Low-ball offers decline in some housing markets

Realty agents say low-ball offers on homes for sale, typically those that are 25% or more below list price, are disappearing in high-demand markets.

By Kenneth R. Harney

April 22, 2012

WASHINGTON — It's not something that economists routinely track, but it provides a rough sense of what's happening in local real estate markets. Call it the low-ball index.

A year ago, according to researchers at the National Assn. of Realtors, 1 out of 10 members surveyed in a monthly poll complained about low-ball offers on houses listed for sale. In the latest survey — conducted during March among a sample of 4,500 agents and brokers across the country and not yet released — there were hardly any. Instead, the focus of volunteered comments has shifted to declining inventory levels — fewer houses available to sell — and multiple offers on well-priced listings.

A low-ball offer typically involves a contract submitted to a seller where the price proposed by the purchaser is 25% or more below list. Low-ball offers increase sharply when there's a glut of properties available, asking prices are out of sync with local economic realities and values are depressed or uncertain. Buyers figure: Hey, why not? Maybe I'll get lucky.

Based on the latest survey results, that sort of strategy is not a winning move in many communities this spring. In fact, in local markets where inventories are tight and competition for homes rising, realty agents say that buyers looking to steal houses by low-balling their offers are ending up at the back of the line — their contracts either rejected out of hand or countered close to the original asking price.

In high-demand, high-cost markets that have rebounded from recession slumps, sellers are now firmly in control; they pay scant attention to low-ball offers. Jayne Esposito, an agent with Coldwell Banker Residential Brokerage in Los Gatos, Calif., said multiple offers are "the rule, not the exception," in her area, and many transactions end up with final contract prices higher than the listing.

"Sure, I've had a few buyers try to low-ball and they wouldn't listen," she said, "but that didn't work out well for them."

Similar trends are underway in more moderately priced markets. Wes Neal, an agent at Prudential Olympia in Olympia, Wash., said, "Low-ball offers are down a lot because we're seeing more homes come on the market that are more realistically priced" — sellers have absorbed the hard lessons of the recession years about what the market can bear.

Even when buyers submit shockingly low bids, sellers no longer are so insulted that they send the contract back without a counteroffer. Now they negotiate aggressively and the final number ends up close to the original asking price. For example, Neal said, a buyer recently came in with a bottom-fishing offer of $150,000 on a house listed for $250,000. 

 Although the seller was irritated, after a series of negotiations the low-ball buyer settled for a final price of $230,000.

OutsideWashington, D.C., in the Northern Virginia suburbs, well-priced houses in good locations move fast, sometimes pulling in multiple offers within 48 hours of listing, said Chris Ann Cleland, an agent with Long & Foster Realtors. Sellers who encounter the occasional outrageous low-ball offer reminiscent of the recession years tell listing agents "don't even bother" with them. After all, there's an excellent chance there will be a realistic offer shortly — maybe more than one.

In the suburbs south of Chicago, Judy Orr, an agent with Classic Realty Group in Orland Park, Ill., said low-ball frequency and efficacy depend on the specific neighborhood or town. "We still see them, and we try to work with them" in communities where prices are soft and the effects of tough economic times persist, she said.

Elsewhere, although low-ball offers are down, Orr urges sellers to stick with it and negotiate. Recently a low-baller came in $40,000 below the asking price. Through negotiations with the buyer, Orr managed to close the gap to just $2,000 below asking.

Marnie Matarese, an agent with J Wood Realty in Sarasota, Fla., said that while low-ball offers are far fewer this spring, some out-of-town buyers still appear to be under the impression that all Florida real estate remains depressed. They insist on submitting offers that make no sense in today's environment. But Matarese has no problem with this — "you can't blame a buyer for trying to get a good deal," she said, but the fact remains: They usually risk losing the house.

The take-away here: Rolling low-balls at sellers may have been an effective approach between 2008 and early 2011. But in 2012's environment — at least in rebounding markets — it could be counterproductive if you truly want to buy.

kenharney@earthlink.net

Distributed by Washington Post Writers Group.

