A few weeks ago I said I was sticking my neck out – that I thought we had stopped declining and that prices were slightly up in our little world. I was cautiously optimistic about the year ahead. In fact, if we were seeing that kind of positive move in the last quarter of 2010 – I thought for sure the first part of 2011 would just be dandy. Oh how we want things to get better! So . . . ARE things getting better?
I don’t know, I’m so confused! Last Monday I did what I always do on Monday morning; I checked the market stats for the week. Yikes!! Now maybe this is just a blip – but of the 25 homes pending in Alamo (which is a pretty average number for early spring) 20 of them were either Short Sales or Bank Owned! That’s 80% of the homes that are pending are distressed!!
Alamo has not historically been the place where bargain hunters shop – so I was surprised to see that pretty much the only homes that are selling in Alamo are distressed in some way. Numbers of distressed properties as a percentage of rooftops continues to be very low – just under 2% of the homes in Alamo are in Default and a tiny, tiny fraction – about 1/10 of 1% are Bank Owned. But I guess that’s what people want, because that’s what people are buying.
Danville is fairing a bit better – but still alarming. Almost 60% of the homes pending in Danville are Short Sales or Bank Owned. And maybe that’s why NOTHING is selling in Diablo, because nothing is distressed in Diablo!
So was I wrong when I “stuck my neck out” and said we had stopped dropping? Maybe – you know me – always quick to accept when I’m wrong. But I’m not sure I am wrong about home prices – I think I may just be wrong about the home buyers out there.
Everyone wants a deal – that’s no surprise. But our buyers right now want more than a deal, they want a bargain, a steal, a giveaway! I am working with a client who wants a deal so badly she can taste it. We find things that meet the 80% rule – 80% of what the buyer wants, so worth looking at.
The properties can be a great value – or we can make a good case to the unrealistic seller about why it should sell at this realistic price, but because it’s not distressed, short, bank owned or off in some other major way this buyer thinks they’re not getting a deal. And they want a DEAL!!
So what is a GREAT deal in our market? I’ve seen houses sell that seemed way over priced. Average price per square foot is hovering right at about $350 in Alamo, $300 in Danville. And because we don’t have cookie cutter tract homes for the most part, this is nothing more than a starting point.
Still – mix in a home you love, in a location that is great, and get it at or below the average price per square foot and that’s a great deal. So what about that house that sold in Alamo late fall last year for $606 a square foot? Was that an anomaly? YES, YES, YES!!
There is a huge disparity between what the homes are SELLING for and what sellers are ASKING for. I know there are exceptions (like the home mentioned above), and a seller just needs to see one of those to believe that his or her home is also the exception that will command that crazy price. But chances are it’s not.
I have one client who always says “but this house is so unique, there’s just nothing else like it out there”. That may be true, but all that really does is limit your pool of buyers and force a lower than average price because you need that buyer who wants that unique home. And never, ever forget that big homes command lower price per square foot because in our world, you are paying as much for the land as for the house. So smaller houses will always command a higher price per square foot. Especially a small house on a big lot.
Some of you have probably heard me say with respect to price that “the market speaks in offers”. If the home is a good home, and it’s priced right, it will sell, quickly, often with multiple offers. So if you aren’t getting a lot of activity and offers – chances are you are overpriced. There are a lot of buyers out there – A LOT of Buyers!! But they want a DEAL, a BARGAIN a STEAL!! And as evidenced in this week’s market stats – they aren’t buying unless it’s just that.
So if you are selling, be realistic, and if you are buying, be realistic. Homes only sell for what someone is willing to pay, and buyers are only willing to buy homes at “bargain prices” right now. My neck is still out, especially because of interest rates still at historically low prices – don’t let that pass you by! I think 2011 is going to be a good year to buy or sell.
Ok – I’m still really struggling with my “These are a few of my favorite things” article. It just keeps getting longer and longer . . . I think I may just create a list that I’ll put a link to. Diablo Magazine’s Best of the East Bay I am not! But do remember that if you ever need a recommendation for just about anything – click on the “Ask Nancy Anything” link and leave me a message. If I don’t have a recommendation, I can find one very quickly. I have at my finger tips a virtual universe of locals who are happy to point us in the right direction!
Have a great week!