Where Have All the Buyers Gone…?

 Posted by at 3:06 pm
May 212011
 

Okay… would you like to play the numbers game again? The Maine Real Estate Information System issued a press release recently informing us that for the month of April, unit sales of single family homes was down nearly 24% over the previous year. Part of the explanation for this huge drop was that last year’s numbers were “skewed by the homebuyer’s tax credit…”  Obviously, that’s a tough statement to disagree with but it does raise the question “by how much of the decrease can we blame on last year’s tax credit?”

Opinions are easy and it’s mine that last year’s tax credit for the most part rewarded people who were intending to purchase a home anyway and probably succeeded in “condensing” those transactions into a tighter time period. (In other words, if we’d left things alone most of those sales would have taken place anyway—just not necessarily at the time they did.

In another attempt to rationalize the downward sales trend, lenders are coming under fire because lending standards have become stricter and “frustrating.” Again, that’s a tough statement to disagree with, but it wasn’t too many months ago everyone was blaming lenders for not having strict enough standards.

Speaking of standards, here’s an interesting observation from the Real Economy Watch by Stephen Cook:

For the month of April, 45% of foreclosed properties were damaged and not inhabitable without renovation. Because mortgage financing is generally not available for foreclosed properties that need major repairs, investors often buy these properties for cash. Fifty-five percent of damaged foreclosed properties were bought by investors in the month of April, while only 27% were bought by first-time homebuyers.  (These are national numbers, not Maine.)

Maybe I’m not asking the right people, but I’m not sure why or how we should fault lenders for not making loans to people who might be considered “poor risks” on properties that are considered poor risks. If there’s an explanation Continue reading »

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Cheap Maine Land!

 Posted by at 7:16 am
Apr 252011
 

An “inside joke” among Maine REALTORS has always been out-of-state buyers who call or email asking about “cheap Maine land.” A few years ago I developed a trade show exhibit that involved a bucket of dirt, a scoop, some plastic bags and a sign that read, “Cheap Maine Land-five cents per scoop!”

Whether property is on the market due to foreclosure, short sale, or just a desperate seller, price is now an important aspect of nearly every transaction.  While buyers can find some real bargains, all too often there’s just too much emphasis put on the bargain at the expense of common sense and basic diligence. Sometimes it seems like it’s not about buying a home or property, it’s about getting the lowest possible price.

Some things haven’t changed.  Common real estate logic used to be “location, location, location.” That logic really hasn’t changed. Property values are still dramatically impacted by location both at the macro and micro level.  Unless your goal in life is to live in a cheap home, you ought also to be looking at neighborhoods, school districts, infrastructure, local economy, amenities, etc.

But you aren’t going to live there you say? I recall getting an excited call from a Boston-based buyer back when one of our local towns lost a major employer. He explained that he’d heard you could buy homes there for “pennies on the dollar” and he wanted five of them. When I inquired of his long range plans, he explained his intention was to turn them into rental properties and garner a great return on his investment.  He hadn’t, of course, considered who he was going to get for tenants.  I occasionally have to explain that my “job” sometimes is to talk people OUT of doing things.

There is something to be said for “at this price I can’t afford not to buy it,” but there still needs to be some caution—especially when dealing with vacant homes that can deteriorate quickly.  Again, logic suggests that you should determine the true cost of owning the home you are considering. A professional home inspection will do that by reporting issues that should be addressed immediately and some that will require attention over time.

It’s strangely ironic that in an earlier market one could sometimes stifle interest by pricing a property too low. Buyers would suspect there was something wrong and avoid considering it! This was also a time when buyers would often require prodding and pushing to do the research and make decisions. Buyers were afraid of making a bad decision. Now it seems like many buyers are afraid to purchase because the price might go lower. A bad decision at a rock-bottom price is still a bad decision!

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Tell it like it can be?

 Posted by at 6:56 am
Apr 192011
 

Scott Leavitt of Oakley Signs & Graphics, Inc. sends out a weekly newsletter to customers that is both helpful and thought-provoking. In today’s issue he quotes Robert Orben, a magician and comedy writer from the early 1900′s. “We have enough people who tell it like it is. Now we could use a few who tell it like it can be.”