 

 

Report: Sellers’ Asking Prices Rose in March

• April 17, 2012, 6:00 AM

• By Nick Timiraos

  Here’s a sign that sellers are feeling more optimistic about their prospects this spring: median asking prices in March jumped by 5.6% from a year ago, and were up 1% from February, according to a report released Tuesday.
  
  The jump in median asking prices comes amid a sharp drop in the number of homes listed for sale from one year ago. While listing inventories in March rose by 1.5% from February, they were still 21.5% below last year’s levels.
  
  

  

  Click for interactive with metro-level data.

   

  Inventories of homes listed for sale tend to go up in the spring, and the 1.8 million listings in March represented the second straight increase for the year. Over the past 27 years, the average increase in for-sale listings in March has been 1.8% from February, according to research firm Zelman & Associates.
  
  The Realtor.com figures include sale listings from more than 900 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.
  Compared with February, inventories declined in roughly less than half of the top 30 metros tracked by Realtor.com during March, with the biggest declines in Phoenix (-6.4%), Seattle (-4.8%) and Orlando, Fla. (-4.2%).
  
  Northeastern cities showed the largest inventory gains — a finding that shouldn’t surprise given that sellers are more likely to list their homes when the weather improves. Washington, D.C., saw a 9.5% gain, followed by Philadelphia (8.1%) and Boston (7.4%).
  
  But compared with one year ago, inventories are still down sharply in almost all of the 145 markets tracked by Realtor.com. Just two, Philadelphia and Hartford, Conn., have seen any annual inventory increases. Listings are down by more than half in Oakland and Bakersfield, Calif.
  
  Where are prices rising? Median asking prices were up from one year ago or unchanged in the vast majority of markets, with whopping increases of 23% in Phoenix, 22% in Miami, 17% in Washington, D.C.
  
  The biggest monthly price gains were reported in San Francisco (6.1%), Seattle (5%) and Washington, D.C. (4.1%).
  
  Where are prices falling? Chicago topped the list, with median asking prices down by 9.5% from last year’s levels. Orange County, Calif., saw a 5.4% decline and Los Angeles posted a 3% drop.
  
  Compared with February, asking prices turned up in all but one of the cities, with Minneapolis posting a 2.2% drop in median listing prices from February.
  
  Follow Nick @NickTimiraos
  
   

California Home Prices Going Up, Inventory Down, C.A.R. Reports

By: Esther Cho

After 16 months of year-over-year declines, median home prices in California posted a gain, according to the California Association of Realtors.).

The median price of a single-family home for March 2012 was $291,080, a 1.6 percent increase compared to a revised $286,550 for March 2011, and a 9.2 percent increase compared to February’s median price of $266,660. The month-over-month increase was the largest since March 2004.
When breaking up prices by specific regions, the San Francisco Bay area was an exception, seeing a year-over-year decrease of 1.6 percent, but a 9.1 percent month-over-month increase.
“In areas, such as Los Angeles and Riverside counties, where the Federal Housing Finance Agency (FHFA) wants to implement the REO bulk sale pilot program, inventory is running at levels well below the long-run average,” said C.A.R.

VP and chief economist Leslie Appleton-Young. “These low inventory levels demonstrate that the pilot program is not necessary in California.”
The pilot program involves the sale of government-owned REOs in bulk to institutional investors who will convert them into rental properties. According to C.A.R., in California, the program would call for the sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties.
Recently, 19 California congressmen sent a letter to Edward DeMarco, acting director of FHFA, asking him to make California an exception to the program.
C.A.R. reported that California’s housing inventory declined, with the Unsold Inventory Index for existing, single-family homes down to 4.1 months in March, compared to a revised 5.4 months in February and a 5.4 month supply in March 2011.
Los Angeles county had a 4.3 month supply, and Riverside county had an even lower number, with 3.8 months of inventory.
San Mateo and Santa Clara counties had notably low inventories as well, at 2.4 and 2.5 months, respectively.
Not only is California’s housing inventory down, but according to C.A.R., it takes less days to sell a home there, with the time it took to sell a single-family home dropping to 53.1 days in March 2012, compared to 58.9 days in February and 57 days for March 2011.

