Sunday, September 30, 2007
We're down, but not out...
The report above is one of the tools that our company uses to keep us informed about the market and to equip us to better explain what’s happening in the market to our clients. This report, which compares the market in several dimensions year-over-year against last year is consistent with the press articles and newscasts about the market. It’s down! The number of homes being listed is down in some areas and the number that have sold year-to-date is down almost across the board – only Detroit and the Gross Points actually have more sold homes this year than last. The median home sale price is down across the board; with Detroit taking a big hit, due mainly to foreclosures. With the drop in prices comes some good news as the Average chance of selling a home in the next 120 is slightly up.
So what can you take away from a chart like this? If you’re in Oakland County, for instance (since that’s where I mainly do business), There have been 7% fewer homes sold this year and 4% fewer listed. The median home sale price is down 5% and the likelihood of selling in the next 120 days is unchanged at 19%. That’s certainly consistent with what I’ve been advising clients about the market. I generally tell sellers that they need to be ready for a 6-9 month sales cycle, maybe longer. I also advise them on market pricing, which is inevitably lower than what they had in mind. Homes are still selling – 7,244 in 2007 in Oakland County at the time of this report – they’re just taking longer to sell and fetching less than sellers had initially hoped.
Certainly one thing that the lay person reading this should take away from a report like this is that now is no time to be trying to go it alone. This is a tough market even for the professionals and a killer market for the unrepresented seller. Realtors are pulling out all the stops and using all of the tools at their disposal to get homes sold and still the sales are down. Imagine what chance an unrepresented seller has with no Multi-list presence, little or no advertising and essentially being invisible on the Internet. Talk about the proverbial snowball in hell. So, call a pro and then take their advice if you plan to sell in this market. If you've decided to sell using a Realtor, then follow their advice about getting the house ready and about pricing. See my posts of June 28 on the 3-C's of real estate and of August 14 on the 3-P's of real estate.
If you’re a buyer, be prepared to analyze new opportunities quickly and to be decisive when you find that great deal that you imagined is out there. I’ve had buyers hesitate for just a day and lose out on some great foreclosure homes. Be ready with a strong letter of pre-approval from your lender and use a Realtor to keep you on top of things in the market. It can take a day or two for a new listing to move out to the search sites that you may be using. Your Realtor can make sure that you hear about new listings that meet your criteria as soon as they hit the Multi-list. Be prepared also to spend the necessary money up front, even if you walk away, on an thorough inspection of any distressed house that you may bid on. It is far better to walk away from your $300-400 inspection investment than to take on a fixer-upper house with major issues that may cost many thousands of dollars to remedy.