Last winter, the only real estate buyers seemed to be bottom end bargain hunters trolling for foreclosure and distress sale properties. This spring, we saw the return of some second home buyers looking for great values in the moderate range. Now it seems we're working our way up the food chain, with some value shoppers at the higher ranges of the market.
Over the past month, I've been out with 4 different buyers shopping in the "better" property categories, with budgets of $500,000 and up. I've chatted or emailed back and forth with another 4 or 5. A few clients I worked with in this range a year or two ago have resurfaced, looking to restart a home search. And I've talked with a few other agents who've seen their first $500,000 range buyers in almost a year.
While their price range and property expectations may be different than buyers in the moderate range, there is one very common thread from the lowest to the highest price ranges. The buyers are looking for great values. They're searching for those properties that have "ripened" on the market, with sellers primed to make a deal.
I've said for a few months now that the upper end, where buyer demand has been very soft this year, was the area where some of the best deals could be found, and that's playing out. In the past two weeks, I've put together two deals in the mid $400's on properties that possibly would have sold for as much as 50% more during the peak of the market. (Both properties have been on the market for 1 to 2 years, but at asking prices that overshot buyer price expectations.)
In the moderate range, there was an inventory of about 10 to 20 'good' houses with appeal for second home buyers that had been priced in the $275,000 to $350,000 range. Most of those houses had been on the market for a year or more, then hit the brick wall of the economic downturn. This spring, with those sellers very motivated to move their houses, they dropped asking prices into the $225,000 to $275,000 range just as moderate range buyers were trickling back looking for good values. The result was a sharp pickup in buying activity right around $250,000.
The same dynamic is surfacing in the upper end. There is a small subset of "better" houses that have been on the market a while, where the sellers are motivated and are dropping their prices. This is matching up nicely with the trickling back of value shoppers at the upper end. They're looking for the great deals — houses that might have cost $700,000 two years ago that might be picked up today under $500,000. And when they find them, they are stepping up to the plate. I've put together two deals in this range in the last two weeks.
The problem in sustaining this upper end interest is that the inventory of 'great value' property in this segment, just like other lower priced segments, is limited. The attitude among almost every buyer over the past few months — whether they're looking for a little $100,000 cottage or a $500,000+ private getaway with acreage — is that they'll only consider houses they peceive as great deals. For example, I'm working with a couple of clients shopping for a nice, private lakefront home with 5 or so acres. Apart from a small log home at Timber Lake listed at $499,000, the rest of the available inventory ranges from $749,000 to $1.79M (outside of Chapin, which is higher.) I've shown most of that entire inventory a number of times. None of the buyers I've shown those houses to have expressed repeat interest, much less make an offer. It's not because they don't like the houses or settings, or can't afford them. They just don't perceive them as great deals.
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