by Sean Hess (Sean@StAugTeam.com), Broker and Manager for St. Augustine Team Realty (www.StAugustineTeamRealty.com). Join us on Facebook and Google+.
I saw this question posed by a first-time buyer in an online forum last week, “Is the market going up or down?”
Anyway, this buyer was / is reluctant to make an offer. In other words, after seing a house she liked she wanted to sleep on it a few days before making an offer.
But in her market apparently “sleeping on it meant not sleeping in it,” because other buyers were making quick offers and getting the houses she wanted. So she had to keep looking for new houses.
At the same time her Realtor was pressuring her to make quick offers, cautioning her that prices were going to start rising back to 2006 levels and she wouldn’t be able to afford what she wanted.
So, in St. Augustine, what is going on in the market if you are a first time buyer (or any buyer)?
What's the market doing?
It really depends on what you are looking to buy and how much you are willing to spend.
Here it is in a nutshell:
The Hot Market (Don’t Sleep On It)
The hottest market in St. Augustine right now are non-Short Sale homes (“straight” sales and foreclosures, in other words), residential homes & condos (not mobile or manufactured homes) under $100,000.
In a lot of cases investors are paying cash for these homes, sometimes as soon as they hit the market.
The closer the price tag is to $100,000 the better chance it will sit on the market a little longer. And if it is a mobile home or manufactured home, or if it is a low-dollar condo with a high association fee (for example, a $100,000 condo with a $500 a month fee), then you can take your time…there should be plenty of inventory and you should have time to think about it for a few days before making an offer.
The Regular Market (Everything Else, You Can Sleep On It)
The rest of the single family home market (not mobile homes) is in balance. There are roughly an equal number of buyers and an equal number of sellers.
This is the “bread-and-butter” market from say, $125,000 to $200,000*.
Prices will rise in this market, but slowly, over the next year.
There is a certain lack of choice in this market at any given time, however.
For example, there might be enough homes on the market for every buyer who wants one, but there might not be a really great one for the price. At other times of the year there might be three really great ones in a certain price range. So it just depends on when you are coming into the market.
So if you see a really great home (and you know it’s a great home because you’ve been looking / searching online enough), then jump on it. But you still should have a day or two to think about it because other buyers are doing the same thing.
This situation (good inventory but a certain lack of choice at any given time) is currently creating a much stronger market for new home sales. If a buyer can’t find what she wants as a re-sale, she can build a new home instead. It might cost a bit more, but there are financing and builder incentives in place to lessen the blow.
This is keeping re-sale home prices honest…if someone gets on too-high-a-horse pricewise for a really average home, the buyers will just go and buy new construction.
Thus there will be no return to 2006 prices anytime soon.
Still Choice, Still Time
If you’re looking for a good deal and don’t want to fight the crowds, then going after a short sale is probably your best shot.
Short sale inventory is really starting to winnow down, but it still takes a certain type of buyer to go after a short sale. So you still have plenty of time and a lot of good choices.
Basically a short sale home is a home that is worth less than is owed on it.
The seller may or may not be facing foreclosure, but in either case they are trying to sell it for less than they owe on it.
For this to happen they need a market-price or near market-price offer from a buyer to submit to their bank. If the bank approves the offer price the sale will move forward and the buyer can get the home.
The banks can take FOREVER to approve these short sale offers (three to six to nine months in some cases). So the buyer has to have a lot of patience.
And sometimes (I would say about 20% – 30% of the time, based on what I’ve seen), the bank will come back and not approve the offer. This is after the buyer has already waited months.
So it’s not for everybody, but there’s a lot of great inventory to choose from if you have the patience and the moxie to do it.
You Can Sleep On It, and Still Sleep In It
For homes above $200,000* and vacation / 2nd home / beach condos, and mobile or manufactured homes, you still have time to go out and look, sleep on it a few days, and then make an offer.
The vacation / 2nd home / beach condo market is finally starting to turn the corner health-wise.
With the overall economy improving, people are starting to feel comfortable about their savings and no longer hoarding cash. And since the beach condo market has essentially been dead for the last four years, there is a lot of buyers who put off a purchase but are now coming back into the market all at once.
That being said, there is still plenty of inventory and will still be plenty of inventory for 2012. So take your time and find the right one.
*Homes above $200,000 are in a healthy and balaced residential market.
The difference between a home priced at $125,000 and $200,000 is that a lot more people can afford the $125,000 home.
Less buyers that can afford homes above $200,000 means less competition with other buyers.
But the inventory is still in balance, though, which means even though the homes take longer to go off the market, you still don’t have loads and loads of inventory to choose from.
Also, if a home that can be priced at $300,000 suddenly shows up for $250,000, it will go off the market fast. So don’t expect it to still be there if you wait.
What happens in these cases is that instead of just $250,000 buyers competing for this home, all the buyers between $250,000 and $300,000 will be competing for the home. If a fast buyer sees it and jumps on it right away it could go off the market immediately.
Or, it could actually sell at a higher price because multiple offers may come in simultaneously on the home.
Hire St. Augustine Team Realty and its nationally award-winning marketing team when you go to buy or sell your next home. Email ReQuestion@StAugTeam.com or call Broker Sean Hess at (904) 386-8327.