The changes they keep a comin…

Posted on June 10, 2010 by admin


The Real Story…

News and commentary about the real estate market and related topics.

Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.

The changes they keep a comin…

Last week seemed to be filled with new announcements of changes in the market place… new policies, guidelines, procedures and requirements… some in the works for a while… others immediate with no announcement. Without getting into the particulars of those changes and whether they were necessary or not, good for the market or not … there simply isn’t enough space here to treat each appropriately… I will say that the coming of changes in the market is now so common place, as to be expected on an almost daily basis. That is if you’re involved in the market place on a daily basis.

The problem is individuals that are buying and/or selling homes do so very infrequently and therefore are not involved in the market in a way sufficientto know what is normal or to be expected, except by comparison to the last time they were involved in the purchase or sale of a home.

We are in a CHANGED Market! The free-wheeling, “loosey-goosey” days that we experienced in the opening years of the new millennium are gone… Moreover, I can’t imagine the scenario that would bring them back in our collective life times. There is a “new normal” and a characteristic of that new normal is to expect change! But change does come easily, quietly or softly!

Preparing for and coping with those changes has become a major part of the real estate market today. So much so, that I begin each engagement with a new client with an explanation of this changed market and a forewarning that we will encounter stumbling blocks, issues and yes even problems often wrought of this constantly changing environment. Rules, procedures and guidelines can and often change from the time the transaction begins and that it ends.

As much as we would like to, it seems that none of us have the ability to stop this onslaught of changes before they happen. What the professional agent does is to not panic, not to rant and rave about these problems but to prepare for these unexpected events and to work through the problems and hurdles to a successful outcome. And as any good guide prepare his fellow sojourners for what lies ahead. To that extent we share a journey through a foreign and unknown land armed primarily with ability to read the stars and overcome adversity. Together we will reach our goal despite those changes… but only with patience and diligence.

May the market be with you…

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Bad News, Good News, Bad News…

Posted on June 3, 2010 by admin

The Real Story …

News and commentary about the real estate market and related topics.

Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.

Bad News, Good News, Bad News…

Seems there’s a never ending cycle of Good News and Bad New as our local and international markets undergo this tumultuous period. As a part of what I discuss here, I often touch on the news resulting from those changes… some good news… some bad news. As the world continues those changes, some of that news changes. My and industry predictions change as the result of the good news bad news cycle. This is my rather awkward way of introducing a correction of a prediction made here earlier this year.

You may remember the prediction of rising interest rates caused by the Fed’s withdrawal from the purchase of mortgage backed securities effective March 31, 2010. And true enough interest rates did make a slight up tick in April … but then bad economic news popped up in another part of the world… Europe and especially Greece. In fear of the changes brought about by this economic crisis, investors who had their money in the European markets began to look for a safe harbor too protect their investments … So now we are seeing a return to investment in the American markets and a reversal of our earlier predictions of rising interest rates, at least for the short term. Good News for the American Housing Market!

While some negative forces still exist in the housing market, this bit of bad news/good news will extend the increased affordability of housing beyond what had been expected. Yes, this is still a wonderful time for buyers looking for that first home or buyers looking to move up… Perhaps not so good for those looking to make a lateral move or down size. Rather than the 5.5% rates anticipated for June, we are now back in the sub 5% range with some mortgage rates below the 4.5% mark. This average reduction of .5 to .75% translates to an increase in buying power of around 10%.

At the same time we have been experiencing a nice up-tick in housing sales largely caused by the tax credit incentives while housing prices are tending to stabilize (the decline in prices has slowed significantly). While industry experts had feared that the improvement in home sales might be temporary, it appears that sales may be remaining stable and even increasing slightly. Moreover, it appears that the activity caused by the tax credit program may have resulted in renewed interest in the housing market… What I have observed as a tearing down of the wall of fear that had been holding so many buyers back.

Now there is no reason to believe that the cycle of Good News / Bad News has been broken… However, I am comforted somewhat by the words of Leo Tolstoy: Everything is always okay in the end, if it’s not okay, then it’s not the end.

I’m hoping that this is good news for you and that you will be able to benefit from this market!

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New or Used… Part 2

Posted on May 27, 2010 by admin

 

The Real Story …

News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.

