Tag Archives: median price

Under the Real Estate Dome

DomeIt was real estate stat time in the Sentinel this week.  Stats not tats.
Yes, there was also a big article about a Santa Cruz tattoo artist on Reality TV – but that’s another story.

I’m talking about the real estate sales data for the month of May that was published on Wednesday, June 26th – google it.  Average and median sales figures, unsold inventory index, year-over-year and month-to-month price comparisons etc.

Helpful in some ways.   Info that’s behind the curve in other ways.  But all in all, a great starting place for further discussion.

Since information presented in these monthly articles references transactions that closed a month earlier and were originally entered into by willing buyers and willing sellers at least another 30 – 60 days prior to that (in some cases longer)  we should all be cautious about making any hard and fast judgments or real time decisions based on loose interpretations of trailing indicators.

Like all news – old or new – aggregate data is fair game and great fodder for spin. It can be doctored up in all kinds of ways.  Used to provoke wildly different perspectives or prove all four sides of the exact same coin.

To create context and lend some interesting narrative to the calculus… the Sentinel reporter wove the numbers into a touching story about a young couple who have made 15 offers and received 15 rejections on 15 different properties.  The subheading read:  First time homebuyers feel rejected.

You think? To hear their story was excruciating.  Won’t someone please start a social media campaign? Issue a mayday distress call and general plea on their behalf? We should find them a house!

Isn’t there some nice seller out there, with lots of equity, willing to forgo squeezing every last dollar out of a sale?  Couldn’t they offer this deserving couple first dibs? No competitive offers? No overbids? No multiple-offer mania?

I was trying to imagine how many people I’ve worked with could have made it through 15 different offers without imploding.  Folding up the tent and going…going, well I guess not home. Not unless their future home was in Boise.

How much time and effort has this couple expended?  How many trips up and down the emotional rollercoaster can anyone take?  Usually after 2 or 3 rejected offers – the average person feels crushed and has to take an extended if not permanent vacation from the process.

I was wondering how their agent must feel.  Run through the ringer? Dispirited? Or heroically strengthened in their resolve?  Determined to see it through to the bitter end?  Perhaps there’s some crucial piece missing in their approach to the multiple offer puzzle? Or perhaps it’s just a cautionary tale for our times.

The story of a dedicated young couple trying not to lower their standards too much while suffering the slings and arrows and outrageous fortunes that an uncaring marketplace is commanding.  A market that is bigger than all of us.  That refuses to bend to any one individual’s will.

It amazes me that the couple could even find 15 properties suitable enough to make offers on. For most people looking at single family homes between $500k and $600k there’s not a lot out there that looks palatable or habitable let alone even close to a sliver of a termite ridden doug fir deck like that vision of their much-anticipated dream home.

The numbers from the story that stuck in my head?  Median Price of $625k.  A jump of more than 20% in a year.  Less lower-priced distress properties available. Fewer listings overall 633 – with 229 of those already pending.  Only 41 properties on the market in the entire County between $500 – $600k.  More than 150 active listings over a million bucks and way out of reach.

Here’s the thing … if you are trying to purchase anywhere in the $500 – $750k range  today – you might has well jump into the way-back machine because it’s 2005 all over again.   That’s the range almost all of you want to purchase in.

Looking at homes priced higher than$800k?  Now that’s a whole different story.

A fascinating glass-ceiling has settled over our local marketplace.  Like the mysterious one that just landed on the small town in that new TV show called Under the Dome.   Next week we’ll explore what the market looks like from the other side. Up there in the higher altitudes where the air is a lot thinner.

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Tiptoe Through the Tulipmania

Welcome to the cognitive blog of dissonance called Real Estate of Mind. That’s right, the royal we  (me, myself and I) sit back all week and soak it in like a sponge. Then “we” try to wring it back out to you in a way that trips the light fantastic on the razor’s edge of realty, deftly tiptoeing through the leftover mind fields of tulipmania still dotting the landscape.

Call it an odd form of drip marketing.  But please feel free to follow the bouncing neuron until you hear your own synapse crackle and pop.

Rumor has it that there was an actual buyer sighting in the Aptos Hills on Tuesday! Another in La Selva! And three spontaneous buyer “outings”  were reported on the west side of Santa Cruz the very next day!

They’re there. They can run around but they can’t hide forever. They are going to have to flush themselves up to the surface sometime. When and if enough of them decide they really do want a permanent roof over their heads.

We’ve got good news and bad news for you Sellers in our studio audience today.
First, the number of single family transactions closed in March was significantly higher than those that blossomed in March of last year –  164 real deals vs.128!

That puts us 40 transactions ahead of 2010’s 1st quarter results.  I guess we can say, with the certainty of big bold font that SALES VOLUME IS UP IN 2011!!!   There’s a headline we can hitch our wagons to!  Giddyap!

