There’s a painful truth about a market where prices are falling. It looks like this:
Every guy who buys pays less than the last guy who bought. That’s pretty much the classic definition of a declining market.
If you’re a seller, it’s better to sell now than later. Later equals less money in your pocket. If you’re a buyer, you’re probably all excited about the fabulous low price you paid. But it’s easy to forget the next guy who buys near your new castle is paying less than you did.
Except . . .
Something interesting has been happening to my buyer clients who are making offers on bank-owned homes during the past few weeks.
We’re bumping up against stubborn sellers who hold out for a price slightly higher than the last sold comparable. It looks like this:
I guess the question I’m noodling over lately is when does a down market turn? Who’s the guy who pays a little bit more than the last one? Who’s the guy (or gal) whose purchase marks the date the market turned the corner?
Where’s the bottom? Is it a bottom, and then straight back up? Or does it wiggle around a little down there, bouncing up and down in teensy increments before rising steadily?
Sometimes a Realtor has to admit “I don’t know.” This is one of those times. But it’s interesting to think about. And I’m hopeful that this is the beginning of normalcy in the metro Phoenix market.
Chris and I watch the market statistics pretty closely and we certainly hope our geeky sides will allow us to call “turn!” when it happens. Check back to see if we’re right.
The deals I’m graphing here aren’t final yet, so I modified the graphs a leetle teensy tiny bit. It’s not cool to reveal the final sold price before it’s finally sold, see?
I based the graph on actual MLS statistics but I added a few data points. For one, it made a prettier graph. For two, it hides the details of deals my clients are working on that aren’t complete yet.
Also, these particular clients are buying entry level condos in very low price ranges. I seem to have become the queen of the under-$75,000 condo without really meaning it. C’est la vie. I love a condo!
Heather Barr is a Realtor and a happy workaholic. She eats more than someone her size ought to be able, and is a runner as a consequence. Her TiVo's full of spy thrillers, police procedurals and Whedonesque sci-fi.
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On the condo deals I’ve done in past 2-3 months on bank-owned stuff, the banks are paying off back-owed HOA dues at close, but only for those months they owned the unit. Local title officer tells me HOAs usually get paid off at close on short sales too. I think the HOAs that ARE losing money are losing it when short sales fail to sell, and the property goes thru the foreclosure auction. HOAs are at least the 2nd lienholder (maybe 3rd) at auction, so they get $0.
Heather: In the inexpensive condos, what do the financials of the HOA’s (Condo Associations) look like? Are they getting the banks to pay their ownership dues?
Back in the day when it hit the fan in Houston, there were condos selling for well under ten grand. One client bought a condo with a $4000 Master Card cash advance. The rent paid for the whole deal in less than 6 months. Now that’s a bad market!