New or used (uuhm, I mean previously owned)… Part 2

We ended our conversation… last week in a discussion about the decision to buy a new versus “previously owned” home.…

Facts established last week were:

· New Homes are in short supply (shortest supply in recent history)

· That supply is unlikely to improve significantly in the near term

· This short supply tends to cause the prices of new homes to be increasing/rising

· A majority of Buyers would prefer to purchase a new home for any number of reasons including: the desire to have a life… a home not in need of a lot of work that almost guarantees I can’t spend my weekends doing what I want. New Roof, New HVAC (Heating & air conditioning systems), new appliances… the desire for all the latest features, amenities, and colors … a home that looks and feels like the times! The desire for a clean home not filled with the odors and reminders of past occupants and their imperfections.

Now in previous conversations, I have pointed out that while there is a large inventory of homes on the market, there is not a large inventory of high quality homes. By high quality, I mean homes that fit the criteria that most buyers are looking for (see list above). That said, there are more re-sale/existing homes meeting this criteria than there are new homes currently on the market. Generally, the cost for re-sale homes with the similar amenities, features and location will be less than that of a “new” property.

Now all I’ve done so far is to communicate the market conditions that exist today… How do you use this information to make the best buying decision for your particular situation?

First be aware of your level of tolerance for involvement in home repairs and home improvement projects either as the performer of those tasks or the manager of those tasks. You need to make an honest assessment here and understand the realm of possibilities. Many buyers in today’s market think changing wall color (painting a room or rooms) is a big deal. Others are much more energetic when considering much larger projects, replacing windows, doing upgrades of kitchens and baths in stride. Do you have hobbies or other passions that will rule-out your involvement in such projects?

Secondly, take a moment to think about what’s coming up in your future… are you likely to remain in this home for less than 7 years, less than 5 years, Less than 3 years? The shorter the time period, the more you should consider the total investment made in the home to make it livable while there and marketable when time to move on… because the shorter that time period the less likely you are to re-coup that investment. If considering a new home, will you have to compete with the home builder when it comes time to sell (will there be new homes on the market which you must compete with in the same neighborhood)? If looking at the purchase of an existing home (“Previously Owned”), what are the short-term, mid-term and long term prospects for the subject community?

The right decision is as individual as is the home buyer. You need an experienced advisor to represent your interests as you consider this important decision. Seek out qualified expertise in the form a Realtor® trained expressly in Buyer Representation and take the time with that advisor not just to look at properties but to define your goals, your constraints, your time frames and how to make the decision that best serves those interests.

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New or used (uuhm, I mean previously owned)…

Posted on May 20, 2010 by admin

The Real Story …

News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.

New or used (uuhm, I mean previously owned)…

The overwhelming majority of buyers that I encounter in today’s market are asking about new homes and in the same breath about the best way to take advantage of this buyer’s market (translation: They want a deal). With my head spinning around, I wonder where is the best place to begin explaining what’s going on in the market.

On the date that I write this there are 13,512 Homes for sale in the Birmingham MLS. Of that number 476 (roughly 3.5%) are new and complete. Another 648 (5%) are under construction and another 213 (1.5%) are proposed for construction. The total possible new homes for sale at the present moment including proposed construction is 1337 or just under 10% of the current market. New home construction is down and with the number of active home builders greatly reduced from the first part of this decade, along with the increasing obstacles for home builders and developers it is likely to remain at or near the current level for the next couple of years and possibly shrink a bit with some additional tighten of credit already apparent.

That brings us to one of the few market rules that have not changed in the new definition of the market and what is now called the new normal: the law of supply and demand. The more there is of something, the more the pressure to reduce price; and contrastingly, the less there is of something, again assuming sufficient demand, the more the pressure to increase price. That’s not to say that prices are increasing in all new home communities. However, there has certainly been less of a tendency to heavily discount new home prices (barring other market issues), as builders and developers realize that they have a desired commodity that is at the moment in limited supply.

There are of course exceptions to this rule caused by a number of issues such as the following:

1. Neighborhoods experiencing a higher than average rate of foreclosures.

2. Neighborhoods which have experienced environmental issues: notably Chinese sheetrock usage, which will usually lead to more of issue number one.