Home prices close to bottoming, to rise in 2013

By Lucia Mutikani | Reuters – Thu, Apr 12, 2012

WASHINGTON (Reuters) - The relentless decline in home prices is nearing an end and prices should rise for the first time in seven years in 2013, but a possible new wave of foreclosures could threaten the recovery, according a Reuters poll of economists.

The median forecast of 24 economists polled by Reuters was for the S&P/Case-Shiller 20-city home price index to end the year unchanged. That was the same finding back in January for this house price gauge, which covers 20 cities.

"We are expecting a gradual improvement, but if we get a big wave of new foreclosures coming to the market, price declines could be even greater," said Yelena Shulyatyeva, an economist at BNP Paribas in New York.

The survey forecast the S&P/Case-Shiller home price index rising 2.0 percent next year, up from 1.5 percent in the January survey.

The housing market's collapse pushed the economy into its longest and deepest recession since the 1930s. Historically, housing has led the economy out of recession, but it has been the weakest link in the recovery that started in mid-2009.

While residential construction accounts for a mere 2.3 percent of gross domestic product, home prices have an oversized reach in the economy, influencing a wide range of consumption decisions by households.

House prices have so far fallen about 32 percent from their peak at the end of 2005, and an estimated 11 million Americans now owe more on their homes than they are worth.

A resulting tide of foreclosures has held back the housing market's recovery.

The survey predicted about 1.5 million foreclosed properties will come on to the market this year. While there is no comparison for this figure, most analysts believe the foreclosure wave has either peaked or is close to topping out.

Given that foreclosures and the accompanying fear of further price declines are the main obstacles to any housing market recovery, few analysts say that further purchases of mortgage backed securities by the Federal Reserve will help.

Fed officials meet on April 24 and 25 to debate whether further steps are needed to drive borrowing costs lower to spur stronger economic growth.
Mortgage rates are already near record lows and house affordability is the best in history.

"The problem with the housing market is not necessarily that mortgages are expensive," said Millan Mulraine, a senior macro Strategist at TD Securities in New York.

"It's more the expectation that prices may continue to fall and cause a lot of potential buyers to sit on the sidelines to wait for more attractive entry points. I don't think there is lot more mileage to be achieved from MBS purchases."

Further MBS purchases by the U.S. central bank, however, could help keep mortgage rates low as the economy's recovery gains momentum.

The survey forecast the 30-year mortgage rate averaging 4.00 percent in 2012, down from 4.15 percent in the January poll.

Although job growth slowed in March, the labor market is expected to continue strengthening this year.

That should help to lift home sales. Sales of previously owned homes are expected to register an annualized 4.70 million unit annual pace in both the second and third quarters of this year before topping at 4.80 million units in the fourth quarter.

That compares to a rate of 4.60 million units and 4.70 million units in the second and third quarter respectively in the January survey.

"This gradual healing is encouraging, but we must tread carefully as the housing market is still far from a robust recovery," Michelle Meyer, an economist at Bank of America Merrill Lynch in New York.

(Reporting by Lucia Mutikani; polling by Snehasish Das and Aakanksha Bhat; Editing by John Stonestreet)

Fannie and Freddie Set Timeline Requirements for Short Sales

Beginning June 15, real estate agents working with distressed homeowners whose loans are backed by Fannie Mae and Freddie Mac should expect to receive a decision on a short sale offer within 30-60 days.

The GSEs issued new guidelines Tuesday that fall under the Servicing Alignment Initiative rolled out last fall and aim to bring greater transparency to the short sale process and expedite decisions related to these pre-foreclosure sales.
Not only is a short sale an effective foreclosure alternative when home retention is no longer an option, but it keeps homes occupied and helps to maintain stable communities, according to the Federal Housing Finance Agency (FHFA).
Addressing real estate practitioners’ No. 1 complaint about short sales, FHFA directed Fannie Mae and Freddie Mac to establish a new uniform set of minimum response times that servicers must follow in order to facilitate more efficient short sale transactions.
The GSEs’ new short sale timelines require servicers to make a decision within 30 days of receiving either an offer on a property under the companies’ traditional short sale programs or a completed Borrower Response Package (BRP) requesting short sale consideration, whether it’s through the federal government’s Home Affordable Foreclosure Alternative (HAFA) program or a GSE program.

