Market Stats so Scary they were Released on Friday the 13th

The local Vancouver Clark County Real Estate market report, as generated by RMLS, came out Friday the 13th of all days,and whether you are a Triskaidekaphobiac or not, these were some scary numbers.

While Months of Inventory (of houses for sale) was down January to February, it was up year-over-year/February. There’s enough real estate data points, ratios and percentages to give anybody wiggle room to spin this report. Really, with enough paint, you can paint this report any color you’d like… as for me, my favorite color has always been transparent.  I know lots of folks can simply throw out the numbers. And while that is the easiest way to get information into the public’s eye, I prefer to dig a little deeper and look at those same numbers from multiple, transparent, perspectives.

Most importantly, where will the Vancouver Clark County real estate market go from here? As a reminder, Months of Inventory (MOI) is defined by dividing the Active Listings at the end of that month by the Number of Closed Sales during that month [Active/Closed]. In my humble opinion, MOI is a key indicator of where we are at and where we are going.  Says something about supply and demand.  I guess that’s important economic mumbo-jumbo.

With MOI in the Vancouver Clark County real estate market standing at 18.6 months in February, it was a 11.4% decrease in MOI from January (yay!), sounds good right?  Sure, but February historically has a decrease in MOI from January.  Problem being that when you consider the average MOI decrease over the past two years from January to February was more than 17%, it doesn’t smell as pretty. Basically, while we decreased MOI January to February, we did it at a slower than historical rate.  In technical jargon, that’s called a bummer.  Still with me?

OK. So we get that the reduction in MOI was slower January to February this year than in the past, that’s just one number.  While I agree, lets continue digging.  Unless you’ve been living under a rock (whereby you’d have little concern about the time it takes to sell a house) you know that MOI has been increasing year over year for the past three years.  More importantly to me is the rate of increase.  For the last four months of 2008, the average year-over-year increase in MOI was 21.2% – that by itself is a BIG number.  Problem is that in January, that number grew to 23.5% and in February, it was 27.4% – Yikes!  While the Law of Large Numbers says it can’t go on this way forever, the year-over-year MOI number is still expanding. Not a good thing.

Back to my question… where do we need to go from here?  Please understand, I bought my crystal ball off of eBay, so I’m not saying its perfect.  But here’s what I’d look for in the March report.  I’d like to see the MOI for Vancouver Clark County in the 14.6-14.9 range (or less, of course!).  One, that would gain some positive traction for decreasing the historical February to March MOI reductions; and two, that would reverse the trend of expanding year-over-year percentage increases back below the number from the past three months. Now really, while I’d like to see that number at about 7.5, I’d simply take movement in the right direction for  now.

I know, them there’s a lot of numbers. And while I may come across as the boogie-man on a scary Friday, I really do think we are searching for a bottom. I talked before about not buying the rah-rah hype.  But, I believe we are finally closer to the bottom than we are the top. The last three offers I’ve written for clients all had multiple offers on the house. Pricing numbers are well on their way to returning to the historical trendline. We’ll likely continue to have an influx of short-sale and repo/REO inventory that will keep a lid on an explosive bounce from the bottom, but if trading stocks for six years in a previous life taught me anything, I know that no one rings a bell when it’s time to buy.

So while it may be scary out there, it’s always darkest before the dawn.

A List Price that Would Make P.T. Barnum Proud…

Finally, RMLS – our local multiple listings service for real estate in Vancouver and Clark County – has caught wind of a tricky tactic that was happening way too often.

Recently, we noticed some real estate listings that simply looked too good to be true.  I mean, I realize short-sales are all the rage, and there have been some screamin’ real estate deals for smart buyers out there.  But the “List Price” on some of these left me scratchin’ my head and searchin’ for my checkbook.  (Right, like I could have done any damage with the latter of the two, but I digress).

First, some school: List Price is defined as a published or advertised retail price of something that can often be discounted by the seller, or a basic published or advertised price, often subject to discount, or even the price at which a product is usually sold to the public.