3. Distressed builders selling under pressure to stay in business or in anticipation of departing the business; not usually a great record of home warranty fulfillment in such cases.

4. Poorly planned or located developments, low sales record.

All of these issues speak to the potential for poor future performance of the home as an investment. We do actually expect homes to return to that position in the next couple of years. Especially, those homes (new or used) purchased during this period of time.

Now all that sounds rather dry, almost clinical I suppose. What I haven’t mentioned is why home buyers favor new homes over those previously owned homes. First of all there is that desire to have a life… a home not in need of a lot of work that almost guarantees I can’t spend my weekends doing what I want. New Roof, New HVAC (Heating & air conditioning systems), new appliances… the desire for all the latest features, amenities, and colors … a home that looks and feels like the times! The desire for a clean home not filled with the odors and reminders of past occupants and their imperfections.

Next week, we’ll complete our survey of the new or “previously owned” home purchase options and how you can decide which is really best for you.

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Three Things…

Posted on May 13, 2010 by admin

The Real Story …

News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.

Three Things…

When I purchased my first home… way back in the day (1970)…I was instructed by many experienced and trusted teachers/advisors that the three most important things in real estate are: Location, Location and Location.

While I still hold on to this instruction with almost religious fervor, I have developed some other insights as well. Those include the following:

· When looking to purchase property with an eye to its future performance as an investment Location is a must consider factor, but not the only factor.

· What you have invested in or owe on a property, has no relationship to the property’s value. Value is dictated by what the market is willing to bear. That is based on what similar properties (evaluated on location, condition, and amenities) are currently selling for.

· The condition of a home dictated by regular attention to its maintenance is the single most important item a home owner can do to maintain value and demand the best price the market is willing to pay.

· Every home is a move-up for someone.

· Every property will sell at the right price… I almost agree with this… however, I have actually seen properties that belie this truth… I’ve seen properties you would have to pay me to take! Properties where the “improvements” are uninhabitable and non-rehabable… Where the cost to remove exceeds the value of the land.

So that’s more than the three things alluded to in the title…What’s up!

The observations above lead me to believe that the three most important things in today’s real estate market are: Price, Price, and Price! Hey don’t shoot me… I’m just the piano player!

Human nature being what it is, I don’t know why I am so consistently shocked when I see contradictory behaviors in people (myself included). Who among us isn’t in search of a deal? Do you research items you are considering purchasing on the internet? You want to know which ones have the best reviews, how they perform, what the competitive prices are for this product versus that product… Seems we can all get very analytical when making a purchase. Ever used eBay, PriceGraber.com, Hotels.com, HotWire.com… Ever shopped at Best Buys, looked at the Blue Book value of an automobile? And yet, when we go to sell those very same products, we want to forget that such tools and techniques are used by those to whom we hope to sell.

No matter how high the quality of the product, nobody wants to pay too much! What’s too much? More than the market demands, more than your best friend (or worst enemy) paid… We may have different ways of determining what is too much; but, make no doubt about it, we are always reviewing those decisions… patting ourselves on the back when we our choices are proved “smart” and, more often than not, avoiding admission to others when we paid too much!

And so it is with the purchase or sell of a home. Homes are commodities when we purchase or sell. Granted we live in them, raise families in them and to some we may even define ourselves by them; but, they are no less commodities than the automobiles we drive or the toasters we use in the morning. Given a decent marketing plan, if a home won’t sell, it’s because it’s priced too high for what it offers the market… that is the same thing is for sell down the street for less! No marketing plan will sell a home that is over-priced!

So while I’ll never forget the importance of location in the value of real estate, it’s Price, Price and Price that are the most important things in real estate! Never doubt that it’s a price war! Want a better price… then pay attention to location when you purchase and to maintenance of the home after the purchase. May the market be with you!

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What’s Next…

Posted on May 6, 2010 by admin

 

The Real Story …

News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.

What’s Next…

 

Well it’s official the Tax Credit Program for First –time and Move-up Buyers has ended… except of course for active duty service members who have until next April 30th to take advantage of this windfall program. The big question in everyone’s mind at the moment is: What’s next?