If more than 30 days are needed, servicers must provide the borrower with weekly status updates and come to a decision no later than 60 days from the date the BRP or offer was received.

According to the GSEs, this 30-day add-on will provide some leeway for servicers who may need more time to obtain a broker price opinion (BPO) or a private mortgage insurer’s approval for a short sale. All decisions must be made within 60 days.

In the event a servicer makes a counteroffer, the borrower is expected to respond within five business days. The servicer must then respond within 10 business days of receiving the borrower’s response.

The GSEs plan to use the new short sale timelines to evaluate servicer compliance with the Servicing Alignment Initiative.

Edward DeMarco, acting director of the FHFA, says the GSEs new borrower communication and timeline requirements for short sales “set minimum standards and provide clear expectations regarding these important foreclosure alternatives.”

GSE servicers must comply with the new minimum communication time frames for all short sale evaluations conducted on or after June 15, 2012, although servicers are encouraged to begin implementing the new requirements sooner.

“I applaud Fannie and Freddie for finally coming out with real guidance with real world timelines for their servicers,” commented Anthony Lamacchia, broker/owner of McGeough Lamacchia Realty Inc., which specializes in short sales. “There is no question that this will help short sales and the market as a whole.”

Last year Freddie Mac completed 45,623 short sales, a 140 percent increase since 2009. Fannie Mae’s short sale completions shot up by 101 percent over the same period, totaling around 79,800 in 2011.

By: Carrie Bay

Foreclosure Sales Continue to Plummet

For the second month in a row we've seen a dramatic drop in the number of properties sold at foreclosure, or "trustee sale", auctions. Foreclosure sales in California are down 16.7 percent from February to March 2012 and down 53.1 percent from March a year ago. A total of 86,487 sales were scheduled to occur in California, but of those 80.0 percent postponed, and 10.6 percent were cancelled, leaving just 8,392 that were actually sold. Third parties, typically investors, purchased a record 38.6% of the properties that did sell in California.

Foreclosure starts rose in most states, with the largest increases occurring in Washington, California and Nevada. This, at least temporarily, reverses a downward trend, but even with the increase the volume of new foreclosures remains significantly down year-over-year in all the states we cover.

The increase in foreclosure starts is especially interesting in Nevada. Bank foreclosures came to an almost complete halt there after the passage of Assembly Bill 284, which made significant changes to Nevada's foreclosure laws. The increase this month is directly attributable to new foreclosure starts by Fannie Mae, which is one of very few lenders to have filed any new foreclosures in Nevada since September 2011. Even with the increase by Fannie Mae it is still homeowner associations that are initiating the vast majority of foreclosures in Nevada.

-posted  by ForeclosureRadar

2012, The Year of the Turnaround

"2012, The Year of the Turnaround" has a nice ring to it.  I used it first last month.  The market continues to signal that we are in transition.  It is wild out there right now.  Not only are local statistics evidencing strength, but we are hearing more and more national evidence showing this to be true.  March data locally is showing the beginning of follow through results signaling that this turnaround is for real.  Looking ahead I can confirm that we will be seeing increases in the median sales price in next two months.  This will be used by many, whether correct or not, to show increases in prices.  This will effect the psychology of the market.  Please read my summary below about how "Perception creates Reality".  It will be interesting to watch and hopefully see this happen.  A major problem now in our local market, especially for the entry-level buyer, is not only finding an attractive home to purchase, but then being able to find a clear path to purchase.  There is a lot of competition and not enough supply.  Do not expect to be the only interested buyer when an attractive listing comes along.  Interest rates have risen a bit, which is actually good for the market because buyers want to complete a purchase while still able to get a good rate and no one wants to miss the long-term golden rates that we are now experiencing.   

