Several Realtors have asked me to reintroduce my old monthly newsletter. I am reluctant to do it as an email because agents and appraisers are getting blasted with email flyers, and all kinds of real estate related stuff that is filling email boxes and cluttering smart phones. Here is a shortened Blog version.
Sales in June of 2013 were a lot better than June 2012 - up about 30%
Forecloses in June 2012 were 77 and in June 2013 were 118 - up about 53%
New construction sales in June 2012 were 178 and June 2013 were 177 - about the same.
The average sold price in June 2012 was $168,856
The average sold price in June 2013 was $173,479
This data is from the local CMLS.
There is a new advisory from the Appraisal Foundation (Advisory #3) titled Residential Appraising in a Declining Market. Here are some bullet points:
They do provide a list of indicators:
Based on unit sales, the Columbia Metropolitan Market seems to be doing much better this year compared to last year. The pricing pressure is still downward on existing home sales, however, because there is still in excess of 15 months of inventory on the market. That number needs to get down to 5 or 6 months before we can say the market has stabilized. Existing home sales are roughly 60% of the market, new construction is about 25% and foreclosure sales represent about 15%.
Here is what I think is happening. At first I thought the supply & demand economic law was being broken but it isn’t. This economic downturn is different in that I don’t believe everyone is affected equally. The people that are directly affected are the folks that lost their jobs and the folks that are under-employed due to the economy. Most experts are saying this segment of the population comprises about 15% to 20% of the total -- these are the folks that are loosing their houses. There is another small segment at the entry-level that can’t get credit due to tightening underwriting requirements. The rest of the population is ‘relatively’ unaffected. Sure, they feel the affects of higher gas prices and higher grocery prices but by and large they reap the benefits of discounts and deals on high-ticket items such as houses -- their salaries are the same or slightly higher.
Here is the deal! There is a large pool of houses for sale (more than normal due to the economy) and there is a much smaller pool of buyers (also due to the economy). The buyers that remain in the market have just as much money to spend now as they would have if there wasn’t a downturn. In other words, if they had a $250,000 budget a couple of years ago they still have a $250,000 budget today. The buyers out there continue to buy as much house as they can for their money. What they are finding is they can buy a newer house or they can buy a bigger house or they can buy in a much better neighborhood for the same $250,000.
This is why “The Average Price Paid” looks about the same even though the price of individual houses has declined significantly in our area. This is what I mean when I say that using ‘Average Selling Price’ as an indicator can be very misleading.