Now make no mistake about it… I have no perfect crystal ball that allows me to see clearly and without a doubt what the future holds… However, I do live and breathe this market and do have some insights into what is currently happening in the market, what is likely to happen in the near term.

While there are many critics of the just “completed” Home Buyer Tax Credit Program there are a couple of observations I would like to make. It is certainly true that for the most part this tax credit moved sales up (robbed sales from the near future): however, it also created an interest in looking at the real estate market again, which is not insignificant. The fact of the matter is that this is a great time to buy… make no doubt about it. The purpose of the tax credit was to overcome the inertia of fear created by the economic disaster that came into public awareness in October of 2008. To that end, I believe it may have been successful; although, it certainly wasn’t the full answer to the issues in the real estate market.

As a direct result of the tax credit program and the fact we are in the selling season, March Sales were robust, as will be April, May and June sales, with May probably representing the peak of “closed” sales caused by the Tax Credit.

 

… March (sales) were up 55.3% from February. This is an improvement of 8.9% from last March. We have not seen this sort of month to month gain since the boom years of 2004-2007. As predicted, last month we did get an expected seasonal increase. We expect the outlook for sales next month to trend up. The twelve month moving average line of total dollar sales chart again seems to be fairly “flat”. This is a sign of the market beginning to find its footing…

As previously stated, I believe sales will trend a bit lower than average this summer, as foreclosures continue to hit the market at an increasing rate… Remember: foreclosures are the result of bad things that happened 9-18 months ago… Prices will continue to trend downward for two major reasons: First, the pressures caused on the appraisal process dictated by the HVCC (Home Valuation Code of Conduct) and secondly, because of the weakness of the market in the above $250K market.

As we find our footing in the regulatory arena, specifically in the area of the appraisal rules and processes to a more neutral position (This writer’s opinion is that the pendulum has swung too far to the right in efforts to correct some of the base causes of our current economic woes), we should begin to see some very gradual and subtle strengthening of housing values/price. It will take this movement to create activity in the above $250K market.

However, I believe the upcoming changes in FHA regulations could create a moderate amount of energy in the buying market beginning late this summer, as prospective purchasers return to the market and desire to act in front of less favorable financing alternatives.

All things considered, I am consulting with my Buyer clients: buy now …for my Seller Clients ,unless you’re planning a move up, I advise holding tight for better days, unless of course they have some over-riding reason to sell. Those better days are coming … within the next 18 – 24 months.

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Housing Inventory… High but not High Quality

Posted on April 29, 2010 by admin

 The Real Story …

News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.

Housing Inventory… High but not High Quality

The following is admittedly anecdotal… based on my own observations… and there may be more than one real estate professional who wishes to disagree. That said, I qualify my observations by stating that I literally look at hundreds of homes (active listings) each month. Yes, there are a lot of homes on the market… more than normal… but I contend that the bulk of these homes are of lesser quality… something short of what the normal buyer finds acceptable.

Now some of that lack of quality is readily attributable to the fact that there a large number of foreclosures in the market, but this by itself does not fully account for the lack of quality inventory. Ironically, we are finding that increasingly REO/Foreclosure properties are beginning to be rehabbed by the banks to make them more marketable. It seems that the banks have begun to understand that if you want to sell, you’ve got to offer at least a presentable product.

Most of the home buyers that I work with find major reconstruction / rehabbing to be a total turn off; and, most of those fail to even see the potential in a home that needs very many repairs that are much more than cosmetic. Hey, it seems that most buyers think anything more than painting a room or two is major. You would think that with the popularity of HGTV and other such Home improvement franchises that sellers would get it. If you’re really serious about selling, you’ve really got to get a home in good shape before putting it on the market.

To those sellers who get it… A well maintained, clean and odor free home is the minimum acceptable level for marketing your home… My hat is off to you; you’re starting well ahead of the crowd. The result from anything less will be most disappointing for all!

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Carrots and sticks…

Posted on April 15, 2010 by admin

The Real Story …

News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.

Carrots and sticks…

For a while now, in an attempt to get the economy going again, the government has been offering carrots to motivate buyers to by homes: Tax Credits, historically low-interest rates (resulting from the Fed purchasing/supporting Mortgage Backed Securities) in addition to various other subsidies and incentives.

