June Current Market Conditions Report Posted with May Data

Hey, everybody, I just posted the latest Current Market Conditions Report, including single family sales and inventory data through May, 2008. Please check it out and come back here to add your comments on the current real estate market here in Sullivan County.

Comments

[CL]

David,

I would love to know how seller agents/brokers in Sullivan county are survivng?

I have been watching most Sullivan RE website for the last 3 years and 80% of what was for sale here 2-3 years ago is still for sale today (most without ANY price reductions). I have facts and data and can provide them but I do not want to post websites and listings on your blog for fear you will remove my post. There are about 25 Sullivan RE websites I view once a week from my favorites list and nothing changes except for another over-priced addition that joins the long list of unsold homes and land (esspecially Land).

How on earth can these Sullivan county brokers survive? Are they selling property that never makes it to the net or do they do this for part-time fun? And how can a seller wait 3 years without selling? I have some few hundred examples (25 websites X 20-50 old unsold listings).

Chris

PS...Sorry for having posted in the other section...wasn't sure where to post

[Mal]

Many of the signs David mentions resonate with us: We are city folks who gave up looking over the winter, waiting for sellers to catch up. Our intention was to wait until early 2009, but a couple of interesting new listings coaxed us out of our shells, and we have the bug again. We have closely monitored one particular segment of the market since July 2007, and have finally (after months of almost no change) noticed a few very well priced additions and a few price adjustments. We were looking at houses 2-3 times/month from Aug-Dec, then not at all until May, when we visited 3 times. We are now more savvy, and still believe prices will drift lower, but we had to smile at David's posts about the simple pleasures of being in the country (first cows, unlocking doors, etc). Absolutely spot on, from our perspective. Thanks, David, for that reminder. So like other city folk who have watched the market for a while, we do realize that it makes sense to be patient a little longer, but we would probably take the plunge for a really good value.

Like Chris (see post above) we have watched in amazement as none of our favorite properties from last summer/fall has sold, and only two have actually dropped their asking price (but by less than 5%!). A few left the market, but from what I can see of public records they did not sell. (The recent cases of better values I mentioned above have all been for listings that entered the MLS in 2008). We have been amazed at how little effort most sellers seem to make to show their homes well, and how slowly many realtors seem to have adjusted to the change in market conditions. Maybe some young agents never before had to close a deal without a bidding war? Some realtors have mentioned that sellers fear dropping their asking prices because they want room for buyers to bid low, but we simply will not play that game. I do feel sorry for realtors who show these properties in good faith, yet never get buyers and sellers to negotiate. But sellers set the tone by sending messages about being insulted if an offer is "too low", so it is up to sellers to signal their willingness to drop a price significantly.

One final question for David: in your recent analysis of the market you conclude that prices have rolled back to 2006, yet today's median is really more consistent with late 2004. Is your interpretation based on adjusting for the fact that the median drop in sales price from initial asking price is not as large as the year over year drop in median sales price? (i.e., that today's $150k is buying a different class of house than the $150k of late 2004?).

[fenton]

Four new properties from Swinging Bridge added to the MLS today. Perhaps someone wants out.

[David Knudsen]

Mal, we're not really back at 2004. In May, 2004, the median was $140K and the average was $167K. In May 2008, those numbers were $150K and $199K. In my current report, I indicate that I think we're back in a mid-2005 to mid 2006 range. In May 05, the median sales price was $159K and the average $188K; in April/May 06 it was $165-180K and $205-215K respectively. Its difficult to do a real apples-to-apples comparison and pinpoint a rollback point because some parts of the market are holding up better than others. Some segments, like moderate priced lakefront or mid-sized farmhouses on quiet roads, are in demand without a lot of inventory, so probably aren't rolling as far back as, say, modular ranches.

I do think one issue in the current market is that a lot of agents don't have experience in a dropping market. I, for one, don't --- I wasn't selling real estate in the late 80's --- but I'm learning quickly. But we're in a transition period, and transitions are rough. Even old salts in the business comment that sometimes talking to some sellers is like talking to a wall. They want what they want, and unless they're very motivated, the only thing that will change their perspective is time.

Part of the problem, though, also rests with buyers. I hear buyers all the time say that a house is only worth such-and-such, without that being grounded in much fact. Some buyers also don't have a firm grasp on the factors that impact value, and will compare apples to oranges. A farmhouse on a quiet country road in the western part of Sullivan County is generally worth substantially more than a farmhouse on a busy main road in the eastern part of Sullivan.

Responding to CL's post about listings seeming to be on the market forever. I don't think the 80% number is quite accurate, in terms of what was on the market 3 years ago still being on the market today. But you will certainly find listings that stay up year after year. In the Sullivan MLS, of the 1209 single family homes on the market as of this morning, 676 have a listing date on 2008, while 533 have listing dates prior to 1/1/2008. Over the course of a year, I figure about 1,500 single family homes will be listed in the MLS, but only about a third (between 400 and 500) will sell. The vast majority don't for whatever reason. Unsold houses will churn their way through the system — some will just stay in the MLS, growing stale; others will move from broker to broker with little or no price change, with the seller having a belief that the right broker with the right marketing will get their house sold; some will shift to an open listing with multiple brokers; some will try the For Sale By Owner route. But the hard reality is that 2/3 of the houses on the market this year won't sell.

