Market Notes – August 25, 2011

I just received the August survey results from Campbell/Inside Mortgage Finance, a firm that surveys agents and brokers from across the country. This is one of many Real Estate-related surveys in which I participate. Their results are broken down both in general groups of buyers and/or sellers and by geographic region.

scottchan / FreeDigitalPhotos.net

Last week my blog entry, “July 2011 Market Data” reported that the number of local cash sales is way down compared to 2010. This most recent national survey reports that July 2011 investor purchases are at a 12 month low. This survey also says that about half of investor purchased properties in July 2011 (48%) will be rented out, compared to 28% in July 2010. Is that due to tighter loan requirements for first-time buyers (investors wanting to re-sell have a worse market), a lack of confidence in the economy by buyers, or something else? It is a big difference in numbers.

Some survey comments conclude that investors are acting decisively while first-time home buyers seem to be demonstrating fear and indecision. The rental market in my area is robust, so perhaps investors are leveraging those conditions.

The sales price to listing price ratio for our region, the Industrial Midwest (MO, IN, IL, OH, MI) shows that damaged foreclosure (REO) properties sold at a 91% ratio. That means a $100,000 listing sold for $91,000. Move-in condition foreclosure homes did marginally better at a 93% ratio, short sales sold at a 91% ratio and non-distressed homes were at 94%.

Remember that homes in better condition sell for more money, too, so while the percentage differences are small, the ultimate purchase prices are much wider. The average sales prices on these categories are: Damaged REO - $57,938, move-in condition REO - $114,015, short sales - $150,493, and non-distressed homes sold for an average of $205,604.

If you are looking for a house, a foreclosure or short sale can be a great bargain. Just know the difference in timelines (and processes) to close, and also know that you still pretty much get what you pay for. A $57,000 house will need a lot more work than a $114,000 house.

As always, if you have real estate questions, feel free to contact me.