Come April 30th most of that comes to an end, except for qualifying active duty military that have an extra 12 months to use the Tax Credit. Given the belief that these programs will not be extended (indeed congress promised not to do so at the last extension), we are about to enter a new period of buyer motivation… that of the Stick!

Now there’s no doubt there was and is a need for change in the real estate, home lending / mortgage and appraisal industries. There have been a number of attempts at making course corrections: rule changes, penalties, new standards of practice. I’ll take a minute here to review some of the more notable efforts that have begun to impact the market and that will continue doing so for the balance of 2010 and perhaps beyond.

Last year Non-Family/Employer Down Payment Assistance programs were banned and the minimum down payment for FHA loans… now the major source of financing for the below $300,000 market was raised from 3% to 3.5%. There are rumors of the down payment requirement will be raised again within the next 12-18 months to a minimum of 5%. Add to that the adoption of the HVCC (Home Valuation Code of Conduct) which places additional reporting disclosure requirements for RESPA compliance and making appraisals a more arms length process resulting in lenders requiring purchasers to pay for appraisals upfront. This change which took full effect in January and has made the whole process a bit more cumbersome. However, it does offer greater protections to purchasers form buying properties with inflated values based on tainted appraisals. At the same time many Sellers have had to face the reality of surprisingly low market valuations.

All-in-all these are good things and needed changes and for the most part helpful to buyers; although, many of us in the industry bemoan the added paper work and opportunities for obstacles to getting transactions to the closing table.

More recent changes have included:

1) the Fed’s withdrawal from the purchase of Mortgage Backed Securities effective 3/31/2010, which will most certainly result in rising mortgage rates form the recent historically low rates and a corresponding decrease in consumer buying power. Note that from current mortgage levels of 5% a 1% increase in rates to 6% would result in a 20% reduction of the purchaser’s buying power. Or to put it another way, if a prospective buyer today is considering a $200,000 home he would have to lower his target to a $160,000 home.

2) The raising of the Mortgage Insurance Premium (MIP) rate of FHA loans from 1.75% to 2.25% (effective 4/6/2010), which will increase the cost to purchase for most homebuyers.

Changes already approved and coming include: the reduction of the allowed Seller Assistance to Purchasers for closing costs from 6% to 3% of the home’s purchase price (scheduled to take place at a yet to be announce date this summer), which will eliminate many buyers from the market since a large portion of Buyer’s simply do not have the cash to cover both the minimum down payment and the closing costs and pre-paid items. This will not only impact purchasers; but, by reducing the number of purchasers is likely to drive home prices down even further.

Add to that the fact that the USDA Rural Housing Program which has been a place for the cash strapped purchasers to find housing solutions (USDA Loans allow up to 102% of the home’s purchase price to be financed) is now projected to be out of funds before the end of May. We are of course hoping that congress will expand funding to this program… but that is in no way a sure thing.

All-in-all the short term outlook is as follows: Buyers and Sellers need to be aware of the changing environment and act to take advantage of the currently favorable market conditions which still exists even in the absence of the current Tax Credit program. It looks as though we are returning to the day when purchasers must plan and save for a home purchase. For the next six-to-nine months informed buyers will be making decisions based on a fear of losing these favorable conditions rather than on getting a check in the mail. Sellers will need to be aware of these changing market conditions and take advantage of the situations and circumstance that promote a favorable market for buyers to take action or be prepared to stay put. You know when you think about it… that probably is more of a normal market.

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So how’s the market… (part 2)

Posted on February 13, 2010 by admin

The Real Story…

News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

For an archive of The Real Story visit: http://www.DavidParrishRealtor.com/myblog

So how’s the market… (part 2)

As a continuation of last week’s conversation, I thought it useful to drill down a bit deeper to look a bit closer at that specific portion of the local macro real estate market for the Eastern Area of Birmingham, that is: East Lake, Roebuck, Huffman, Center Point, Pinson, Clay, Trussville, Argo, and Springville. Understand that even this view is at higher level than that used when making a specific estimate of market value.

As you will see in the detail below all of the areas compromising the Eastern Area Market represent a Buyer’s Market … that is 6 months or more of inventory.

