Perrysburg Blog

Fearless 2012 Real Estate predictions from Jon:

1. Interest rates will be talked about more.  If they go up we will be screaming at how stupid we all were to NOT lock in.  If they stay at these historic, ridiculous lows it will mean that the economy is still in the tank.

2. An aging population demands “NO MORE STEPS!”.   So if you have a first floor master, a ranch, a main floor condo – all is good.

3. Perrysburg Values.  I fearlessly predict more of the same!   Values have held steady in the 43551 (more on that in a later post).  I see nothing that will change that.  You can look HERE to see the latest quarterly MSI numbers for Toleod’s Metro area.  See all those “negative signs”?  That’s bad.

4. Perrysburg Sales.  No new projects for sale.  No new plants being built.  No new big corporate moves.  More of the same  -  but note that there are several hundred new rentals opening/just opened up.  That SHOULD increase demand for single family housing the Pburg School district in the future.

5. Perrysburg REO’s.  That’s bank owned foreclosed property.  More.  Lot’s more.   Great news if you are a buyer.  Horrible news if you are a seller/owner.

6. Perrysburg Investment Property.  Blah.  The best deals extant are HUD houses in Toledo/Sylvania/Oregon/Maumee/Rossford.  Amazing deals.  But . . . HUD foreclosures are FHA loans that have gone bad.  The VAST majority of Perrysburg real estate closings now are FHA loans.  You do the math!

7. The Economy.  Holding pattern.  Solar soars/solar cools.   Autos crash/autos recover.  Caps and Snaps sell/Glass shines.  Corn and wheat are up / ethanol is cool.  Just more of the same.  And as I have repeatedly opined housing values and prices are going nowhere until the economy booms again.

8. Threat of Federal “HELP”.   The Fed wrote a big paper – about helping the real estate market.   There are ideas to lower mortgages, rent empty houses, maybe even store large amounts of newly printed dollar bills in foreclosed homes’ attics for all I know.  Lots of ideas to “help”.  If they happen – things will get worse.  There are operative laws of unintended consequences at work.

9. Best real estate search tool – Google.  More and more valuable.  It’s why I spend more money on Google advertising real property than any other broker or agent in Toledo.

10. Mobile.  If you are looking from home at houses it will most likely be on a tablet/iPad.  On the road? It’s your iPhone or Android.  Mobile tools using real estate software designed to look good and work well on mobile devices used by on the go mobile shoppers.  No looking back – mobile is the way to show/sell real estate.

11. Just Walk Away.  If the economy does not improve, if the employment picture is still grim, if the national debt is still exploding . . . I expect to see more and more “tactical defaults” as homeowners upside down simply leave the house empty and walk away.  Over 1/2 of the new bank assignments that I get are for abandoned houses.   I did two last week in Perrysburg – both empty houses/condos.

12. Longer and longer escrows.   We used to close in 30 days.  45 is the new 30 in 2012.   Every deal has more hoops, shunts, and landmines.  None of them are easy/fun/simple anymore.   It takes more time to close and more energy to get to the closing table.  I am writing a new special report on this very subject . . . .

Overall another challenging year.   Opportunity to buy great houses at a great discount.  Tough times to sell if you are leveraged.

I sold over 300 houses in 2011 – and it was my best year ever.   Tough market?  No.  A market you can thrive in if you know what is happening and you have ideas on where it is going.  You need help with your real estate predictions . . . you can always call me.

Which, as I remember, used to be about 10 developments/projects/unit types that I could memorize/almost perfectly know, has transmogrified into a huge amount of property and property types.

Which is a good thing.

If you want a condo/zero lot line/downsized property.

But . . .

If you are a buyer you have to deal with a SUBSTANTIALLY reduced inventory.   There are 10 to 20 to 30% fewer condos on the market for sale than in the recent past, depending on how/when you measure it.

If you are a buyer you have to deal with SUBSTANTIALLY tougher loan regs and rules.   You cannot just waltz in with your FHA loan approval to pick any condo project.  It has to be “approved”.  And certified.  And the number of tenants known/capped.

If you are a buyer you are going to perhaps pay more too.  Because of the small sample size and the disparate values of condos in the 43551 a quick and dirty $/sq. foot analysis or median price analysis is not a good way to find value.  You really have to go unit vs. unit for comparable properties.   And it “seems” to me that some values have been seriously hit hard . . . in the lower end price range.  And some values have firmed up . . . paradoxically in the higher price range.

