephant in the living room,” Daley says.
Realtor Kevin Orak of The Selby Group in Flagler County said the area is “surrounded by water on all sides and actually still affordable for those looking to live in the Sunshine State.” The past few months “have been absolutely dismal,” but Orak says his phone has begun to ring again.
“Buyers have plenty of inventory to choose from and we are waiting longer for buyers to make a decision,” Orak says. “I am staying upbeat and this has been chance for those of us who want to work in this business full time to change our way of thinking regarding pricing, advertising, etc.”
Fort Lauderdale broker-associate Carolyn Burns, of RE/MAX Partners, offers a similar assessment.
“In south Florida, buyers have the luxury of being picky and choosing the best-looking house in the best condition and in the best location,” Burns says. “They can ask for closing costs credits and get them. Sellers that have the luxury of getting an offer should thank their real estate agents for presenting their homes in the best light, and take the first offer they get.”
Burns says Florida is experiencing “a crisis” of high property taxes and enormous increases in property insurance, “which is deterring buyers from getting properly qualified with their mortgage payments (PITI) to purchase the type home they want.”
The homes that are selling are either priced very reasonably — between $300,000 and $350,000 — or newly constructed, high-end homes in the $700,000 to $1.5 million range built to withstand hurricanes. Houses priced in the middle, between $450,000 and $550,000, are taking six to nine months or longer to sell, Burns reports.
“Patience is needed to stick it out, and work with our sellers to be realistic in pricing — even pricing back to 2005 prices, if necessary,” Burns advises. “A seller in denial is not going to help matters. Agents need to work harder to hold open houses for maximum exposure. Houses on lockboxes don’t sell like they used to.”
Marcus Burke at CondoMetropolis in Orlando says central Florida has “much inventory and slow sales,” but isn’t worried about the long term. “With a thousand folk a week moving here and the baby boomers still to come, I think central Florida won’t suffer for too long … unless of course, we get a another Wilma.”
Flynn Taylor of Keller Williams Lanier Partners does business in northeast Georgia’s Habersham and White counties — a bedroom community for Atlanta.
“(Home builders do) not seem to be concerned about the market,” Taylor says. “New subdivisions are cropping up all around (with homes) in the $200,000 range. Buyers are anticipated from the Atlanta area and from Florida.”
There was a “definite slowdown” in the third and fourth quarters of 2006, and the region always sees decreased activity from December through February, Taylor says, “but being a bedroom community of Atlanta will help our market carry on in 2007.”
Dianne Dunn of Keller Williams Realty in New Bern, N.C., says eastern North Carolina had only “a minor setback last year,” with prices continuing to appreciate. The area is a haven for retirees and second-home owners looking for a moderate climate and less hectic pace of living, she said.
Dunn said the market started tempering in the second quarter of 2006, “and the last three months were fairly slow. During the week between Christmas and New Year’s, I had three listings sell, and we’re experiencing great buyer activity, and numerous showings as we start 2007!”
Linda DeVlieg, broker-associate at Albuquerque Real Estate, reports the “pitter patter of buyer feet are starting to be heard again.”
Good homes priced well are still selling, DeVlieg says, and the ratio of new listings to pendings is “growing a smaller gap than it was a few months ago. I see things improving and looking up.”
The only downside, DeVlieg says, is in new construction. “I believe that the builders are suffering from the over-sell to investors in the last 18 months, and buyers are reluctant to go as far out as it takes to get to the new developments; more infill building is moving buyers closer into town,” she says.
In the western suburbs of Chicago, Eric Rogers says single-family resales lost steam in December, but inventory continued to decrease from a high this fall. Rogers, a Realtor with Century 21 Pro-Team in Aurora, Ill., analyzes local market conditions on his Web site. He thinks the market is seeing “the beginning of the end of the downturn,” with home values are about where they were in January ’05.
