This time of year the unpaved roads in Oakland County, Michigan are a mess – a real bumpy ride. However, even they may seem to be glassy smooth compared with what’s going on in the stock market, which seems to have dips and peaks that swing hundreds of points every day. What a ride! The work behind the scenes by the Federal Reserve and the Federal government seems to be having some damping effect on that market, but it's still pretty wild. The stock market is no place for the faint of heart right now.
In real estate we seem to still be headed in the down direction only and the hard part for the professionals in the business is to try to keep up with how fast and how far things are falling. One used to be able to look back over a year’s worth of sales in an area to establish a good sold price baseline, then it went to looking back only six months; now if you look back more than a quarter, you’re probably too optimistic. To compound the problem not much is selling in many areas, so one may not be able to find any comparable houses to use to help establish medians or average sold prices. In some areas the only homes that have sold in the last 3-6 months were foreclosed houses, so the data is seriously skewed by their prices.
Appraisers and assessors are now required to use the sale data from foreclosed houses in their work, so that “bad” data is baked in to every appraisal that I’ve seen lately. I do 7-10 Market Analysis reports a week for potential sellers and I’ve had to forewarn them that I too use this foreclosed sales data in my analysis. It’s just a part of the market right now and foreclosed houses are competition for buyers’ attention. I think I’ve reported here often that I’m showing mostly foreclosed houses lately. I also have had to expand the search area that I use to look for sold comparables, sometimes going out as far as 3-4 miles; which really isn't good, but necessary today.
The work that the government has tried to do in this space, with new, higher limits for FHA, Fannie May, and Freddie Mac loans has helped a bit and almost everything that is selling is going through one of those programs now. As I opined yesterday; however, things are now so bad in the overall economy that many “regular Joe’s” now find themselves in potential default trouble, so a huge second wave of foreclosures looms on the horizon. We really can’t see the bottom of this down escalator yet.
I’m certainly hopeful that better weather will bring out buyers who had hunkered down for the winter. Even if they just want to look at foreclosed houses, that’s OK. At least that will help us get them off the market faster, so that regular homes for sale don’t have to compete with them. For home sellers my advice remains that you get as competitive as you can on price and make sure that your house wins on condition. All of the foreclosed homes need something, whether it’s just maintenance items that have been ignored or major repairs (due to previous owners or vandals damaging the house). So make your house a “move right in” winner for those buyers who are willing to take on home projects as soon as they buy.
See! There is hope and that’s what I try to deal in. As Napoleon said, “A leader is a dealer in hope.” (From this mornings Jack’s Winning Word Blog) I work for a leader like that and I’m married to a dealer in hope, too. My hope is that enough of their optimism rubs off on me that I can deal in hope, too. So, what I see in the picture of Napoleon is him reaching for his check book; so that he can write out the earnest money check on a cute little waterfront place on Saint Helena Island. Hope springs eternal!