Real Estate Information

Phenomenon: I’m not sure how it happens, but what happens is this:  inventory that was priced and appeared on pricing trends prior to the holidays (last quarter 2006) is generally priced at levels different than similar inventory after the new year break, sometimes lower and sometimes higher.  I have been following and interpreting these differences and what happens is a clear indication of the pricing trends strength.

Add what we have seen so far since January 10^th of this year to our interpretation of this pricing data and let’s see if the prediction holds up: that the bull Pricing trends that fell quiet in 2006 will return in 2007.  Why do we say that?

Well, first the price levels of the post holiday inventory are higher than those pre-holiday, many Sellers who weren’t happy with the low ball buyer mentality last summer and fall are back in the pricing trends now (or coming back) and they still aren’t ready to lower prices.  In fact, many are holding their prices and getting them.  Some are going back and making improvements, polishing up their places and hitting the pricing trends in max-salable condition to meet the market.

Next we have generally low inventory levels, translating to more leverage for sellers.   For example today we have only 118 SFR’s for sale in Andover, 116 in North Andover, 72 in Boxford, 38 in Topsfield, 74 in Haverhill and a bit higher inventory level in Methuen with 158 single families.  These low levels,  roughly 50% below last year and 30% below norms, are chastising to the buyers whose mantra last fall was, “I want to wait; prices are coming down”.  Well, here’s the truth: prices hit bottom in late November and began up in January. 

Second, interest rates have come down. Today they are hovering at 5.75-6% for a thirty year conforming jumbo loan.  Whew – that’s a record low. A 10% drop in rates has psyched up the buyers and they are back – last Sunday, I visited an open house in North Andover and over a dozen potential buyers, in the pricing trends to buy, showed up!  These interest rates coupled with low inventory are driving today’s pricing trends. 

Third, the investor / speculators are hungry. With the fast and easy days behind us, the business types are looking harder and farther afield and they are doing it with less inventory too. They are looking towards bank owned, foreclosure properties and they are looking towards new build opportunities with low risk pre-sold homes built more slowly and carefully for less profit. Business worthies need something to do, and with less inventory for sale they are prepared to spend to stay in business.

Last, we are seeing two phenomena side by side:  Correctly positioned inventory in desirable move in condition is still moving quickly on multiple offers – a recent sale in Andover went for $50K or 10% over asking with 5 offers!  Contrast that with the same home I saw last week with the 12 visitors at the open house. It’s still on pricing trends because the home, as nice as it was, it is plain and somewhat dated.  So the buyers are ready to go and will pay the price for perceived value, especially when pressed by pricing trends conditions.  But anything less than desirable or a perceived bargain is going to sit.

Given the slippery slope the stock pricing trends is currently in, add to the recipe the traditional flight of capital to real estate when stocks are short, and you have all the ingredients for another round of fast track price rises: I expect this Spring to be a good ride through June if the Indicators we’ve seen so far hold true.

THE BIG WHY?????  Recently I attended KW University advanced training in Austin, TX.  It was there that I learned what Gary Keller, our corporate guru, euphemistically labels The Big WHY?  (Try that with a strong Texas accent-WAAAAAAAAAAA)! It’s a question we each have to answer for ourselves; why do we do what we do?  If the WHY is big enough, powerful enough, hopeful enough, then it empowers us to move ahead in search of financial security and emotional maturity.  If it’s not, we falter. That’s why you meet people who consistently say TGIF when in fact it’s not about their job, it’s their big WHY? 

I am writing you with pricing trends news and an update like I do every quarter as part of my big WHY.  Fortune has smiled on us, and four years back we reached one of our major BIG WHY goals.  So we no longer need every deal that comes our way, and we can afford to give back without fear of criticism or compensation.  We are motivated to help and make a difference in some way. Real estate has become too entrenched, too expensive, too big, too runaway-unpredictable for you not to have a family counselor for real estate as you would an attorney, a doctor or even an accountant.  And since our expertise is in all of those areas as they apply to real estate, why would you not want a relationship with someone whose interests last beyond the transaction?  Indeed, we only get paid when you let us get paid; the rest of the time our advice is yours for the asking.

I'd love to hear your comments on this or any other article on our blog. Thanks for your support!

I

pricing trends Snapshot as of February 8, 2007

           You may have heard it said we’re in a ‘Normalizing’ pricing trends. What does that mean? A study of the performance statistics for Inventory of Homes for Sale as they relate to Homes Sold over the past 20 months shows several things clearly.

           Real Estate Markets are ever changing. Changes from Buyer’s to Seller’s markets are measured 2 ways: 1: ratio of homes for sale to sold 2: # of months supply available for sale. Changes or shifts typically happen over time so it’s important we look at small trends up or down and 2-3 month averages are helpful, particularly due to the nature of our industry. Remember, homes sales contracts take place in one month and don’t officially become home sales for several months later. Normalizing markets indicate we are performing in the wider middle between the Buyer and Seller Markets.