Vito Boscaino, owner of Help-U-Sell North High Realty in Columbus, Ohio, says inquiries from sellers and buyers picked up after the holiday. An interesting trend is that many buyers making inquiries of late are not represented by an agent, he said.
Direct inquiries are “great for our listing clients as it provides them with the opportunity to potentially sell their homes while paying a low-set fee with no co-op commission to be paid,” Boscaino reports. “This positions them to capture the maximum level of savings versus a standard 6 percent commission that a traditional agent would generally charge.”
Matthew Benedict of RE/MAX Metropolitan in Utica, Mich., says the metro Detroit area ” has an overload of inventory, including a ton of bank repos.” That makes it “a good time to buy and take advantage of the market. Its funny, when the market is peaking and homes are overpriced everyone wants to buy. Yet when there are some tremendous values out there, buyers are on the fence. The time to buy is now! I have noticed an increase in buyer inquires and showings on our listings. The market is turning.”
Marabeth Gildersleeve of Coldwell Banker Residential Brokerage in Glastonbury, Conn., says inventory is down, but that’s partly because of expired listings in the month of December. “Right now there is not much out there,” Gildersleeve reports. It “will be interesting to see what happens in the next month or two with inventory, which will tell where the market is going.” In the mean time, sales are off about 15 percent, but closing prices are up 1.5 percent, she says.
Geri Sonkin of RE/MAX Hearthstone in Merrick, N.Y., reports “a definite difference in the Long Island market.” Sonkin said she began to notice the change in November, when buyers were out in greater numbers than they had been in many months. “When checking with my colleagues, their experience seemed to mirror mine. Inventory, growing at an alarming rate earlier in the year, has trimmed back as well. There is no doubt, however, that buyers are still in the driver’s seat since their options are many.”
Earni Young, who writes about real estate for the Philadelphia Daily News, says the market there is faring better than the rest of the East Coast, “primarily because our housing prices are far lower than in New York City or Washington, D.C.”
“Our luxury condo and townhome market consists primarily of empty nesters moving in from the surrounding suburbs, a smattering of New Yorkers and Washingtonians willing to commute by Amtrak,” Young says. Nevertheless, sales have slowed and there is currently a three-month inventory of unsold homes.
Several large condo projects either are on hold or are being revamped as rentals, but a number of new projects are in the pipeline.
“Despite the gloom of those who can’t seem to remember what the real estate market was like pre-1998, our current market is not bad,” Young says. “The difference is that homes that once sold in three days with multiple bids, now take three months to pull in the first offer.”
Craig Pattberg an investor and Realtor with AllPro Realty Group Inc. in Midvale, Utah, reports the region has been immune from the slowdown in the market, with prices on the rise and inventory low.
“Here in the Salt Lake Valley of Utah we experienced a 19.4 percent appreciation for the fourth quarter of 2006 over 2005. We are 43.2 percent over the fourth quarter of 2004.”
It takes an average of 32 days for homes to sell, with a three- to four-month inventory, and an average sales price of $284,193.
“Hot!” Pattberg says of his market.
In Portland, Ore., Patrick Brown of Windermere Cronin & Caplan Realty Group says he’s seeing a “big jump in activity” in the below-$300,000 market, but his $600,000-and-over listings “are getting no showings.”
Brian Quilty, president of Online Land Sales LLC, says sales through the company’s Web site, Landbidz.com, are “good,” with “a steady increase in demand” for land in rural Nevada and Texas. Prices “seem to be rising,” Quilty said.
In Sioux Falls, S.D., Harlan TenNapel of Ameri/Star Real Estate said there has been no downturn. Although there inventory is three, four months and more, that represents a balanced market, he said.
“We are seeing most price ranges still have a 3-4 months’ supply of homes, with a few price ranges considerably out of that range,” he said. “I was always taught in my 27 years (in the business) that if you have a 3-4 months’ supply you have a balanced market. It is not a buyer’s market, and it is no longer a seller’s market, it is a balanced market as a whole.”
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