He uses this  as a springboard to suggest those of us who work in the real estate market can and perhaps should impact buyer and seller confidence and thereby “help” the market improve.  As one who prides himself in “telling it like it is” I found his suggestions more realistic than the organizations who want me to put on my rose-colored glasses and parade down the street shouting, ”It’s a great time to buy! Things are getting better!”

Since I don’t have a brass band at my disposal, I especially liked his rhetorical question, “So, as a real estate professional, is it your duty to simply report the market conditions, or should you be helping buyers and sellers see how it can be?”

To my way of thinking, “how it can be” must include a healthy dose of realism. I suppose given our current economic state it’s easy to have too much realism and not enough “can be.” But as I think back over the various times I’ve reported statistics and market conditions I think I’ve done so with a fairly consistent observation that the statistics don’t create our future; we ultimately create our future and the statistics.

It is interesting, for example, that the most recent Sales Agent Class I’ve taught has a higher enrollment than the last year or two’s average class size. We can debate whether or not this is an indicator of the market but I do know this: Many of those students are creating their future. They have a plan, have identified a niche and are going to create an opportunity for themselves.

Should I buy? Should I sell? Should I get a license and get into the business? How you determine the answer to those questions may be more important than what the answer is. Leavitt refers us to an article in Forbes Magazine. that offers a positive (but conservative) outlook. Understand it’s fairly technical and reading it may make your eyes glaze over. But it contains some great examples of how one’s view of the world can influence one’s future.

Do you want to buy? sell? get into the real estate business? If the answer is “yes,” you may be thinking about how it could be! Think some more. Success always comes when preparation meets opportunity.

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Will I live long enough…?

 Posted by at 6:30 am
Mar 242011
 

A student recently asked if I thought she’d live long enough to see a return to the “good days” in the real estate market. It was both funny and not. My reply was that I’m sure any of us will. Things will improve, certainly, but I’m not sure we’ll ever have those boom days again for a long, long time.

Ironically, MREIS (Maine Real Estate Information System) issued a monthly press release the same day. In February of this year 482 homes were sold across the state–2.43% less than a year ago. I’m not sure that’s a statistically significant number (we’re only talking about 12 less houses), but the trend is clear.

Looking at the three month “rolling average” by county is certainly interesting. Piscataquis County continues to be a bright spot, with sales UP 15.5%! Penobscot County is down 9.63%, Somerset County is down a whopping 26.32%.

Of course as I’m fond of pointing out–if you are interested in buying or selling it’s important to realize that you create those statistics when you buy or sell. The statistics do not have to “create” you.

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Information, information, and more information!

 Posted by at 7:49 am
Mar 132011
 

The things you can find on the Internet! If you haven’t noticed, I’ve changed one “widget” in the sidebar on the right to connect to local information. Because of the rural nature of our area, some of the items may not be particularly helpful, but I thought the local inormation would be more important and useful than national real estate news.

Some additional sites you may find helpful:

Should you be considering starting or locating a business in Maine, you’ll want to visit http://www.maineisopenforbusiness.com/ to discover what’s going on and what is being said!

Redfin.com: In addition to listings, this site offers information such as how long a home has been for sale, its last sales price, and its current value. (These value computations on sites of this nature can be significantly inaccurate.) It also provides virtual tours to listed homes.

Trulia.com: Like Zillow.com, which offers satellite views, Trulia’s “heat maps” show how hot or cold an area is based on prices, sales, and popularity among its users.

?Google Maps and Bing.com/maps: For a bird’s-eye view, even 360 degrees in some cases, these amazing map sites offer a virtual perspective of available homes that’s truly hard to beat.

Walkscore.com: Is an interesting site that rates any address based on the walking distance of its nearby stores, restaurants, schools, parks, coffee shops etc.

SchoolMatters.com: A Standard & Poor’s company, this site offers parents (and potential home buyers) an objective rating of public schools and public school districts by region, including test scores and demographics. GreatSchools.net offers similar info and ratings on private schools based on region.

HUD.Gov is the official website for the U.S. Department of Housing and Urban Development (H.U.D.) This site lists HUD homes and provides information for home buyers, including financing options and home buying programs available through the Federal Housing Administration (FHA).

Maine State Housing Authority offers a wide variety of information including details regarding a great loan program for first time home buyers.

Homeloans.va.gov: This site houses information about government home loan programs specifically for veterans.