For Zip Code: 35206 East Lake/Roebuck

  • · Last 6 months of 2009: 143 Sales of which 100 (69.9%) were foreclosures
  • · Active Inventory as of 01/31/2010: 240 of which 98 (40.8%) were foreclosures
  • · Absorption Rate: 24 Months Inventory: 10
  • · Median sales price: $15,111 Lo: $1,000 Hi: $162,500 DOM: 97 SPL: 85.7%
  • · Foreclosure Median Sales Price: 100 Sales $10,950 (Lo: $1,000 / Hi: $95,000 DOM: 83 SLP: 83.0%)
  • · Non-Foreclosure Median Sales Price: 43 Sales $99,000 (Lo: $6,000 / Hi: $162,500 DOM: 127 SLP: 91.0%)
  • · Pending Sales: 28 of which 24 (85.7%) are foreclosures
  • · Pending Foreclosure Median Sales Price: 24 Sales 12,900 (Lo: 6,900 / Hi: 58,000 DOM: 62)
  • · Pending Non- Foreclosure Median Sales Price:4 Sales 106,700 (Lo: 56,000 / Hi: 164,900 DOM: 177)

For Zip Code: 35235 Huffman

  • · Last 6 months of 2009: 156 Sales of which 81 (51.9%) were foreclosures
  • · Active Inventory as of 01/31/2010: 218 of which 26 (11.9%) were foreclosures
  • · Absorption Rate: 26 Months Inventory: 8
  • · Median sales price: $80,950 Lo: $18,000 Hi: $3200,000 DOM: 82 SPL: 93.0%
  • · Foreclosure Median Sales Price: 81 Sales $58,000 (Lo: $18,000 / Hi: $205,000 DOM: 75 SLP: 92.7%)
  • · Non-Foreclosure Median Sales Price: 75 Sales $115,000 (Lo: $34,000 / Hi: $320,000 DOM: 91 SLP: 93.4%)
  • · Pending Sales: 27 of which 21 (77.8.1%) are foreclosures
  • · Pending Foreclosure Median Sales Price: 21 Sales 61,900 (Lo: 24,900 / Hi: 123,000 DOM: 82)
  • · Pending Non- Foreclosure Median Sales Price: 6 Sales 120,400 (Lo:104,900 / Hi: 125,000 DOM: 94)

For Zip Code: 35215 Center Point

  • · Last 6 months of 2009: 296 Sales of which 195 (65.9%) were foreclosures
  • · Active Inventory as of 01/31/2010: 458 of which 105 (22.9%) were foreclosures
  • · Absorption Rate: 49 Months Inventory: 9
  • · Median sales price: $56,250 Lo: $6,550 Hi: $215,000 DOM: 80 SPL: 92.0%
  • · Foreclosure Median Sales Price: 195 Sales $38,500 (Lo: $6,550 / Hi: $155,000 DOM: 73 SLP: 91.5%)
  • · Non-Foreclosure Median Sales Price: 101 Sales $90,000 (Lo: $19,900 / Hi: $215,000 DOM: 92 SLP: 93.0%)
  • · Pending Sales: 70 of which 47 (67.1%) are foreclosures
  • · Pending Foreclosure Median Sales Price: 47 Sales 39,900 (Lo: 23,170 / Hi: 119,900 DOM: 83)
  • · Pending Non- Foreclosure Median Sales Price: 23 Sales 99,000 (Lo: 17,900 / Hi: 187,900 DOM: 136)

For Zip Code: 35126 Clay/Pinson

  • · Last 6 months of 2009: 194 Sales of which 70 (36.1%) were foreclosures
  • · Active Inventory of 01/31/2010: 280 of which 36 (12.9%) were foreclosures
  • · Absorption Rate: 32 Months Inventory: 9
  • · Median sales price: $124,675 Lo: $155,000 Hi: $500,000 DOM: 84 SPL: 93.7%
  • · Foreclosure Median Sales Price: 70 Sales $84,500 (Lo: $15,000 / Hi: $259,900 DOM: 100 SLP: 90.8%)
  • · Non-Foreclosure Median Sales Price: 124 Sales $133,006 (Lo: $24,900 / Hi: $500,000 DOM: 75 SLP: 95.4%)
  • · Pending Sales: 31 of which 12 (38.7%) are foreclosures
  • · Pending Foreclosure Median Sales Price: 12 Sales 77,500 (Lo:47,200 / Hi: 249,000 DOM: 103)
  • · Pending Non- Foreclosure Median Sales Price: 19 Sales 159,900 (Lo: 105,000 / Hi: 314,900 DOM: 262)