3^rd quarter ’06 sales performance up over ’05:

I’ll begin with most recent performance. November ’06 was very strong with 27 homes sold and December and January ’07 followed with 19 and 18 respectively. These numbers are higher than many of the lowest performers over the past 20 months. In my tracking over 22 years in this pricing trends area, May/June and November/December have always had the highest number of closed sales for the year. For that reason, our November ’06 sales performance shows we’re in a Normalizing market. With 64 units in Nov/Dec/Jan 06, we out perform the 56 units for the same period for 2005.

50% Fewer homes for sale:

We see a 50% reduction in Homes for sale over six (6) months from June ’06 –Dec ’06. This was the result of 3 things:

1. Sellers and agents did reality checks and low motivation sellers came off the pricing trends.

2. Other Sellers held through the normalizing pricing trends adjustments and the reduction in inventory from November to December 2006 can be largely attributed to sales and not ‘off market’ listings.

3. Last Quarter showed good sales performance with motivated buyers and sellers making deals happen with the advice and assistance of realistic real estate agents.

With 118 homes for sale, we are at a more typical inventory level of a Normalizing pricing trends. The goal is a more ‘normal’ relationship between the Homes for Sale and Homes Sold numbers. The graph shows that there is normally a fairly wide gap between the two but when one number out paces quickly and repeatedly, we move to a buyer’s or seller’s market. If the goal is for 25% of the homes to sell, we need a 4:1 ratio. So there is still room for improvement on the homes sales side, providing inventory remains fairly steady and doesn’t trend up over time.

15% of homes for sale are becoming homes sold:

Gap between For Sale and Sold tracking: Only about 20-25% of the homes for sale actually sell in a ‘normal’ pricing trends, although you may perceive that to be a low number. In a seller’s market, that number nears 50%, while in a buyers market, it’s closer to 10%.

 

    With the lowest mortgage rates in more than a year, as well as stabilizing prices and strong inventory levels, the Massachusetts housing pricing trends continued to favor buyers in December, according to the Massachusetts Association of Realtors®.

     “Coming off record prices, brisk sales and seller’s markets of the past decade, it’s good to see the pricing trends coming back to some balance,” said MAR President Doug Azarian of Falmouth.  “At this point, the balance definitely tips toward the buyer, although the monthly inventory of available homes is beginning to diminish a bit.  Sellers who heed their Realtor’s® advice about right-pricing are doing well.”

    December’s monthly median selling price of detached single-family homes declined 5.4 percent, from $354,000 in December 2005 to $335,000.   They declined 1.5 percent from the November median selling price of $340,000.  Single-family sales also continued a downward trend in December 2006, decreasing 16.6 percent from the same period a year ago, from 3,574 homes in December 2005 to 2,980 homes sold this past month.

    Inventory figures for December 2006 show a slight 2.9 percent increase over December 2005, with 30,651 homes on the current pricing trends compared to 29,771 homes last year.   This translates into 10.3 months of supply in December 2006, compared to 8.3 months last December. However, the 10.3 months of supply continues the descent to a more stable pricing trends from the record high of 15 months of supply seen in February of 2006. Mortgage rates remain favorable for the Massachusetts market, currently at 6.22 percent, dipping to the lowest rate seen in 2006 and the lowest since September of 2005 when rates were 5.98 percent.  Detached single-family homes stayed on the pricing trends an average of 138 days compared to 104 days in December 2005.

    December condominium figures reflect a more normal pricing trends as condo sales fell 8.2 percent, but remained near record levels for the month at 1,493 sales compared to 1,627 sales a year ago.  Sales increased 6.6 percent over November’s 1,401 figure.  Condominium selling prices increased in December for the second consecutive month by 1.9 percent from $264,950 in December of 2005 to $270,000 last month. Prices remained level from the November selling price of $270,000.

     The number of condos for sale is up 13.7 percent from 14,581 units last December to 16,581 in December 2006. This represents 11.1 months of supply, up from 9 months in December 2005. Inventory levels decreased 7.1 percent from November’s figures of unsold units, reported at 17,851 or 12.7 months of supply. Similar to the detached home pricing trends, condo units stayed on the market longer in December, with average condo listing time rising from 98 days in December 2005 to 134 days in December 2006.