In all of these definitions, it is an established price, and for the most part, one which a buyer can assume is somewhat negotiable.  Of course, normally – and especially in this market – one would assume the negotiations could generate a reduction from the list price. But there’s the rub. In a questionable marketing ploy, some listings seem to have been priced to simply generate buyer leads.

Sure, there have been real, stupid-cheap real estate deals out there (usually with some big strings attached), but in some cases, listings seem priced simply to pull buyers out of the woodwork, with no true intent to sell at that price.

Well, now according to the MLS for Vancouver, “Listing a property at a lower price than what your seller is willing to accept is a violation of RMLS™ Rules and Regulations (see section 8.5).  Properties listed for less than the seller will accept obviously attract attention because they are literally too good to be true.  Enticing buyers with false information is unethical.” (emphasis mine).

Good. The last thing we need is bait and switch, loss leader tricks in this business. From now on, when you see that house on Craigslist, priced tens of thousands below market value, think twice, and then give me a call or shoot me an email… we’ll get the real story, and you won’t have to worry about being fodder for P.T. Barnum’s historical phrase. (which, by the way, did you know he never actually said…)

Clark County Real Estate: “Days on Market” Doubles!

Well, not really, but the headline caught your attention, no?

Days on Market (how long it takes a home to sell in the Vancouver/Clark County market) jumped from 75 in September, 2007 to 146 in September, 2008, a 94.7% jump, at least according to the details in the way the Columbian reported the September number.  Yikes!

Now, as Paul Harvey used to say, the rest of the story.

Because of the recent challenges in the market, RMLS (the multiple listing service that includes Vancouver, Clark County and Southwest Washington) changed the way they calculated Days on Market (DOM).  The move seemed focused on changing seller’s “expectations” of how long it takes to sell.

The old way, a representation of the current listing DOM, was determined based on only the most recent real estate listing. Where the new “Total” Market Time, reflects the cumulative number of days on the market, including those from a previous real estate listing (so long as the house wasn’t off the market for more than 31 days in between).

Clear as Mud Pie?

Regardless of the complexity of the definitions and massaging of numbers, the new way is actually a much better reflection of the time it takes to sell a home.

Days on Market is a key factor in a listing, especially to buyers. Our free home search service on our site www.search360homes.com allows buyers to sort their search based on time on market, and in conjunction with our daily updates, is a great way to stay on top of the what’s new (or old, if you so desire) on the market.

For kicks, I searched our site and with a little sleuthing found that the “oldest” currently active home on the market has been for sale for 756 days, and counting.  Yes, Seven Hundred Fifty Six.  That’s a lot of time to make mud pies.

Is 17 Your Lucky Number…?

Not if you are a seller in today’s Clark County real estate market.

No matter how many ways I’ve looked at the recent statistics from the local MLS, well, they ain’t purdy (with apologies to all my English teachers). Average “Months of Inventory” (MOI) now stands at 17 months. OK, so that’s a tad bit different than the 1.7 Months of Inventory (MOI) in the Portland market in the summer of 2005. Amazing the difference a decimal point can make!

(A quick reminder, MOI is defined as the time it would take to sell all the houses currently up for sale, based on the number of actual sales, if no new inventory came on the market. Opinions vary, but a market with healthy balance and equilibrium will have between 6.0 and 8.5 MOI. )

As always, we see different areas of town vary in their market performance. If you are looking to sell your home in Fisher’s Landing (7.3 MOI) or Salmon Creek (10.5 MOI) you likely stand a better shot than say, Washougal (33.6 MOI). Yipes!

With the amount of competition throughout the Clark County real estate market, it behooves a seller to be properly positioned. I have talked before about the fact that only the best deals are getting done. And remember, “best” does NOT simply mean just cheapest price, but a well thought out strategy, combining price and condition that creates an unbeatable market presence compared to competing inventory.

We have recently started doing a complete staging analysis as part of some of our home-selling packages. We bring in someone to add another set of eyeballs to the evaluation of property condition and what needs to be done to facilitate a timely sale. While these detailed reports tend to be very, shall we say, well, detailed, I’ve made my sellers promise not to beat the messenger, because in this market, a smart seller will take all the help they can get.