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How Is YOUR Home's Value Doing in Our Local Market? This entry was posted on 6/18/2007 8:42 PM and is filed under Real Estate Appraisal,Education,Wealth Building. Everyone is concerned about the local real estate market right now. Is it justified?
Rates are still very, very reasonable... near their historical lows as a matter of fact.
Despite that, our market has showed signs of slowing over the past eighteen months.
According to statistics on the Traverse Area Association of Realtors website, Grand Traverse County is faring the best. Numbers are showing current sales volume down 19% over a five year average from 2002-2006 with average sale price at 2003/2004 levels.
Leelanau County is showing sales volume down 26% over the same five year period average with dollar value of average sale matching that of 2004/2005 levels.
Benzie County is down 23% over their five year average with average sale value at 2002 / 2003 levels.
Antrim County is down 20% over the 2002-2006 average volume with average sales price at 2003 / 2004 levels.
Kalkaska County is down 24% with average sales price equal to 2002 / 2003 levels.
Wexford County is down only 14% with average sales price at 2003 / 2004 levels per information obtained through Paul Bunyan Board of Realtors.
What came first the chicken or the egg?
I remember hearing about the real estate bubble on the local news back in 2005. The tease hyped it big time then when the story came on they were talking about Washington, DC. I thought to myself how ridiculous it was they were scaring all the
people in our local market. After all, it's common knowledge that "All Real Estate Is LOCAL". Then I noticed the story travel all around the media over the following six months. It seemed to me the media was forcing the issue. About nine months later I started to notice resistance in our market. Homes were taking longer to sell. Then appeared a glass ceiling
about the $400,000 mark. Now it has escalated to include a much broader segment of the market.
Starting in 2003 and lasting until late 2005, I saw a fantastic (and for the most part) unprecedented rise in local home prices. This was frightening to me on many levels and I discussed it with friends and peers. I wondered what was driving the price increases. Was it really the baby boomers moving north for retirement? Was it that the world finally discovered how GREAT Traverse City is? Or was it the refinance boom with everyone needing to push the value just a little to be able to consolidate debt and get the extra money they need for ( you fill in the blank).
A lot of customers always say when you do an appraisal..."bring it in as high as you can". The law forbids mortgage appraisals to show anything other than True Market Value. Appraisals are based on recent sales of comparable properties from within your immediate market area. Cost to rebuild is considered in most appraisals, but the bottom line is the bank wants to know what they can get for the house should payments be defaulted upon. Period.
Let's say you had an appraisal in 2005 for $200,000. Let's say you borrowed 80% of value in that year. Now you are in a position to need to sell your home. Maybe you have been transferred. Maybe you want to be closer to your family. But for what ever reason you are put in a position to NEED to sell. Well, if you want to sell your home in three to six months,
the price must be reasonable to the market. As well, the home must show well in order to hold up to the competition which is now stacking up. Based on figures shown in the MLS, your home is going to be worth somewhere between $185,000 and $200,000 with many factors playing a part in the ultimate determination. But you need to sell. Along with your Realtor, you make a decision to market the home at $190,000. You do get an offer about four months later for $185,000. After closing costs and Realtor fees, you walk away with $12,500. Ouch!
With that in mind, let's say the Appraiser fell for your argument of why you needed the home to come in at a predetermined level. Maybe they could stretch the truth a little bit to help a fellow community member. Ok, so they brought your home in, even though they should not have, above market, at $220,000. So what? You were happy because you could do what you had in mind with the money. Ok, let's look at that same $185.000 sale price we were talking about above. Now you are selling your home and guess what - you OWE money - about $3000.
Lessons learned here would be that it is possible for markets to slow. Real estate does not always gain value in leaps and bounds. Sometimes it is stable or occasionally even looses a little ground, particularly after huge yearly gains. This is similar to the stock market "corrections" you hear about. Similar, too, to gas prices of late.
It's not all doom and gloom. You can still sell your home. You must be reasonable with your asking price. You must make sure you home shows well. Maybe your Realtor can tell you about some open houses in your neighborhood so you can personally view your competition.
The fact of the matter is that in 2007 there have been (as of June 15th) 1028 sales in Grand Traverse County, 220 sales in Leelanau County, 203 sales in Benzie County, 192 sales in Antrim County, 85 sales in Kalkaska County and 140 sales in Wexford County. These numbers reflect single family homes sales per local MLS data. The buyers are still there if you are smart when placing your home on the market.
If you are faced with needing to sell, consider consulting a staging expert to look over your home, or having a pre-listing appraisal. It's been my experience both of these tools truly do help your home to sell faster, and staging does help a home to sell for more money on average. |
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