If you want a new condo you have a problem.  Only one or two projects are building – and you will most likely need to ink a contract for a custom property.  One of my clients who just did such a building contract “set a new record” in the Perrysburg condo project they are buying in . . . imagine that!

So . . . fewer properties on the market.

More properties selling (I think I sold 2 this week in Perrysburg. . . )

And weird, wonky prices.

The Perrysburg Condo Market.

If you are a landlord in Perrysburg in 2011 you have much to be thankful for.

Your property is most likely rented.

Your tenants are on “good behavior mode” as they know that if they have to look for another 43551 rental house or condo it will not go well.

Your bank account is probably in better shape with rent receipts than if you had to sell and mark your asset to market on the bank/REO depressed current market.

And there are no hassles in Perrysburg from the local constabulary . . . unlike a rather large and more regulatory rapacious city just to the north that I will not mention.

There are – at least according to my Mark 1 Eyeball – fewer for rent signs up in Perrysburg now than in recent memory.   Only 1 of my managed properties and 0 of my own properties has a vacancy.

The WSJ has a nice piece on the situation here.

Implications?

If you are fully invested in the stock market . . . . you must be addicted to risk.   Diversify into some nice multifamily in Perrysburg or Sylvania.

If you are fully rented out . . . now is the time to raise your rents.

If you are looking to get out of the rental market . . . not a bad time to sell your multifamily property in Perrysburg (since values are based on cash flow imho).

Wow.  It snowed last night.   Which caused me to order snow tires.  I am expecting the worse . . . and hoping for the best this Winter.

Which leads me to the current market stats.

I am expecting the worse . . . and hoping for the best in the Perrysburg real estate market.  It SEEMS like things are more “back to normal” . . . but IMO things are not going to go back to what used to be.   There has been too much economic disruption and movement and change.    Values and taxes and employment have changed and shifted.   But every dollop of good news comes with a side order of bad news . . . so please do not accuse me of parroting the NAR line of “now is a great time to . . . .”

Here are this month’s single family and condo sales and numbers in Perrysburg:

Closed Sales: 82

Median Price: $204,500 (that’s the second highest monthly median price in 2 years)

Average Price/Sq. Foot (sold): $95

Sold House Average Days on the Market: 152

October 2011 Number of Houses Listed: 339

Number of Houses Pending: 41

Months Supply of Inventory: 6.6 (which is why the market seems better this month . . . )

So there you have it.   Things are getting more balanced.   But the market is still very price sensitive and buyers are still in the drivers seat.

That’s the abbreviation for “good news . . . bad news”.

I have seen lots of multiple offers in Perrysburg.

I have seen a seeming “shortage” of good listings priced to market.

But is that good news?  Or is that bad news?

It really depends on where you are sitting and whose side you are on.

A buyer/future homeowner?  That’s often bad news.

A seller/homeowner?  That’s maybe good news.

Now – more GN/BN.

The Case-Shiller numbers just went UP for the first time in a long time – as far as Detroit matched pair real estate numbers go.  And I really do believe that Detroit is now the perfect analog for Toledo real estate numbers and velocity of sales.

So . . . . that’s good news, right? Yes.   I think so.

What’s the bad news?

Mortgage defaults – i.e. future foreclosures – are going up for the first time in 2 years.

It came from a blurb on housingwire.com:

“The national delinquency rate for borrowers who are 60 days or more past due on their mortgages rose for the first time in two years during the recent third quarter, TransUnion said Tuesday.

The delinquency rate for seriously past due loans edged up to 5.88% in 3Q, TransUnion reported.”

Which tracks what I am seeing – lot’s more foreclosures in Perrysburg and Maumee.  

That is the bad news.

You know I love numbers if you read this blog.   More numbers!   More stats!  More graphs!

And you might think that I therefore believe that you figure out the Perrysburg real estate market by reading the statistics reported by the media.

But, the numbers aren’t always the numbers and here’s why!

Sales Prices

• May include seller-paid buyer’s closing costs and/or bonus commissions paid to buyer agents that distort the true property value.
• On FHA loans that close today . . . almost ALWAYS includes 3.5% credits to the buyer.
• May include major repairs and or other credits on cash sales.
• Often use funky/wonky things like tax prorating methods to shove more cash to a buyer.

Average Prices

• Can be influenced substantially (higher or lower) according to the mix of properties sold during the time period.
• In a small sample size – one or two large sales can skew the numbers.

Days On Market

• Can be gamed by pulling the property off the market for 30 days, then re-listing.
• Can also be gamed by changing the address spelling (North First Street vs. N. First Street or N. 1st Street, for example).
• Often covered up by switching brokers.

