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February 16, 2011

Home sales, super quick and very slow

Think it's impossible to sell a home quickly these days?

Last month, 100 homes in the Baltimore metro area were on the market and back off -- with a contract -- in one to 10 days. So it can be done. (About 130 more sold in 11 to 20 days, according to Metropolitan Regional Information Systems, keeper of the local multiple-listing service.)

All told, about 350 homes -- a quarter of the properties sold in January -- were on the market for one to 30 days.

But there are plenty of homes that sit and sit, too. Just among those selling last month, about 150 were listed for at least six months before going under contract. Two were on the market for -- wait for it -- at least two years.  

Here's the range:

(Days on market to the left, number of home sales to the right)

DOM Sales
037
1 to 10 100
11 to 20 131
21 to 30115
31 to 60270
61 to 90215
91 to 120 152
121 to 180178
181 to 360 124
361 to 720 27
721+2

What about the 37 homes that sold in zero days? MRIS's stats arm, RealEstate Business Intelligence, says that category was all about the sold-immediately craziness of the bubbly years but nowadays is more likely to capture the unlisted "comps" sold and entered into the system by agents after the fact, such as for-sale-by-owner properties and new homes.

(Agents who focus on the upscale part of the market tell me they still do sell some homes before they're listed, either because the stars align or because their clients don't want photos of their home splashed all over the MLS and therefore the Internet.)

The statistics don't break down the average days on market among homes still on the market -- the ones without contracts yet. But I'm guessing there are a lot more two-year-plus listings, even accounting for owners who go on and off the multiple list a few times.

In January, at least, it was a whole lot easier to sell a newly listed home than one on the market for six months. (The most common selling point? Between one and two months.) Puts a lot of pressure on sellers to figure out the sweet-spot asking price early on.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (7)
Categories: Housing stats
        

Comments

As you allude to in your piece... the price point is probably the largest factor in these with varying reasons in each price range.

Is there data on the amount financed (if any) available to be applied to these numbers? As the really low end and run down properties won't qualify by FHA standards and must be bought for cash (almost always by investors who will return them to being rentals) this would separate these transactions rapidly.

And who really cares about the high end of the market? ;)

That leaves the middles... $100,000 - $250,000 - $350,000... where most of the concern is by families headed by people who actually work for a living shop (and dare I say is most of your readership).

As always but not actually said enough.. thanks for your efforts to glean sense from the numbers.

I wish we did have statistics related to days on market, MrRational, such as DOM by price or financing, but that's not among the numbers released monthly by MRIS. (I'm guessing that an enterprising person with access to the actual multiple-listing service could probably figure that out, given enough time.)

I think you're right about the price points of interest to most people (and blog readers). But I've also found that the high end of the market does have lookyloo appeal. Human nature!

MrR:

There is a sub-section of the middles ($100-$350K) that also requires cash: most foreclosed REO properties.

Most of these require some level of rehab/renovation. Fannie Mae's Homepath renovation loan only covers up to $30K in repairs. (And, that's if you can find a lender who does these.) You can go the FHA 203(k) route with these, but that process can take up to 3 months to get approval. I found that Fannie's REO portfolio managers are demanding 30-45 day closings, so at least with Fannie REOs that need work cash is the only way to go.

Interestingly, Fannie's mercurial behavior leads to its property sitting on the market way longer than necessary.

This is what I saw through my 10 month housing search. I think this "super quick and very slow" phenomenon is a product of a falling market in which prices going down are sticky. Even though the market is now leveling off, there are still tons of homes that are overpriced. The ones that are priced right, go quickly; the others just sit there.

And here's what exacerbates the phenomenon: if a home STARTS off overpriced, then it will take longer to sell, EVEN AFTER the price is lowered to a fair market price.

The reason isn't really math or market related; when folks browse online listing, the houses that have been sitting on the market for months and months simply look less attractive. It just feels like something must be wrong with them, even if it isn't.

We had friends put their house up for sale in May. I thought they should price it about $250K and that it would sell in a month. They listened to their realtor who told them what they wanted to hear, and priced it at $290K (and had a bunch of open houses). Over the last 9 months they have slowly lowered the price by small amounts until they are now just a few thousand over that number I had in my head way back then. Of course, at this point, their house is worth less than it was 9 months ago, and the listing says "on the market for 280 days."

As a seller, you have to get ahead of a down market; otherwise you will slowly bleed to death as prices fall. Of course, lots of sellers don't have this option; they are pricing their houses for what they have to get out of them to pay off their mortgage. But just because that's what they owe doesn't mean that's what the house is worth

Half my business is in REO work as a buyer agent, so I am not sure I agree with D's "most" require cash. I have a fair number in that 10-50k range that end up being cash deals, but I've had just as many in the $200-400k range that the people were able to get their 203k loan or even conventional/FHA as long as the property had the basic utilities available. I've done several 203k loans and they never took more than 45 days.

The biggest issue with REOs is often the bank's reluctance to move on price. I had a buyer interested in a home in Owings Mills. Bank had it priced at $799k, even though the kitchen was pretty much gone (along with carpets, light fixtures, bathroom cabinets and more) and the fact that the last sale in the neighborhood was the MODEL home at $745k 6 months prior. But they wouldn't move on that $799k price an inch.

I had another instance where the bank had a property listed at $19,900. We offered $14k. The bank countered at $19k. We said "No, $14k." They rejected us... and proceeded to sell the house 6 MONTHS later... for $14k.

Oh, and the MLS does allow the listing agent to put in the first/second mortgage loan information, but it's not required and not done with consistency.

the comment by "fronesis" is very close to my own experience. we looked for about 6-7 months in 2010 (april-end of november). during this time, overall sales prices were dropping. we saw a lot of sellers act completely oblivious to this. i have all the houses we looked at saved in my Redfin account (added them to favorites list) and I get emailed when there are price drops/sales.

at risk of repeating what i said back last fall/early winter: if your house sits more than 30 days without any offers, you need to realize it's a buyers market and ask the BUYERS and their AGENT what they really would've offered on your house. a lot of the houses we saw, i wouldn't buy at any price (probably 20% of the houses we saw), but for most, even if the buyer didn't want to hear it, i could've told them roughly what we thought bc by late summer/fall we had easily seen 50 houses and looked at hundreds more on the computer. in neighborhoods ranging from mt. washington to graceland park and everything in between.

there were 4 houses we looked at that were priced right and were brand NEW listings when we saw them. my fiancee didnt like them, but i did and thought the price was about right. guess what? all 4 of them went to status "pending" on redfin within a month and ended up closing the last few months. the 5th house we liked is the one we bought. price was a little high but sellers were smart and not emotionally tied to the house (it was their deceased parents' house and neither of the kids live in the area, so it was simply a financial move for them, not personal).

sellers--don't be the idiot who believes your house is worth near-peak prices or that your "well maintained" renovations (from the 80s and 90s) make your house worth more than anyone will pay. it's true--if your house sits behind 2-3 months, us sellers go in with a bad taste in our mouth and quickly start to think you're unreasonable.

don't embarass yourself by being the idiot seller that everyone laughs at afterwards. (e.g. "hun, did you see the nasty wood paneling in their living room? it felt like my great great grandparents house from the 1950s")

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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