I think we're dragging along the market's bottom right now, although I expect to see a longer and bumpier than normal recovery. However, there's a big difference – a HUGE difference really – between "The Market" and any one individual home.
When I talk about The Market, I'm talking about Maricopa County – a county with a population of almost 4 million people. I'm talking about the 56,006 residential homes actively for sale in the MLS (as of this writing). Each home, subdivision, neighborhood, zip code, city, and price range is going to see a different recovery – even as The Market shows signs of increased strength, some homeowners are going to see downward price pressure from the increased number of bank-owned properties in their neighborhood. (see Bank Owned Listings are like the Clearance Rack)
I've identified 5 different categories of Sellers in our current market; each one is on a sliding scale in terms of willingness and ability to adjust their price downward, and in their desire to sell quickly.
5 Types (Categories) of Sellers
1. Owner Occupied Homeowners, who would like to move, but are not required to. These Sellers are least likely to reduce their price, and are affected the most by the current market conditions. Many, if not most, of these Sellers will put their desired move on hold for a year or two and let the market recover.
2. Owner Occupied Homeowners, who are required to sell. Maybe they're moving to another state, or maybe they need to sell due to a divorce, death, medical condition, or some other reason. These people are going to be more likely to take the financial hit required to sell their home today.
3. Investors. Many investors are able to sell their property for less than they had hoped; they either have equity in the property or the financial wherewithal to cover the loss.
4. Short Sales. Once prices drop low enough, many people in Categories 2 and 3 will explore a Short Sale. One thing that usually happens with a home listed for sale as a short sale, is the listing price drops significantly. The Seller needs to procure an offer to bring to their bank, so they price very low in order to get an offer. This puts severe downward pressure on prices in a neighborhood.
5. Bank-Owned / Foreclosures. If a Short Sale is unsuccessful, the bank will eventually take the property back, and put it on the market at an even lower price. This represents the bottom of the market for this home's neighborhood.
Why did I outline these 5 categories, and what do they have to do with the market's recovery?
In doing my MLS analysis, I'm seeing a couple of trends develop: The number of homes Actively for Sale has been staying relatively flat over the last few months, and the number of homes going into escrow has been increasing steadily over the same time frame. Meanwhile, the number of homes that have actually Sold is coming off the worst 6-month period in a very long time – September through February was dreadfully slow.
Even though we're seeing record numbers of foreclosures, and the mainstream news is talking about the forthcoming collapse of the market, what we're really seeing is homes falling from Categories 2 & 3 into Category 4, and then into Category 5. It's the same homes on the market, just with a different strategy &/or owner!
(I'll try to put together some charts to illustrate what I'm seeing – look for that in the next day or two..)
Your wading through the data Realtor,
[tags] Maricopa County, market analysis, mls statistics [/tags]