The bad news?  Sales have increased but the median price has slipped well below $500k – three months in a row.  We’d have to ask Sherman to fire up the Way-Back Machine and chauffeur us to 2001 to see the last time prices were mired in the $400’s. Of course, a decade ago we didn’t see it as “mired.” We were happily moving up.  Not ratcheting our way down.

And condos? Uh.  Not a pretty picture on the stat charts.  One more unit actually closed this March than March of last year.  A score of 29 to 28 if you are keeping track for your rotisserie real estate league.  But the same marketplace managed to suck the oxygen out of the prices on those condo sales.  Without cabin pressure, the median fell to earth and hit $250k. You definitely have to recede to the turn of the millenium to find that price point.

A reminder to those who always ask the question: “Are condos a good investment?”  One answer is: “Yes and no.” The real answer, like anything else market-oriented is: ” Depends on when you buy ’em in relation to when you sell ’em.”  Timing. timing, timing (not location, location, location) is God when it comes to real estate.  You might want to friend the 4th dimension on Facebook if you haven’t already.

Condo sales & prices generally trail the single family market up. When the cost of regular old houses graduates beyond the level most people can afford, more buyers begin to look at the next best choice –  condos/townhomes/puds.  Suddenly demand skyrockets and overwhelms the supply. Condo Sellers are in luck.

Conversely, condos lead the way down, when the price of single family homes  drops.  When, people can afford it, most would rather own their own piece of the rock  instead of sharing it with strangers.

Condos appreciated much faster than single family homes did in 2005-2006. A great investment for those who got in and out at the right time.  But as March’s median tells us, some who thought they knew when to hold are now learning what it’s like to fold.

Just a few more realty bytes to digest as brain food for thought: The median for single family homes peaked in 2005/2006 at $790K.  Condos peaked at $572K in 2006. Last month 40 to 50% of the closed sales were distress sales. With more on the way. An increasing number of purchases were all-cash. Less lenders. Less tortuous qualifying. Even with exceptional interest rates.

Expert economists are now revising the revision of their formerly revised opinions.  They say the real estate market will continue to weaken till the end of the year, before we see a modest recovery.  Now if they can just define ‘modest recovery’ in terms everyone can understand, the prognosis will mean something.

In the meantime, let’s go back to the good news and bad news of the moment. Sellers, think of yourselves as one collective body. One group mind. One global consciousness.  What would make it a better market for you?  More sales? Or higher prices? You only get to choose one.  Which one are you willing to take?  Name your poison.

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Reading the Headlines

Are we there yet?  Settled in?  Hunkered down?  Resigned and signed on for the “new normal ” of real estate?  The same old that continues to look more and more like the same old as more time goes by?

Our regular ration of news about the state of the market is due out any day now.  A smattering of real estate-related stories will start popping up in the public domain presently.  It’s the little flurry of activity that always accompanies the release of the previous month’s sales data.

Don’t blink, because the half-life of these stories only quickens the pulse and fogs the mirror for a day or two.  And don’t hold your breath either, thinking that the UPI guy is going to be delivering any big gift-wrapped packages to your front door.  As we wander further ahead into the Ho Ho-Ho season we are going to find ourselves sinking further into the Ho-Hum season as far as real estate is concerned.

Status quo seems to be the current quid pro quo. Stories sounding more like non-stories will be rearing their nondescript headlines in the daily press.   Dressed in bold font. Spun this way or that to foster an air of enlightened importance.   But in the end, there won’t be a whole lot of new news fit to print.  Certainly not much news to use in any meaningful way for anyone trying to determine their own individual path forward through life.

Maybe there’s some brilliant phrenologist out there with the ability to get a good “reading” from those upcoming headlines when they appear.  Tickle some kind of intuitive sense or future perfect tense out of them.  As for the rest of us?  I’m guessing most Agents and Buyers and Sellers are going to remain hovering in the dark for quite awhile longer.

Yep, the jury is still out even as the results are trickling in.  Just as inconclusive as they’ve been. And had been before that. The median price is still lodged in soft tissues of the marketplace – between $500k and $550k.  The number of sales has ratcheted down a little but not by a significant amount considering the small local sample  – 140 to 119 year over year.  The average price is still residing in the familiar confines of the same ballpark  -$572k – one that simply isn’t allowing many home runs.  The ubiquitous Unsold Inventory Index is holding steady in the 6-8 month range, the suggestion being that prices, for the moment, remain “stable”  –  if not completely and utterly uninspiring  to principals on both ends of the average real estate transaction.

Is the lack of news the real news?

Here we are. Sitting on the edge of our musical chairs. Primed with anticipation after a whole year of kicking the can down the road. Wondering whether the other shoe is going to drop from the high wire balancing act of the economy.  Or alternately wondering what miraculous confluence of factors is going to step up to give us a swift kick in the pants. Boot and reboot us forward.