You’ll also find links to a number of sites in the sidebar to your left by scrolling down the page. Happy searching and learning!

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“How’s the real estate market?”

 Posted by at 6:52 am
Feb 172011
 

A few years ago I wrote an article regarding how often I was asked “How’s the market?” I hadn’t realized it until last night, but I’m not getting the question so much anymore.

I realized that when a client commented, “You know, I probably know as much about the market as you do.” He immediately apologized and explained his position even though I agreed with him. His point was not who was smarter; his point was it’s darn tough to understand this market and almost impossible to make predictions.

Unfortunately, this is not a case of clients getting smarter (nor for that matter is it a case of me getting dumber!). The media is doing a great job of keeping information about “the market” in the news. We can debate the quality of the information; we can disagree with the conclusions… but the point here is that folks have a much higher awareness of the economy and market events. They truly don’t have to ask; they know. The problem for all of us is, in part, we mostly know that we don’t know!

An interesting example of this was a major story that hit my inbox just yesterday morning. Corelogic (a company that collects mortgage and property data) issued a press release stating that “Statistics published by the National Association of Realtors appear to be overstate sales of existing homes by 15-20%.”

Whoa.

If you thought it was bad before, this number gets your attention. In practical terms, NAR says the unsold inventory on the market last November represented a 9.5 month supply. CoreLogic says it’s a 16 months supply.

NAR’s response to CoreLogic’s claim is that it’s “premature at best.” You probably don’t want to hear the explanations. Most of us would prefer to think this is not rocket science but rather a simple counting exercise. 

My point is that assuming my client and I both read this article we both know:

  1. Sales are down, NARs thinks by 5%–CoreLogic says 12%.
  2. The glut of homes on the market represents either a 9.5 month supply or a 16 month supply.

Of course what’s especially interesting is that none of these numbers are of particular interest or value to a buyer or a seller. More localized numbers might be, but even those numbers are just that: numbers.

Market’s don’t buy and sell real estate, people do. And I still “sell” properties (admittedly far less than in the past) the same way I always did: one at a time.

I’m not suggesting we should ignore the “market.” But if you — for whatever reason — are in a position to buy or sell property, you should focus on your objective. Almost all of this “market data” is history and a lot of it is at best “spongy.” If you want to buy or sell it’s important to remember that history doesn’t create the future and you are not the victim of history; you are creating it.

 Buying Real Estate, Market Information, Selling Real Estate, Uncategorized  No Responses »

Who’s Buying Maine?

 Posted by at 8:28 am
Feb 132011
 

The answer might surprise you!

For several years now, MREIS (Maine Real Estate Information System) has tracked where buyers of Maine property live(d) when they purchased the property. The 2010 data has just been summarized and I’ve tabulated some of the results–specifically single family homes.

The data shows that three out of four (76.5%) of the single family homes sold in Maine last year were sold to people already living in Maine.

When we add the New England States we learn that just over 90% of the homes sold in Maine last year were sold to people already living in the Northeast.  (Massachusetts accounts for 7.17%, New Hampshire 3.7%, New York 1.45%, Connecticut 1.3% and Vermont .43%.)

One item that I confess surprised me a little was that 1.3% of the sales were to buyers from Florida. I suppose these might be “seasonal” homes, but we could wonder if perhaps a few people are trading some sun for some snow.

While the numbers aren’t statistically significant it is interesting to note that the states of Pennsylvania, Virginia, California, Texas and Maryland have provided Maine with a number of buyers and 43 (.36%) of the homes sold were purchased by “International” buyers. And would the one person from Mississippi who bought a home in Maine last year please raise his or her hand?

“What about land?” you say. The numbers are not signficantly different. Just under 76% of land sales in 2010 were made to buyers already living in Maine.

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Ready for more numbers?

 Posted by at 6:51 am
Jan 242011
 

The Maine Real Estate Information System has released December statistics. Shall we skip the spin? Unit sales of single family homes are down 10.68% from the previous year. (In December 2009 there were 852 sales–December 2010 there were 761 sales.) The median sales price is up by 4.24%.

We also have the full year comparsion. Statewide, sales are down 2.6% for 2010. A few counties that might be of interest:

Piscataquis County sales are down 2.47% with the median sales price flat–unchanged.