           

    The latest National Association of Realtors Survey of Buyers and Sellers has been released and there are no big surprises. Once again buyers are using the internet as one of their most utilized resources for finding a home, increasing to 80 percent.
    It is one thing to know what information sources buyers use, it is another to find out what they perceived to be useful. Of those who used the internet, 73 percent reported that they found that to be very useful. Sixty-nine percent of those who consulted with a real estate agent indicated that doing so provided a very useful source of information. 31 percent found that yards signs were very useful sources of information, and 20 percent said that of newspaper ads.
    As in past years, the top three sources from which buyers learned of the home they ultimately purchased were real estate agents, the internet, and, of all things, yard signs. At 36 percent, 24 percent, and 15 percent respectively, these three sources accounted for 75 percent of homes found, and were the only sources in double-digit percentages.
    For sellers who believe in playing the odds, there are some rather clear lessons from all this. Want to sell your house?
    1.Get an agent and have it put into the Multiple Listing Service so that other agents will be exposed to it.
    2. Be sure your agent puts it on the internet on numerous sites
    3. Put up a yard sign with a catchy rider!

Bring on Two Thousand Seven!

I am very grateful for the many opportunities we have had to help buyers and sellers make deals in the tighter buyer’s pricing trends of 2006. Successful pricing strategy for the market was a mindset adjustment for everyone: sellers, buyers and us. Despite corrections in the pricing trends and tweaking our marketing and services, we had some of the most rewarding transactions of my 21 year career in real estate sales. Thank you to all of you. May all your house dreams always come true!

What’s new in the news? Many times we have been called upon to report to the local media regarding pricing trends and housing trends, new real estate tools and services, pricing predictions and home improvements and investment returns as a real estate resource for the Eagle Tribune and Boston Globe news. The market rally in the Andover area and persistent price escalation over the past seven (7) years challenged affordability and the buyer’s ability and desire to buy in recent months. Prices were down below recent 2004 and 2005 sales prices between 10 and 20% with adjustments varying by price range, desirability and location.

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Check out the Jan 7th , 2007 Home section of the Eagle Tribune for the latest on ‘finished basements and how they might affect your home’s value.’

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5. 6. 7.  

I continued to work with the 30 members of the North Andover Rotary Club and currently serve on its Board of Directors. One of my most very memorable activities was a full day’s work this fall with 8 fellow Rotarians installing the vinyl soffit and rigid foam insulation sheathing to prepare a Habitat for Humanity home in Lawrence for winter weather. I’m grateful for all that our Rotary Club and members and many friends across the world continually do to make a difference for others.

My husband, Jeff, supported me and my unusual work hours whether leaving the house early or arriving home late to accommodate "before-work" and "after-work" client meetings. After 24 years together, he’s got the requirement for ‘hot food on the table immediately when I come in the door’ nearly down. It’s quite a challenge, I admit. Some of my most enjoyable hours were spent watching Greg at soccer skills practices, fast-paced Futsol games and out door soccer games several times a week throughout the year. Greg is really committed to being active and outdoors whenever possible but soccer is the only game he plays competitively. I’m glad. He’s promised he’s committed to slow down and learn the true meaning and value of ‘proof your work’ and make sure it’s your best. He’s a fast paced, fast thinker and takes after his mom.

Regrettably, my completed reading list is very short not for lack of many interesting options and recommendations. I’ve just not made the time this year. But, if you have anything ou’d really like to add to my list, please don’t hesitate to drop me a note. I’ll have to find the time in ’07. I promise myself. Bring them on! My goal is 10 books in 2007.

Mornings on Horseback by David McCullough

Water for Elephants by Sara Gruen

The World is Flat by Thomas L. Friedman

Washington’s Crossing by David Hackett Fischer

Curse of the Narrows by Laura M. MacDonald

Leadership Promises for Everyday by John C. Maxwell

The Intellectual Devotional by David Kidder and Noah Oppenheim

I'm looking for more suggestions so feel free to add your comments and recommendations.

I’ve just finished my goals for 2007 for Susan Sells. We’ve set our goal at 48 sales and I’m confident we’ll make it. We’ll be talking to a lot of people this year. I hope that if you need help with real estate or know someone who does, we’ll be talking. It is with heartfelt gratitude that I seek your referrals and recommendations and with unwavering commitment to make you proud of the job we do. The engine of our business runs with consistent performance at the highest level and its fuel is creativity, expertise and experience and a team with great attitude.

We received many referrals this year from friends and past clients of Susan Sells and fellow Keller Williams agents across the United States and I want to personally thank each of you from the bottom of my heart. Every year, we celebrate you and our appreciation with special events. Please watch for your invitation in the coming months.

My Mom and Dad are both healthy and energized with good, positive spirit for life and their world. At least once every week we connect by phone and deliver the latest news to and from. Each Friday evening as another week comes to a close, I’m amazed at how much someone very special offers another person; being there, a few positive words, caring and supportive concern, continual teaching, enthusiasm, yearning and discovering, passion for something old or even something new, simple love. Family.

All for today.

Susan