Observances on the current real estate market (2013, countertop, appraisal)

[KathrynAragon]

I live in Texas. Thankfully our real estate prices are pretty reasonable - in the context of what I hear about many other parts of the country. I'm not here to grouse about price as much as other weird things I'm observing!

OK - my husband and I have a nice home that's only a little over three years old. It's in pristine condition and the yard is very nicely landscaped. All fixtures and surfaces are high quality and very current and marketable - lots of high quality trim and molding, granite countertops, hardwood floors, high ceilings, split bedroom plan, master downstairs, corner lot, big flagstone patio, all the bells and whistles but slightly under 2500 square feet so it's still in an affordable price range that moves fairly quickly in our market.

OK so here's the deal: We need more parking (three car garage) and would like to have a larger lot. We don't mind spending more money to get more. So - we've been shopping.

I am SHOCKED at what we're seeing on the market. It seems that people are asking top price, but the homes are not well maintained, not updated, hell, they're not even CLEAN. Obvious repairs need to be done in many homes we've seen - even in upper end homes (in this market that would be over $350,000).

I practiced real estate in this market up till about five years ago - including in the real estate " boom" here in Texas. So the last time I really looked for a home to buy, even though we bought our current home at the very bottom of the market (2009), most of the homes we looked at in our price range ($250,000 - $350,000) were at LEAST in good condition!

Another thing I've noticed is that there is very little ON the market. I know that part of this is because we've been looking in a slower time of year - October thru January. But DANG - very slim pickings and the homes are worn, not updated, in disrepair, and dirty - in a higher price range.

I would expect the REALTORS with the listings to have educated their sellers on the importance of at least cleaning their homes and fixing things that obviously need to be fixed. For example - yesterday we looked at a home that had obvious roof damage and water damage in the master, as well as a lining coming out of a koi pond that was in the center of the home - literally the first thing you see when you walk into the foyer (it's a U-shaped house and the foyer is all glass looking out onto the patio with the koi pond). COME ON, PEOPLE. You're honestly asking top dollar for your home and you can't even clean it and fix a few obvious issues????

Even the realtor told me, "I can't believe these asking prices. I am so sorry!"

Well, we've just about decided to just stay where we are and build a second garage. I was worried about investing too much into our current property but what's out there right now in our current market is absolute CRAP.

It seems to me that these conditions imply that people are overextended on their mortgages and are trying to recoup as much as they can (even if they are still in the negative) on the sale, but can't afford to even maintain, let alone update, their current homes.

Your thoughts?

[MrRational]

Originally Posted by KathrynAragon

It seems that people are asking top price...
Another thing I've noticed is that there is very little ON the market... Your thoughts?

With little on the market and a lot of people moving there...
those who CAN sell will ask top price. And they'll get it... even for dirty poorly kept properties.

Well, we've just about decided to just stay where we are and build a second garage.

Most owners don't have the option to sell even if they have a desire to.
They're stuck until prices go higher or their loan balance drops more.

[Rakin]

Katheryn - Our DFW market has exploded back to levels back in 2005-06. We are getting multiple offers in on home that 2 years ago would just be sitting on the market. It's unbelievable. I had a nice little home in Flower Mound listed that got 4 full price cash offers the 1st weekend it hit the market. There are so many people moving here, we have probably the best economy in the US.

People are anticipating higher prices and an increase in Interest rates. We are getting back to the Inflation days of higher materials, labor, services costs that we saw back in the early 80's. I see a higher Interest rate within the year to start addressing Inflation.

And yes, there are still crappy agents who don't educate their clients on how to have a home show ready and crappy sellers who don't listen even when we do try and educate. I'm about to list a home that smells from 3 cats and a big dog. I took them looking at homes so they could see what a good home should look like. They are still pretty clueless and what's worse is they don't realize their home stinks. Yet they think they want top dollar for this lemon.

People don't understand carpet, paint, a new roof is not improvements but necessary maintenance.

[DMenscha]

I always tell my sellers what they need to do to help sell their property. Very few actually do what I ask of them.

My market is also desperately in need of inventory. Properties that haven't had any showings are now getting a lot of attention.

[oregonwoodsmoke]

I don't know your market. but if prices had a big drop, a lot of sellers would be lucky to pay off the mortgage and the commissions. There might not be any money available for a new roof or new carpet. Some of those sellers will have to bring cash to the table in order to close.

As a buyer, that is not your problem, but still it places a limit on what is for sale and how many repairs have been done.

[cdelena]

Real Estate is a local market that is sensitive to the economic conditions at the time. You happen to be in an area that is hot during a period that is pumping demand... just the way things go.

I am in the PNW where demand is off and business activity is not booming. On top of that the lending industry has swung from stupid lax practices to restrictive procedures that put a damper of sales and activity.

After a small number of poorly managed appraisal practices in the boom years the overreaction has been to clamp down and eliminate any chance of liability due to appraisals over market so low-ball appraisals are now the rule here killing deals in many areas. Rules pushed loans to anyone breathing during the boom times creating a reaction so that now borrowers have to fit a restricted premium profile to be considered which has slowed the industry.

So feel good you are in an area that has an active market with professionals making the wheels turn.

[SouthernBelleInUtah]

Rakin, they literally can't smell the odor in their home. Pet owners become used to the smell and can no longer distinguish it. It took one buyer's comment, followed by 2 non-pet owning friends to convince me I had to do something. OdoBan was the only thing that took away the smell (Home Depot) and I had to have the friends come check. My agent gad several dogs and a cat so she never noticed, either.

[davebarnes]

Dallas Inventory

Can it go lower?
Maybe. Look at Sacramento

[aneftp]

Laws of supply and demand. Banks and short sellers flooded the market with distress properties from 2009-2011 for the most part.

Now less distress properties being released.

Less inventory.

Pretty simple.

I live in orlando area and I believe the "average home prices" jumped about 15% from 2011 to 2012. Average is all relative since less lower priced homes (homes 150k and under much harder to find). So higher end homes drive up "average selling prices".

We aren't in the crazy 2005 days. People are more cautious about over paying. But we are reaching a point where there are less desperate sellers. Those who couldn't afford and short sold their homes already did. From 2009-2012 for the most part. Sure banks are holding on to properties and slowly releasing them. But it's created very little inventory so people can ask for more money.

[NinaN]

That Sacramento chart is just what I'm dealing with. Along with buyers who haven't yet come to terms with the fact that prices have risen and they can't get what they want at last year's price. Very difficult right now.