For Zip Code: 35146 Springville

  • · Last 6 months of 2009: 62 Sales of which 10 (16.1%) were foreclosures
  • · Active Inventory as of 01/31/2010: 97 of which 12 (12.4%) were foreclosures.
  • · Absorption Rate: 10 Months Inventory: 10
  • · Median sales price: $175,950 Lo: $500 Hi: $292,500 DOM: 105 SPL: 93.2%
  • · Foreclosure Median Sales Price: 10 Sales $71,825 (Lo: $500 / Hi: $274,900 DOM: 112 SLP: 83.4%)
  • · Non-Foreclosure Median Sales Price: 52 Sales $178,450 (Lo: $44,000 / Hi: $292,500 DOM: 103 SLP: 95.4%)
  • · Pending Sales: 11 of which 3 (27.3%) are foreclosures
  • · Pending Foreclosure Median Sales Price: 3 Sales 192,900 (Lo:76,000 / Hi: 199,900 DOM: 36)
  • · Pending Non- Foreclosure Median Sales Price: 8 Sales 172,450 (Lo:105,900 / Hi: 330,900 DOM: 131)

For Zip Code: 35173 Trussville/Argo

  • · Last 6 months of 2009: 182 Sales of which 38 (20.9%) were foreclosures
  • · Active Inventory as of 01/31/2010: 355 of which 26 (7.3%) were foreclosures
  • · Absorption Rate: 30 Months Inventory: 12
  • · Median sales price: $203,680 Lo: $9,000 Hi: $531,500 DOM: 156 SPL: 94.3%
  • · Foreclosure Median Sales Price: 38 Sales $167,700 (Lo: $9,000 / Hi: $355,000 DOM: 147 SLP: 91.6%)
  • · Non-Foreclosure Median Sales Price: 144 Sales $211,250 (Lo: $14,300 / Hi: $531,500 DOM: 158 SLP: 95.0%)
  • · Pending Sales: 40 of which 12 (30.0%) are foreclosures
  • · Pending Foreclosure Median Sales Price: 12 Sales 129,900 (Lo: 29,900 / Hi: 378,900 DOM: 50)
  • · Pending Non- Foreclosure Median Sales Price: 28 Sales 218,092 (Lo: 99,900 / Hi: 499,900 DOM: 119)

For Zip Code: 35120 Odenville/Branchville

  • · Last 6 months of 2009: 102 Sales of which 44 (43.1%) were foreclosures
  • · Active Inventory as of 01/31/2010: 184 of which 28 (15.2%) were foreclosures
  • · Absorption Rate: 17 Months Inventory: 13
  • · Median sales price: $147,000 Lo: $16,900 Hi: $314,900 DOM: 100 SPL: 95.9%
  • · Foreclosure Median Sales Price: 44 Sales $114,450 (Lo: $16,900 / Hi: $314,900 DOM: 56 SLP: 96.3%)
  • · Non-Foreclosure Median Sales Price: 58 Sales $159,450 (Lo: $69.000 / Hi: $293,900 DOM: 134 SLP: 95.8%)
  • · Pending Sales: 27 of which 4 (14.8.0%) are foreclosures
  • · Pending Foreclosure Median Sales Price: 4 Sales $49,200 (Lo:$ 29,900 / Hi: $129,000 DOM: 29)
  • · Pending Non- Foreclosure Median Sales Price: 23 Sales $149,900 (Lo: $109,900 / Hi: $321,500 DOM: 155)

