A Confusing Market

Perhaps A Confused Market would have been a better headline. Each week new and often contradicting data and opinions about the state of the real estate market is released by various groups that surround the market. While existing-home sales rose again in January and are outpacing year-ago levels, we are still seeing a drop in home prices across much the country.

Existing-home sales increased 2.7 percent in January and are 5.3 percent above January of 2010.

Regionally, the West saw the largest existing-home sales increase. In the West they rose 7.9 percent and are 7.0 percent above January 2010. The Midwest and South also saw monthly rises -- up 1.8 and 3.6 percent respectively. The Northeastern region is down 4.6 from December and down 1.2 from year ago levels.

The most recent reports from the Case-Shiller Index have brought on a slew of comments from the experts. The Case-Shiller quarterly index showed prices fell 3.9 percent in the fourth quarter and 4.1 percent for all of 2010.

So, what is happening in the local real estate market? Well the best answerr is to check things out on one of my Web sites—www.themilfordteam.com or www.movetomilford.com. I’m tracking nine local markets this year— Milford (of course), Commerce, Highland, West Bloomfield, White Lake, Lyon/South Lyon, Green Oak, Brighton and Hartland.

I track what has sold each week in those markets and keep running year-to-date totals, too. I record all of the houses that have sold above $20,000 in those markets, as well as what they were listed for at the time. Then I calculate the percentage of the sold price vs. listed price.

I also record the latest SEV value for the home and calculate the sold price vs. SEV ratio. In theory SEV should equate to 1/2 of market price. In practice sold prices are running 1.4 to 1.7 times the SEV. That is a measure of how far behind the assessors are, compared to the actual market values. Finally, I record the Sq Footage of the sold homes and the listed and sold price per square foot. Those are running well below $100/Sq Ft in every market.

Here are a few representative averages for those markets, so far in 2011:

Market .......................Ave. SEV ..............................Ave. Sold
......................................Multiplier .............................$/Sq Ft
Milford ..........................1.4472 .....................................$80
Commerce ....................1.6822 .....................................$89
Highland .......................1.4829 .....................................$69
White Lake ..................1.5828 .....................................$74
West Bloomfield ..........1.5703 .....................................$73
Lyon/South Lyon .......1.7964 .....................................$85
Green Oak ...................1.6138 .....................................$78
Brighton .......................1.5595 .....................................$87
Hartland ......................1.6450 .....................................$79

How is this data and the derived numbers of value to you or someone you may know? If you are thinking of selling, this will give you a good feel for the market in your area (if you are in one of the ones that I track). You should not believe that somehow your home has been magically spared the collective pain of this market. It has not. These numbers can help you avoid wasting time by listing your home too high.

If you, or someone you know is looking to buy a home in one of these markets, you can get a good feel for what homes may really be worth, no matter what the current listed price is. Almost all sellers start out priced too high when they place their homes on the market. Equipped with this data you can make a stronger case for making a more realistic bid and back it up with facts.

In either case, call me and I’ll help you get the pricing right.