This months newsletter will focus on:
 
1. Analysis of Closed and Pending sales for February as well as for March 1-19. 
2.  14 months statistics detailing the makeup of the local Entry Level market. 
3. A now continuing detailed view into the makeup of sales in the Mid-Range market for the last year.
4. A detailed analysis of Pending Sales. 
5. Investment property analysis.
6. Continuing analysis of condo market. 
7. A discussion of "Perception creates Reality"
7. The regular short analysis of each segment of the market. 

NOTE:  All previous newsletters can be found archived on my website.  Please go to 
www.DonElconin.com    to view them.  You may find it interesting to see the trends in a longer view.

As I said last month, what a difference a year makes!  This is the strongest market we have had in five years.  We only had 414 active single family & PUD listings at the end of February.  We had 387 at end of December and 415 in January.  We are working with about 87% of the inventory we had at this time last year and 78% of the inventory we had at this time in 2010.  Meanwhile closed sales are up 39% in February over last year.  We had 83 sales in March 2011, but we already have 74 this month through 3/23, so I expect we will beat that figure this year and will do so with significantly less inventory.  Pending sales are averaging more than 100 every month for last five months through March.  Open Houses are really busy, Buyers are out in force and now are actually buying.  The mid-range is again seeming to strengthen.  We need more inventory!  Soon we will be discussing what it means that closed sales are back to the highest monthly levels reached last year with median prices now increasing.  For now, however, lets take a look at what has been happening in the recent past.

Closed Sales -  We had 68 closed sales of Single Family Homes and PUDs in February compared to 49 last year.  January and February closed sales tend to be lower than the rest of the year.  We already have 74 closed sales through 3/23 for March.  (I was a bit late getting to the numbers this month which is good, because we only had 54 sales close through 3/19.)  These March sales include 27 in the now critical $800K-1.6MM price range.  This is the first step reaching toward renewed strength in this part of the market which is necessary to signal a moving forward of the market turnaround.  One month a market does not make, but I am becoming very hopeful.

The February closed sales came in at a stronger than usual 95.61% of List Price and 89.84% of Original List Price.  Homes again sold more quickly last month, selling on average in 67 days compared to 80 days last month and 100 days previously.  The median sale price dropped again to $699K after being over $800K for the first time in awhile in January.  The mid & higher ranges are improving in March, however, with the median sale price all the way up to $850K for the 74 March sales so far.  Although the Average Sale Price fell in January all the way to $931,617 we can expect it to skyrocket at end of March, given that we already have three sales over $16MM this month! (881 San Ysidro, 2840 Hidden Valley Ln & 1940 Tollis).     
    
Market Share Analysis:  Here is a look into the number of sales and percentages broken into price ranges:     

Closed sales are starting to pick up as they should given the strength of pending sales the last months.  Continued strong pending numbers should translate to strong closed sales looking forward.  Much will depend, absent world events, on whether new product can make it to the market.  The most glaring change in the closed sales starting with March is the transfer of market share to the mid-range of the market.  As mentioned above, 36%(27) of the March sales are in the $800-1.6MM mid-market range.  We saw the beginning of this change with increased pending sales in this range last month.  There are 31 pendings sales in this mid-range already in March so, for now, we are getting continuation.  Keep your fingers crossed! 

    

Low End Sales Data (Under $800,000) -   Sales are steady in this price range.  We had 42 in February and have averaged 46.15 monthly for last 14 months.  More of the sales are now in the higher end of this range than before.  There are now only 82 homes available in this price range, down from 89 last month.  This is less than two month's inventory.  There are only 29 homes currently available under $600K.  We had 24 sales under $600K in February & 20 so far in March.  This is barely one month's inventory. Only 8 of the 29 homes are regular sales, the rest are short sale or REO.   That leaves 53 homes between $600-800K available with 24 sold in last 30 days.  The bank strategy of only letting a few of the homes held in inventory out each month might finally be working because the news soon might become that the concept of scarcity and increasing pricing overtakes the concern of overhanging shadow inventory.   The question is: "What will bring out increased inventory?" A few entry level sellers, with significant equity, are putting their property on the market in order to take advantage of pricing at the next level up.  But, other than these sellers, I believe that only increases in pricing will bring out significant inventory other than REO & short sale homes.   

The data shows that:

1.  Bank-owned (REO) and short sale properties accounted for 46% of total entry-level sales last month & 45% for last 14 months.   