For Zip Code: 35004/35094 Moody/Leeds

  • · Last 6 months of 2009: 215 Sales of which 47 (21.9%) were foreclosures
  • · Active Inventory as of 01/31/2010: 266 of which 16 (6.0%) were foreclosures
  • · Absorption Rate: 36 Months Inventory: 7
  • · Median sales price: $141,065 Lo: $22,000 Hi: $573,500 DOM: 66 SPL: 95.3%
  • · Foreclosure Median Sales Price: 47 Sales $78,226 (Lo: $22,000 / Hi: $289,900 DOM: 61 SLP: 93.0%)
  • · Non-Foreclosure Median Sales Price: 168 Sales $150,148 (Lo: $40.000 / Hi: $573,500 DOM: 67 SLP: 96.18%)
  • · Pending Sales: 40 of which 18 (45.0%) are foreclosures
  • · Pending Foreclosure Median Sales Price: 18 Sales $67.950 (Lo: $19,900 / Hi:$209,900 DOM: 66)
  • · Pending Non- Foreclosure Median Sales Price: 22 Sales $152,400 (Lo: $112,900 / Hi: $234,500 DOM: 164)

Conclusions: While Pending Sales indicate a definite increase in sales activity (higher than the absorption rate or average number of monthly sales for the past 6 months), we remain and will remain for some unforeseen period in a Buyer’s Market. Foreclosures combined with inventory levels continue to put downward pressure on pricing with foreclosures representing a larger portion of actual sales than they represent as a percentage of active listings of any of the examined markets by up to a ratio of 3:1.

Next week, I will look closer at how this information might impact real estate decisions with a focus of sellers who after all are those most negatively impacted by the market conditions present today.

NOTE: DPM (Days On Market; SPL (Sales Price to List); Median: the point at which half are above and half are below.

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So how’s the market… (part 1)

Posted on February 7, 2010 by admin

The Real Story…

News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth

For an archive of The Real Story visit: http://www.DavidParrishRealtor.com/myblog

So how’s the market…

It’s a question that I am asked everyday: So, how’s the market? Simple question … complex answer! My normal (and very true) response is: That depends on where you live. With that response, there usually follows a discussion of many different topics that impact the answer to the question providing information useful to the asker of the question and their specific market concerns. While I will probably continue that modus operandi, I have made some general observations lately that may be useful.

Being a kind of numbers freak, I spent some time last weekend putting together a current analysis of the market with an eye to foreclosures and sales during the past six months. Guess there’s no accounting for what some of us count as fun! As always, I will issue the warning that averages and other numerical analysis represents some type of normalization of the studied and therefore doesn’t necessarily represent the most accurate answer for a particular situation or property.

Looking at the metro Birmingham market there were: 6,892 home sales during the last 6 months of 2009, of which 1,981 (28.7%) were foreclosures. Foreclosures averaged an actual sales price of 88% of the last list price, while non-foreclosures averaged just below 98% of the last list price. Active Inventory as of 01/31/2010: 12246 of which 1393 (11.2%) were foreclosures.

The absorption rate (average number of homes sold per month for the previous six months) currently stands at 1149 homes per month yielding an inventory or supply of homes of just under 11 months worth… clearly a Buyer’s Market.

Period Homes Sold Foreclosures % of Sales Sales Price Average % OfFinal List Price
Sep 2009 1213 326 26.9 88.0%
Oct 2009 1182 368 31.1 87.6%
Nov 2009 1115 283 25.8 88.0%
Dec 2009 938 315 33.6 88.5%
Jan 2010 (Partial)* 585 227 33.8 88.1%

*Sales recorded as of 01/29/2009. Final sales not available at time of reporting

Note the difference between the percentage of homes on the market that are foreclosures and the percentage of homes that have sold that were foreclosures. That is while 11.2% of the homes for sale are foreclosures, the most recent numbers indicate that an increasing number of sales are foreclosures by a factor of 3 to 4 times the percentage of homes that are foreclosures indicating a very clear trend of bargain hunting buyers.

Note: Pending Sales on Jan 29th (that is homes which were under contract but which had not yet closed) stood at 1111 of which 489 are foreclosures or 44% of total sales (pending).

Most of these (foreclosure) sales were for non-owner occupied residences indicating investor purchases. This information fits with a national trend, which is the increase in investor activity in the market. Investor activity is up by 20% over 2008 activity, representing the largest market growth sector.

So what does this mean? Investors are seeing now as the time to get back into the market… a signal that we are at or near the bottom of the market.

Next week I will look at micro markets (neighborhoods)in the Eastern area of the metro Birmingham market.

 

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