What is it with people??? (Tulsa, Owasso: wood floors, appointed, for sale)

[briansgi]

My house in Owasso has been up for sale for about 3 months, we've had quite a bit of activity on it which is always a good sign. It's priced at $225K and has been repainted inside/out, new carpet throughout, wood floors refinished, etc., etc. We finally get an offer - for $174K! I believe I'm more disappointed in the buyer's real estate person for delivering this ridiculously low offer as I am with the buyer. Needless to say I'm not even going to respond to it. I understand the housing market is depressed nationwide, but apparently buyers and their agents haven't seen the recent news on Tulsa's #1 ranking of top places to live and relocate to.:smac k:

[Goodpasture]

Brian, we are seeing some decline in the Owasso/BA/Jenks/Union markets in certain sectors. For example, in disaggregating the housing inventory we are finding that there is currently a glut of golf course housing. Between Bailey Ranch, Battle Creek, Forest Ridge, the new Canyons in Owasso, etc, etc, etc, builders trying to move new inventory, are offering incredible incentives all while existing houses are sitting vacant. I think it is a temporary depression in the market, and that once it back into balance, values will recover rapidly. But for now, existing houses in excellent condition are competing with new houses with incredible sellers concessions. You can't afford such concessions, and most people who bought in the past 5 years can's afford them either. If you have a new house listed for $225,000 that has the equivalent of a $40,000 concession competing with an equivalent used house listed for $225,000 with no similar concession, you have a house that is either not going to sell or that will receive a lowball offer.

[briansgi]

That goes against everything I've heard and read regarding the housing market in the Tulsa and surrounding area! If builders can make those large of concessions to move their inventory what does that tell you about the margins they have on their houses??

Good thing I don't have to sell, I'll just rent it out for a year and see what the market is like then.

[Goodpasture]

Not all portions of the market respond the same. We can show that one year ago, houses sold within 5% of the original list price from MLS data. (Let me preface this that I am not using actual MLS data, but using random numbers for illustration sake) and we can show that right now houses are selling for an average of 5% within the original list price. Which would indicate a relatively stable market, wouldn't it? And if the mean List price is 7% greater than it was a year ago it would appear to be an increasing market.

But that doesn't deal with what we call "disaggregation" or where the inventory is located....what part of the market does the inventory attract.

Under normal circumstances I do not put a lot of value on the differences between a 3 bedroom and a 2 bedroom house of similar sizes. I generally adjust for size, but not for room count. However there is an area in Tulsa where I have to look at the room count. It is a very important consideration in the purchase of a house for some people.

There is an older Hardesty neighborhood in the eastern portion of the city. There are about 15% two bedroom houses in this area. They typically sell for 10%-15% less on a price per square foot basis than their three bedroom counterparts. In trying to discern the reason for a discrepancy that doesn't exist in most other neighborhoods, I realized that the primary market for these houses were an ethnic minority. Part of the culture of this group of people is being Roman Catholic. Part of being Roman Catholic of this ethnicity is large families. Two bedrooms do not meet the basic needs of this group of people, consequently a substantial discount must be offered if it is to sell.

So, even in this relatively homogonous area, three bedroom houses are selling rapidy at close to or sometimes above Listing Price, while others in the neighborhood are selling well below the Listing Price.

While over all the trend in value is upwards, within segments of the market, the reality is that it can have both downward and upward trends in value simultaneously. It is how the market is segmented (how are the various potential buyers grouped) and how the inventory is disaggregated (how the listings are grouped).

At this point in time, it is likely that the $225,000 house is actually competing with a $240,000 new house, based on square footage, amenities, and, in the final analysis, the actual monthly cost of ownership.

One other element has been introduced in the past year and a half.....Energy Star. A house that is Energy Star Compliant is worth more, simply due to operational costs. I am beginning to see discounts being asked for for a non-Energy Star housing. A house with a total monthly energy bill of less than $250 is going to demand more attention than one where the energy bill is over $500. This is an indication of the depreciation called functional obsolescence, and it is going ti impact houses all over the country in a very negative manner.

An example is insulation. Energy Star houses typically have an R-50 or more ceiling and a R-30+ exterior wall. A three year old house is lucky to have an R-38 ceiling and an R19 Wall. Cost at construction is less than 2%. Renovation costs is closer to 10% of the value of the house.

[TulsaArtist]

We may be the top place to relocate to, but that doesnt mean things are getting better. If the rest of the nation is plummeting, and we are only sliding down a bit (for now), that makes us look great, but prices may still fall some, not go up. Last year and the stats we get from that and the first of this quarter may have looked good, but that was mainly from oil. The rest of this year is going to paint a less rosy picture as Tulsa begins to catch the recession. Then too as has been mentioned before, depends on where you are in Tulsa and the metro, and the demographic trends.

[briansgi]

I told my realtor when she emailed me the offer I wasn't even going to respond. She called the buyers agent and relayed that message and a few minutes later the offer magically increased $25K! So at least now we're in the ball park of making a counter offer.

[DogLover99]

At leasst you have an offer! If you have to sell, work the deal as well as you can and make an effort.

That someone made you an offer, they're interested in your house. Good luck, I'm crossing my fingers for you.

I'm sitting in a 5,000 sq. ft. house on Keystone which has been on the market for 15 months. My husband was relocated to Philadelphia 14 months ago, luckily they're not pushing him to be there. I'd be thrilled with an offer, but we're hearing the same thing - people are looking for a fire sale (which we're not having!). Realtor wants us to drop the price but I think he's lazy. Willing to wait until the market (and the buyers) straighten themselves out!

[briansgi]

We now have a contract, inspections were today, still awaiting how bad they nit picked everything. After I told my realtor I wasn't even going to respond to their first low ball offer of $174K they came up to $195K. The contract settled at $217K after a couple counter offers on both sides, so I'm pleased. I guess the buyer was just testing me to see how bad I wanted to sell, with that ridiculously low first offer. Good thing is I don't have to sell. In fact if the inspections come back and they nit pick numerous items I'll just keep it and rent it out. At least if it's rented it's my understanding I can then take a tax write off on renovating the house, such as new heat/air, new roof, etc. I really don't want to mess with renters, but if it comes down to that I can end up making some good money each month on rent!

[linicx]

I would have to disagree on one point. A three bedroom two bath house has always sold faster and at a higher price than a two bedroom house unless the two bedroom had some specatraular features and there was room to expand. In the few years before the housing bust, it was a sellers market. Everything and anything was fair game. Prices were outrageous, anyone could get a house. What you see today is the result. Now it is a buyers market. The buyer that gets a good deal today will have a few years to wait before they make a profit. If they ever do. If the banks revert to the 20% down with good credit, you'll see more renters and less home owners again. And there will be a lot of empty homes in the housing glut that will be razed becaise they are no longer fit for human habitation. This is what happens when a house sits empty for two or three years with no heat or air, The mold and interior rot takes over. I've seen it far too ofen in hte ltast three years. The bust was long overdue.

[Goodpasture]

Originally Posted by linicx

I would have to disagree on one point. A three bedroom two bath house has always sold faster and at a higher price than a two bedroom house unless the two bedroom had some specatraular features and there was room to expand.

But if you analyze the sales, you will find that the difference in the price per square foot is marginal at best. In fact, the contribution of the third bedroom is often swallowed by condition considerations.