So . . . the numbers you read are not always truthful.

But I still love analyzing and sharing them!

Here is a tabular report of the MSI – Month’s Supply of Inventory – for Perrysburg as of 30 days ago.

Seasonality is stronger than it was 5 years ago.

20% or so fewer houses active on the market vs. 2 years ago and WAY down over 5 years ago.

8 months or so of inventory?  Pretty balanced in my opinion – as I am hearing from more and more buyers who are NOT getting the house they bid on – which was unheard of last year.

The numbers are firming up . . .

The casino is hiring . . .

The sun is shining nice and warm in October . . .

And my team and I are selling lots of property . . .

So what do the numbers say?

Fewer Perrysburg houses on the market.

More houses in Perrysburg pending sale.

More houses in Perrysburg closed.

And fewer houses in Perrysburg failing to sell.

What’s not to like about these numbers as seen on this chart?  (you can click on it for a full size view . . . )

A recovery?  I think not.   Not until more and better things happen on the employment front.   We are seeing natural market forces balancing out a bloated inventory.   I am seeing cash investors moving in to buy good deals (I personally wrote 4 cash offers today, and negotiated a cash offer on a Perrysburg listing . . .).   I am seeing sellers who can’t afford to sell call the bank, or lease the house out and move to Florida or S. Carolina anyway.

No.   Not a recovery.   But something better than what we had last third quarter in 2010.

Which is what we have in Perrysburg.

I could write about the increase of homes being foreclosed.   And I could write about the national and local statistics of homes “under water”.   And I could write and tell you about the personal trauma so many Northwest Ohioans are facing in this market.

And yet . . . there are many homes selling for MORE than asking price.

And with more than one offer coming in.

The market is bifurcated – with 2 sides.  2 halfs.  2 realities.

Case in point: the single family MSI in the 43551.  That stands for “months supply of inventory”.

It’s a measure of how balanced the market is.  How “hot” it is.  How hard buyers or sellers have to fight for each deal.  It is, in one sense, a worthless number!  Because you only buy one house.  You only have one house to sell (normally) if you are a seller.  The medians and averages and group aggregation of data mean little in one little deal.

But they do set the tone for the market.

Right now?   Just 6.1 months supply of inventory in Perrysburg.   Last August there were 260 houses for sale in Perrysburg and 7.9 months of inventory.  Last month there were only 224 houses for sale and with 37 under contract just 6.1 months supply of inventory.   MSI always drops in the Summer.  It always goes up in the Winter.   But that is a 23% drop in 12 months from August to August.   So the Perrysburg market “feels” hotter if you are a buyer.   If you are a seller?   The broken record says “it’s all about price and condition” and it is.

Of note, at least to me, are the following:

May of 2009 – 352 houses for sale.   May of 2011?  310.  Down 12%   Buyers have fewer houses to choose from . . .

May of 2009 – 30 houses “sale pending”.  May of 2011?  51.  Up 70%  Buyers are buying more houses . . .

May of 2009  – 24 houses closed.  May of 2011?  36 closed.  Up 50% Buyers did buy more houses . . .

Prices?

This is what is interesting . . .

May of 2009 – Median “For Sale Price” – $212,450.  May of 2011?  $219,000.   About the same.

May of 2009 – Median “Closed Price” – $187,200.  May of 2011?   $188,500.  About the same.

May of 2009 – Median “Under Contract Price” – $227,500.   Last month?  $175,000.  Down a whopping $52,000 and 23%.

What is going on? More houses selling.  Fewer houses on the market.  And a blood bath, apparently, in what buyers are buying.

They are INCREDIBLY price sensitive right now.

Now – these are monthly numbers in a restricted sample.  So they dance around a lot.  But the volatility is not in the asking price.  Or even the closed price.  It’s in the price of the homes that buyers are putting under contract.    April and May are normally big months for houses in Perrysburg going pending – and right now if the price is right it can be sold.

Price it wrong . . . and it will sit.

More stats:  we are down to 5 months supply of inventory right now – a recent low.  And the average house takes about 4 months to sell/close.

Pretty data pictures:

Just for your perspective.

Just for comparison.

This is for the City of Toledo ONLY over a 3 year period.

2010 Q3 vs. 2007 Q3 . . .

1300 fewer listings on the market.   -20%

200 fewer listings pending. -23%

300 fewer listings closed.  -35%

That is a changed, impacted, depressed market.