2.  45% of properties listed in this price range sold within 30 days in 2011.  42% last month. 

3.  We had 291 properties in this price range that were either REO or short  sale properties in the last 14 months.  That is a lot of Santa Barbara people who lost their homes!!  

4. As a side note, seven of the 40 sales in last 60 days that were listed for less than 30 days sold for more than list price.  A high percentage of short sale and REO listings now come out very low and create bidding wars. Three of these in last month sold for at least $25,000 more than their list price. 

   

Mid Range Sales Data ($800K-1.6MM )-  Only 20 properties sold in this price range in February but we had 24 sales from 2/20-3/19 and 27 so far in March.  There were 11 closed sales in the four days from March 19-23!  We also have had 30 pending sales in this price range so far in March.  I am still seeing many published Notices of Trustee Sales in this price range but so far not many are ending up as foreclosures or short sales.  We will keep watching.  This market segment seems to be moving towards balance.  We now have 127 active listings in this price range, essentially equal to 133, 131 & 128 three months previously.  We actually need more good listings in this range also.  Side note: 501 Samarkand listed at $1,395K, had around 7 offers, and sold quickly for $1,600K! 

Pending Sales -  There were 102 Pending Sales in February, with 107, 102 & 102 the previous three months.  Strong numbers!  The median List Price for February Pending Sales was $777,000.  We already have 85 more Pending Sales in March through 3/23 and the median List Price for those is up to $816,750. The Average List Price was up to $1,451,304 in February.  The prices range of March Pending Sales is up from previously with only 48%(41) of the pendings being below $800K, 18%(13) of pendings being between $800K-$1MM and 27%(23) being between $1-2MM.  31 properties went pending between $800-1.6MM in March already.  Again, as I keep saying, we need 30 properties per month sales in this price range to get confirmation of the next step to recovery.  Hopefully these escrows will close and the numbers will continue strong

Total pending sales were 198 as of March 19 but back up to 211 as of 3/23.  Total pending sales have not been this high since we started building pending sales into last spring/summer. We continue to maintain pending inventory below $800K although active inventory continues to decline.  We had pending inventory of 54 in the $800-1.6MM mid-range and this increased to 60 as of 3/23.  This adds hope to continuation of strong sales in this price range.  Pending sales in the $1-2MM range stayed at 40 but increased to 47 as of 3/23.  We continue to put homes in escrow over $2MM but not enough of them.  Total failed escrows numbered 25 through the end of February for the year.   

PENDING SALES                <$800K     $800-1M     $1-2MM    >$2M    TOTAL

      Total pending  MAR. 19        117             26               40             16           198  

      Total pending  FEB. 19          124             24               44             14           206 

      Total pending  JAN. 19          110             22               30               9           171  

      Total pending  DEC. 19:        119             28               36               9           191
      Total pending  NOV. 19:        120             20               41             15           196
      Total pending  OCT. 19:         104            23               27              14           168
      Total pending  SEPT: 19        100             22               36              15           173    

 

SUMMARY (for single family homes) -  "Perception creates Reality".  The Santa Barbara real estate market continues to change, with more pending sales and closed sales in higher part of entry-level and mid-range of our market.  We are also seeing stronger luxury end sales.  All of this will translate to higher median sales values in the next two months.  Many analysts equate changes to median sales values to changes in pricing even though this may not be so because the increase or decrease can actually be only due to which price level of sales is most active at the time.   Whether actually true or , instead, misunderstood statistics, just the talk of increases in pricing as measured by median sales prices will produce changes in psychology which will create the same result whether or not actual prices are increasing.  And the result of this perception will be that prices might actually start to go up.   I continue to believe that it will probably take longer than past market turns to make a base, (it already has!) but I am starting to see how the turn could be stronger than most now think it will be.  Everyone continues to believe that Buyers have learned to be cautious because of the previously burst bubble, but we are already seeing a shift in Buyer attitudes given the many recent over-list price bidding wars in lieu of the previous unwillingness of Buyers to overreach.  Again, by the time the media has the news, the cat will be out of the bag. 