Contributing to this perception is that not all brokers keep their websites up to date. I've seen some properties on broker websites that I know were sold quite a while ago. The MLS has strict requirements (backed up by fines) to keep property status current, but that's not true with individual websites or non-MLS advertising sites like sullivancountyrealestate.com.

The percentage of unsold raw land is probably even higher. There are lots of folks that have a parcel or two that keep a listing out there if someone wants to buy it.

A contributing factor to this is that is costs virtually nothing for a broker to carry a listing. Once you're a member of the MLS and pay your monthly fee, it only costs about ten bucks to put in a listing. And virtually nothing to put it on your website. The more listings you have on your website, the bigger and more successful you appear. The more listings, the more likely a customer is to call on one of them. You may wonder why listing agents don't turn down listings that are grossly overpriced or 'unsellable'. There's little incentive for them to do that and a seller is just going to go to another agent.

The situation would be very different if there was a montly out of pocket cost to a seller to keep a listing active. If it cost a seller say, $50 a month, to keep their property listed, the number of active listings would probably plummet.

[AR]

The site has been very helpful to fend off buying fears! How much of a difference should buyers expect and plan for between the low bank appraisals that you write of and the purchase price? Putting down 20% is one thing--putting down 40% is another. How much is too much of a responsibility for the buyer to take on?

[David Knudsen]

AR, I'm not saying that buyers should, across the board, make up any appraisal gap. Its very much a case by case thing, very dependent on the type of property and the agreed upon sales price. I just raised this in the monthly column because its an issue that needs to be taken into account.

[mazz]

http://www.recordonline.com/apps/pbcs.dll/article?AID=/20080610/NEWS/80610038

[Reg]

David,

If you adjust the May 2004 prices so that they're May 2008 dollars (you have to compare apples to apples, after all), they end up at a $159K median and a $192K average. Looks an awful lot more like the current $150K median and $199K average, actaully.

[David Knudsen]

Great point, reg. But now I need to do inflation adjustments, too? I'm just a humble real estate salesperson, not an economist. But I really do appreciate folks keeping me on my toes about my numbers. One of the things I find pretty gratifying is that so many of you really do read what I write.

[Mal]

David, this site is far and away the best source of information for anyone buying or selling in Sullivan county. But here's another thought about the comparison of current and prior sale prices: You mention on the main site that the current average is inflated by two recent $million+ sales, and that the average is likely to drop below $190 next month. That's a level like May 2005 (leaving aside Reg's inflation adjustment!). What about the median? During the market run-up, the $150k median level (equivalent to today's median value) was reached in Fall 2004 and was overtaken in Spring 2005. Of course, the much bigger issue is whether the decline has actually halted, or has merely paused. I agree completely that the stability of the current median is the key to watch.

[JM]

The best (or worst if you are a seller) is yet to arrive folks.
Thi great recession has barely begun and people are looking for a pause or 'bottom' in housing losses? The real pain is felt after the recession is long over (like post-Katrina). We are still in 1990 situation here. Those of you who remember that time period know what I am talking about. The bargains won't come to surface for another 2 years at least.

[JD]

As a real estate agent in the Sullivan County area, I would just like to rant about the appraisal process and one appraiser in particular who will remain nameless, but who many know who I am referring.

Late winter 2007 my office had an accepted offer on a property for $215,000. I am not going to describe because I think it is not pertinent to the argument. The issue here is we had a buyer and seller agree upon a price in an open market. In my opinion the definition of "market value".

Appraiser X came in with an appraisal of $155,000. Needless to say, the deal fell through. The house is back on the market.

Two months later we get another offer accepted at $215,000. Some issues came up at inspection. This buyer was a little more "hard-nosed. We settled on $205,000. This was 80% cash. Different bank did a drive by--here's your money, thank you very much.

My point here is that if two offers in a three month period come in at the asking price, that is the definition of "market value.” An appraiser's job is to form an opinion of market value. Appraiser X's $150,000 appraisal was just as wrong as a dentist pulling the wrong tooth. He failed at his job.

It seems more and more this particular appraiser is attempting to drive the market, not attempt to form an opinion of the market. To me that is egregious.

I say this because I currently have another deal halted because of his low appraisal. I have sent the banks some comps that are more in the ballpark, and they are considering, but to have an appraiser be the end all be all, after haphazardly picking out sold MLS listings that he has not even viewed makes no sense to me.

My current buyer has seen almost twenty Sullivan County properties. He knows what is out there, and he chose this one--again the definition of free trade in an open market.

Anyway just my two cents.