The real estate market has taken us on a pretty wild ride for the past decade. The pendulum has swung from an unhealthy high that peaked in 2005 and 2006 to an equally unhealthy low starting in about 2008. There were far too many foreclosures and short sales.
Today there are still a lot of us who paid more for our properties than the current value, but the pendulum is beginning to settle. The Pollyanna in me says that we are finding our new normal, that place in the center of the spectrum that will make more sense to all of us.
Personally, I don’t trust numbers much. Averages can be so easily distorted by one exceptionally large or small sale. But market trends are more trustworthy. Check out this Market Comparison Chart showing the SOLD data for Valley County since 2007. It looks like a bunch of dry gibberish at first glance, but a minute of study brings the obvious trending into view.
2015 was a bit of a mixed bag for real estate in Valley County. The number of home sales was down a little but the average sales prices increased in Cascade and McCall. Donnelly saw some drop in the average home prices.
Cascade experienced a pretty dramatic increase in the number of bare land sales, though the average price decreased. Donnelly and McCall saw fewer land sales in 2015 but enjoyed an increase in their averages prices.
Take a look at this Market Comparison Chart showing all of the numbers from 2007 through 2015. It looks pretty dry at first glance, but if you spend just a minute I think you’ll find it interesting – maybe even surprising.
2014 was an interesting year for real estate in Valley County. It felt like we were finally breaking out of the difficult years of the downturn and moving into a more healthy, prosperous real estate climate. But when I compiled stats to compare the numbers of properties sold along with the average prices, I discovered that things hadn’t changed as much as it seemed.
From 2013 to 2014 the market in Cascade held at about the same level. Donnelly saw increases in both the numbers of sales and average prices. McCall’s sales decreased and the average prices increased. Take a look at this Market Comparison Chart showing all of the numbers from 2006 through 2014. It looks pretty dry at first glance, but if you spend just a minute I think you’ll find it interesting – maybe even surprising.
Personally, I don’t trust numbers much. Averages can be so easily distorted by one exceptionally large or small sale. But market trends are more trustworthy. Check out this Market Comparison Chart showing the SOLD data for Valley County since 2006. It looks like a bunch of dry gibberish at first glance, but a minute of study brings the obvious trending into view.
I saw it again this week – an extremely disappointed client (Bill) who missed out on a great buy. It was a bank owned house with a listing price just over $97,000. Bill made a full price cash offer and was sure he’d own his dream cabin soon. But the bank received three other offers and came back to each buyer asking for his “highest and best” offer price. We had no idea what the other offers were and Bill was immediately frustrated because “he’d given them exactly what they’d asked for”. I visited with him about his “disappointment price” (we’ll save that for another blog) and he did raise his offer, but not enough to secure his purchase.
Curious, I did some research on bank owned sales. In the first 6 months of 2011 there were 159 homes sold in Valley County. Of the homes sold, 66 (41 percent) were bank owned. Of the 66 bank owned homes, 19 (29 percent) sold for more than the asking price. THAT IS A SIGNIFICANT PERCENTAGE.!
Did you know that 75 percent of the homes in Valley County are second homes? There are lots of good points about that statistic.
- People like to be here and choose this area for their recreation and relaxation. They smile a lot.
- Emergency services and schools are strained less by part-time residents.
- Second homeowners are unable to take advantage of the Primary Homeowner’s Tax Exemption. This is a tremendous help with our limited Valley County tax base — and we thank you!
- Part-time residents bring energy, ideas, and life to our small communities. They tend to be wonderful neighbors.
Personally, I don’t trust numbers much. Averages can be so easily distorted by one exceptionally large or small sale. But market trends are more trustworthy. Here is a Market Comparison Chart showing the SOLDS since 2006 for Valley County.
The downward trend is apparent. Home values have slipped over 50 percent since the peak. Appraisers tell us that home values have declined at around 1.5 percent a month. And bare land has been even harder hit with a 70 to 75 percent drop in prices.
It’s not my nature to be negative. If I consider the big picture I can see the truth — the real esate market saw a very unhealthy high in 2005 and 2006. The correction started in the last half of 2007 and now we are seeing a very unhealthy low. Eventually, hopefully sooner than later, the pendulum will settle at a healthy middle. At least at that point we’ll have some stability and be able to operate in our new normal.
In this distressed market we’ve had to become familiar with new terms and new ways of doing business. Maybe I can help take away some of the mystery. Keep in mind that these are Karolyn’s Simplified Versions……
FORECLOSURE: When an owner is behind in mortgage payments the lender can begin Foreclosure. From the day formal notice is served, the owner has 120 days to bring his payments current or the property is sold to the highest bidder at a public sale. The highest bidder is almost always the lender because he has more invested in the property than a private party is willing to pay.
SHORT SALE: When an owner needs/wants to sell and he owes more than his property is worth, the owner can try to negotiate with the bank to accept less than full payback for his loan. Keep in mind that the owner may or may not be in Foreclosure during this process. There are lots of ins and outs with Short Sales that will be covered in future posts.
REO: These properties are Bank Owned. They have been repossessed and the seller is now the bank. The properties are traditionally low priced because the banks are anxious to get them off their books. The banks have their own time frames, forms, and procedures.
The term “auction” can be very confusing in real estate because it is used for two different types of public sales.
First, there is the type of auction we all think about – you know, the one with the fast-talking auctioneer who has several properties to sell in one afternoon. Usually those auctions are organized by a bank who owns several properties. There is a lot of advertising and hype in hopes of creating bidding excitement.
Second is the auction that is held as a result of Foreclosure. You may have heard the term “Sale on the Courthouse Steps”. At the end of the 120 day foreclosure period a representative, at an appointed place (courthouse, title company), calls out for bids on the property. Almost always the highest bidder is the lender because he has more invested in the property than other bidders will pay. And also because there is some risk involved in buying a property with no contingencies or title insurance. So, the bank takes the property and it becomes an REO to sell another day.