Somerset County sales are down 10.21% with the median sales price also down 9.58%.

Penobscot County sales are down 11.6% with the median sales price up just a bit.

You can access the complete press release here.  In the interest of being observantly curious… this press release mentions “over 4600 licensees inputing data.” (I suspect that number was higher in 2009, but allow me some latitude here.) I suspect this is ultimately going to a meaningless number but it might create perspective. In 2010, there were 10,213 single family homes sold. If we assume (which we shouldn’t) there are two licensees involved in every transaction–one representing the buyer and one representing the seller–that gives us 20,426 “sides” for the year. If those sides were divided equally among licensees, each licensee would average 4.4 transactions (closings) per year. 

Are your eyes glazed over? I confess I’m now tempted to use the median selling price and some sort of “average” commission rate (which there really isn’t)… but you get the idea, right?

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Piscataquis County Does It Again!

 Posted by at 5:30 am
Dec 282010
 

Without making too much fun of the spin placed on November Maine Real Estate Information System (MREIS) statistics, it’s exciting to note that Piscatquis County’s rolling quarter average is once again bucking the state and national trend. Unit sales from September 1 through November 30 were up nearly 10% for 2010 versus 2009. The only other counties in Maine showing positive numbers were Franklin (4.29%) and Lincoln (1.01%). As noted last month, we’re not talking huge numbers here, but it’s still pretty exciting!

Statewide the number of units sold is down nearly 24% for the month of November. The spin doctors are focusing on the fact that the median price continues on an upward trend and claiming this indicates some stabilization of the marketplace.

Perhaps ironically, Piscataquis County continues to buck the trend with a 20% decrease in the median price during the rolling quarter cited. This suggests there is an increase in the number of lower priced properties being sold.

If you promise to remember that this is a huge county, I’ll share another generality regarding  the state of affairs. As of this morning, Piscataquis County shows 427 active listings on MREIS (aka Multiple Listing). These are residences of some sort—we’re not talking any land parcels. In the past six months there have been 93 sales. That’s not great, but it’s not horrible either. And it’s actually an improvement. During the previous six month period there were only 70 sales. If we ignore seasonality, unit sales in Piscataquis County are up nearly 33% for the second half of the year!

It might not seem that way if you have an unsold  house on the market, but there are properties selling and there is reason for hope!

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Let’s Play “Spin the Numbers!”

 Posted by at 6:39 am
Dec 062010
 

Staying with a statistical theme, I chuckled at a recent industry press release. In large bold print it announced “Maine Median Sales Prices Up 0.9% in October 2010.” If it escapes your attention that 0.9% isn’t a very big number, perhaps you’ll notice the sub-headline announcing that the number of homes sold was down 29% for the same period.

Before we go too far, let’s just clarify “median.” The median price is the middle price; it is not an average. One particularly high priced or low priced sale can dramatically affect the median. Do not be confused. Contrary to the headline, prices are not necessarily increasing. What may be happening is higher priced homes are being sold. (Maybe I’m not a statistical nihilist after all!)

Regular readers know that I like to “drill down” through the numbers. So I went past the headlines and looked at more localized data. While I’m not sure I would claim a trend, I was pleasantly surprised when I looked at Piscataquis County. The number of homes sold  from August through October 2010 was actually up a little over 11% above the same period a year ago. (The median price was up as well.) Admittedly we’re dealing with some small numbers, but I’ll label that “good news” without putting much of a spin on it.

Not so much so in Somerset County where unit sales were down 28% and the median price was down 15%. Penobscot County sales were down as well—approximately 25% in units and 6% in median price.

Who wants to write the headline? “Piscataquis County Real Estate Sales Are Up, Bucking the State and National Trend!”  (That’s not an untrue statement.)

And I’m probably guilty of writing more about journalism than real estate. In the interest of returning to the topic at hand I’ll offer two pieces of advice.

One, sometimes you have to listen very hard at what’s not being said. Two, there is no rule I know of that says you have to fit into the statistical pattern. We can debate whether or not Piscataquis County’s sales in October are an aberration or we can simply acknowledge the number and move on from there. The fact is that unless there are zero sales property is being bought and sold.  If you are buying and selling and the trend is down you figure out how to beat it. If it’s up you figure out how to take advantage of it.

Simple; not easy.

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