After what seemed like an agonizingly long time, IndyMac/OneWest Bank assigned me an REO listing a couple of weeks ago. The property is presently undergoing a personal property eviction, so we won’t get started on the BPO for a little while yet. Even though I’ve sold lots of houses in the area, the market is ever-changing and it’s important to keep up on the latest fluctuations. The bank’s automated system wanted me to go out and do a weekly occupancy check and report back – silly, maybe, on a house known to be vacant but I have a policy of checking every property weekly regardless. I thought I would make best use of the trip by also going and checking out the competition, and seeing some of the recently sold comps.
I should mention, this is a rural area – pretty much farm country, or horse country maybe. Given that its a rural setting, it’s always a challenge to find any two properties that are actually “comparable” – since there is such a wide variance in age, style and quality of construction, lot size and utility, access, distance to urban amenities, and of course good old-fashioned economic obsolescence courtesy of amenities like high tension power lines and noise pollution from nearby highways and bi-ways. But if you look at enough “comparables” you can get a pretty good idea of a subject property’s value by using back-of-the-hand matched-pair analysis and my personal favorite, the principal of substitution.
I checked out over a dozen properties yesterday, and I also e-mailed a few agents to ask about what kind of activity they had had on their listings – offers, threats of offers, inquiries, etc. One of the agents wrote back and told me something pretty interesting – he’d been on the market a couple of weeks, and they had four offers. The seller had rejected three of these offers and was negotiating the fourth. All four offers had come in under asking price.
It’s kind of unusual to have a multiple offer situation and have all offers come in under asking price, to say the least. It’s especially interesting when, of all the dozen or so houses I had gone to see, this particular house was the one I thought was by far the nicest/best deal – but everyone is coming in low? Granted, it was also the most expensive on the list – but was the newest, had the least deferred maintenance, highest functional utility, etc. – and it was not all that much more expensive than the competition.
And the agent for this property added a bit of commentary which was totally unsolicited: “Definitely like a big slowdown.”
Well that’s a nice juicy anecdote! It does jibe with my own experience, which is that I have listings that are languishing, attracting no offers (even though fairly priced against the comps) – or attracting low-ball offers. So what’s going on here, has the market fallen off a cliff since the expiration of the federal home-buyer tax credits?
Nationally, I do believe that is the case. NAR (the National Association of Realtors, natch) reported in July that nationwide, home resales were down 27%. I don’t believe they have posted their August numbers yet. But how are we doing locally? I have some freshly crunched numbers for you, served up hot and fresh:
Santa Clara County
Santa Cruz County
Monterey County
As you can see, in each of the counties that we service, the median home price is up year-over-year (especially so in Santa Clara and Monterey counties) – and the amount of “active” inventory (not under contract/pending sale) is down considerably in each county. But, crucially – so is the number of sales. We can clearly see that year-over-year, the sales volume in all three counties has dropped considerably. One can take heart by looking at month-over-month sales numbers and see that at least in Santa Cruz and Monterey counties there were more closings in August than in July, but I have long felt that month-by-month numbers are much less useful than year-over-year.
It’s clear that the median price is rising in all counties that we service – but I would caution that this number does not mean much, as it continues to be the mix of homes that are selling which is driving the price “rise” – neighborhood-by-neighborhood, I don’t see much in the way of upward price pressure – quite the opposite, in fact. While our “Days on Market” is generally pretty healthy across all three counties, I see the declining sales volume as strong evidence which, when coupled with anecdotes from myself and other agents, indicate that we may be setting ourselves up for a grim autumn and winter selling season.
What do you think? Comments are welcome!