Investment Properties -   There are only 28 active listings currently.  We had 31 last month and 28 the month before.  Only 9 of these are priced under $1MM and, unlike previous months, none are short sales.  We have 10 new listings in last 30 days.  List prices are somewhat rich but it is the only way to get a Seller to list.  Very few short sale listings come to market now.  All the short sale investment listings get bid up over list price and are gone quickly.  There are now a total of 18 pending sales and 13 of them were priced under $1MM.  Only 5 of those 13 are straight sales.  11 of the pending properties went into escrow in last 30 days and 5 of them were short or REO.  Investors need to focus on what the cap rate and/or after tax cash flow is and compare this to other possible uses for the cash.  The big question is how important owning Santa Barbara investment property is.  There is also a huge difference in analysis between properties of four or less units and those with 5 or more units.  

Condo market -  The condo market is waking up with 43 pending sales in February and another 41 through March 23.  These strong pending numbers will translate into closed sales in next two months far above the 17 closed sales in February and 12 in January.  The February closed sales did sell at 97.09% of their current list price.  The median sale price was $369K for February but February pending sales had a median list price of $429K.  The median list price for March pendings as just below $400K.  There are currently 115 active listings down from 118 last month.    

How Is The Market Doing?

HOW IS THE MARKET DOING?  -  I am asked this question all the time.  We actually have many markets.  Here is a quick synopsis of the various markets as I see them.    

Entry Level Properties: (under $800,000) - There are currently only 82 active listings, below the 89 last month and 103 in December and way below the average of 123 for the last eight months.  We continue to average 40-45 sales per month, and we have 117 pending sales in this price range.  We have 2 month's inventory!  We need more listings!   

Mid Level Properties  ($800,000 to $1,600,000) -  We currently have 127 active listings and have averaged 130 over the last four months.   We were averaging over 170 during the summer.  We are again approaching 30 sales per month which is what we need to balance this market.  There is still enough product to create sales but we would benefit from additional new listings.    

High End Properties ($1,600,000 to $3,000,000) -  We currently have 108 active listings compared to 97.5 average over four previous months.  We had 4 sales in February, 8 sales in January and a monthly average of 7.25 for the last eight months.  We now have a total of 19 pending sales, down from 22 last month.  A "balanced market" of 6 months inventory would be somewhere between 15-20 monthly sales.  We are showing signs of life. 

Luxury Market  (over $3,000,000) -  We had 2 sales in February but already 6 so far this month with 3 over $16MM!  The eight month average is 4.21.  We have 11 current pendings up from 8 last month.  We currently have 136 active listings, compared to the seven-month average of 138.5.  This market has been slow.  We do get some sales that do not go through the MLS.   We need a significant increase in sales in order to turn this part of the market around.  We currently have 18 properties listed over $15MM, 30 over $10MM, 60 over $6MM and 84 over $5MM. 

POLITICAL RISKS -  As mentioned last month, lender underwriting is becoming a bit less rigorous.  This should help our market.  This is well known.  No one, however, is discussing the fact that, this being an election year, we should expect the best possible news regarding the economy.  It is true that Congress is dysfunctional and that election year effects could well be diminished by this, but we should still expect that the news on the economy will be more upbeat as we head to November.  As such, unless we get some world event similar to what happened to Jimmy Carter with Iran , we can expect that macro economic events will favor the positive for the economy, interest rates & therefore, at least to some degree, our local real estate market.  It will also probably favor the Democrats.  If Democrats can get control of Congress we should have a better chance of getting a resolution with Fannie & Freddie that is similar to the current Harp 2  that we have with FHA, assuming that we are not able to get that template in place before the election.  This will provide an answer for up to 10 million underwater homeowners.  As I have said for over a year, resolution of this shadow inventory problem will be necessary in order to get to a strong real estate recovery.  Speaking of a possible recovery, I am reading and hearing more and more media and talking heads discussion that speaks to an improving national real estate market.  As I said earlier, the effects and impact on the market of a change in Buyer psychology that creates a new view that the turnaround is at hand and that prices are moving up cannot be overestimated.      

-Written by Don Elconin