With Thanksgiving and Christmas on tap, we’ve got the perfect excuse to explain why people and properties aren’t moving faster.  Faster better. Or faster worse.   For another month or so, we can simply say that we aren’t really holding our breaths., we are all just taking a breather.  Buyers are on temporary hiatus.  Sellers are on sabbatical.  Agents are on vacation.   The market has given itself a voluntary furlough.

There’s no way around it so we might as well use this time wisely.  Take a few extra weeks to drop back twenty yards and survey the horizon ahead. Ponder the landscape before we decide whether we have to punt or not in the new year.

We’ve thrown a lot of life preservers to real estate this past year just  to keep it floating in the same place.  Incredible interest rates. Tax credits. Buyer incentives of all shapes and sizes.

What’s going to determine whether we sink, swim or continue to tread water this year?  That’s easy.  The big three:  1) Jobs.  2)  The continuing machinations of the credit crunch. And…3) The disposition of the ominous shadow inventory that has grown to archetypal proportions in the realm of the collective unconscious.

 

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Bigger and Better and More April Fools

* (Read to the end and receive your free gift for playing the game)

It’s no secret. We’re living it. Real estate can fool ya’ in a New York minute. Some of the time. Most of the time. All of the time. Just when you think there’s a fastball coming right down the middle of the plate, the invisible hand of the marketplace alters it’s grip on the seams and throws you one of those really nasty curveballs instead. Even when your eyes are focused clearly on the pitch, you can still miss by a mile on occasion.
It’s April Fools week folks. Real estate is buzzing with a crazy kind of trickster energy that has us doubting established truths, looking over our shoulders, questioning everything getting tossed in our direction. Since baseball’s opening day is also coming up, you are all invited to step into the batter’s box while I step up on the pitcher’s mound. I’m going to check the dream catcher’s signs, take my wind up and deliver a few patented knuckleballs your way – in true trickster fashion.
Decide whether each of the following pitches is true or false and then log onto my blog (real-estate-of-mind.com) to see what your batting average is. Everyone will be rewarded with a take home souvenir just for playing the game.
•    To encourage consumer confidence, the Obama Administration considered calling this spring’s time change – Daylight Spending Time. False

•    A Homeowner has officially been redefined to mean someone with more than 51% equity in their home. False

•    A Million Mortgage March is being planned for mid May. Throngs of angry mortgagees are expected to descend on Washington to present the White House and both Houses of Congress with ceremonial Notices of Default. False

•    More than 35% of the homes in both inland and coastal California are now considered underwater. True

•    Recordings of Rush Limbaugh have been used to kill termites in heavily infested progressive regions of the Country. True and False

•    A disgruntled winner of a $2 million dollar Dream House Raffle sued a Bay Area non-profit recently after an independent appraisal proved the home was only worth $1.2 million. False

•    Enterprising Agents are buying midget-sized statues of the patron saint of homes, St. Joseph, and burying them upside down outside of their short sale listings in the belief that it will make those oh so tedious bank processes move a lot faster. True and False

•    The median income in Santa Cruz County only allows a buyer to purchase a home for $350,000 assuming they could actually scrounge up a 20% down payment and that they could actually  survive the rigors of a full doc loan qualifying process. True

•    Using credit scores to determine a borrower’s loan qualifications has been declared unconstitutional and a discriminatory lending practice aimed at redlining people who don’t pay their bills. False

•    The EPA has declared the Orlando and Las Vegas real estate markets Superfund Hazard Sites in a bold new move to jumpstart remediation efforts to clean up toxic assets all across America. False

•    Disney’s California Adventure Park plans to open a new attraction featuring an underwater McMansion Ride. Thrill seekers will attempt to get out of homes turned upside down by an unexpected rogue tsunami. It is loosely based on the hit 70’s disaster movie – The Poseidon Adventure.  False

•    Locally, more notices of default have been issued in the first three months of 2010 than there have been sales. True

•    Nobel Prize winning Economists have declared it impossible for multiple offers with buyers competing against other buyers to exist in a buyers’ market. True and False

•    The housing market is being called “the Vietnam War of the American economy” and a new syndrome called PTDSD (Post Traumatic Distress Sale Disorder) has been identified in a high percentage of former foreclosure and short sale participants. True and False

•    Unemployed actors in Southern California are being hired to occupy vacant homes and coached to go through the motions of being “real” Sellers to help “psychologically stage” and market Bank-Owned listings. True

•    A host of new online real estate courses are being offered for enterprising Agents anxious to earn flashy new professional designations. In addition to CDPE ( Certified Distressed Property Expert), new webinars are focusing on GGC (Greed and Grief Counselor) and CYA (Liability Aversion Specialist) accreditation. True and False
Your Reward for Taking the April Fools Test: A free ride on the real estate market roller coaster…have fun and hang on! CLICK HERE

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