Perrysburg Blog

• 1.8% of all U.S. homes are in foreclosure
• Therefore, 98.2% are NOT in foreclosure
• 33% of all owner-occupied homes don’t even have a mortgage!
• 18% of all U.S. mortgages are upside with 2/3 of them located in 7 states (Arizona, California, Florida, Nevada, Ohio, Michigan, Georgia)
• 2.8% of all U.S. mortgages are three or more months in arrears.
• There are 18.6 million vacant homes in the U.S. now.
• 25 MLS closed sales, single family, in Perrysburg, February 2009
• 305 MLS closed sales, single family, in Lucas and Wood Counties, February 2009
• Average Toledo Board of Realtors agent sold just .25 of a home in February 2009
• Jon Modene closed 11 transactions in February, 2009.
• Perrysburg number of listings for sale on MLS, end of February, 2009 = 305
• Perrysburg number of listings that went “pending” in February, 2009 = 30
• Perrysburg median SOLD price, February 2009 = $172,000
• Total number of houses for sale in Lucas and Wood Counties in February 2009 = 4838
• Total number of houses that went pending in Lucas and Wood Counties in February 2009 = 363
• 11.1 Months supply of inventory in Wood and Lucas Counties

When Will The Market Thaw??

I am asked by about every client or customer: “When is it going to turn around (in real estate)?”

I don’t know the answer.

I used to say “If I did have the answer to that question I would be working on Wall Street” – but that’s not a good place to work anymore!

Here’s what I think:  when the number of new bank owned properties starts to dry up, then the market will change course.

But you must know this – Fannie, Chase, Freddie, Bank of America, et al have all had a moratorium on new foreclosures and evictions for the past 60 days – and that “REO HOLD” has NOT slowed the pace of new REO properties coming on the market.

2 real estate equations that cause the most confusion?

Easy:  Cap Rate and Absorption Rate.

Absorption rate is the topic for this post.

In this kind of market you REALLY have to pay attention to absorption rates if you are a seller or an investor.

Simply put -  the Absorption Rate is the rate at which inventory is being removed from the market by a closed, successful sale.  It tells me, if I am a seller, how long – all things being equal – i will have to wait to see my house “cleared” from the market.

Great definition?  Well, in reality the market is moving.  And in reality no home is average.   And in the real world, each and every house is unique.  So much for the technical definition.   In reality it’s a gauge.  Like a wind speed gauge.   Or a weather vane.

The absorption rate can show you what is happening and where the market is heading.  So it’s pretty useful.

In Perrysburg – with single family residential homes – we had 313 active listings on the market on the last day of October.  The number of sold listings last month was 18.  Multiply solds (18) by (12) months and you get 216.  This is a yearly number of solds IF everything works like it did in October.  Take this number (216) and divide it by 52 weeks in year and you get 4.15 homes per week being “absorbed” under current market conditions.

Now go back to the number of active listings in Perrysburg – 313 and divide it by 4.15 and you get 75 weeks.

Which is a huge absorption rate!  Usually we put that in month  -  so divide it by 4 and you get 18.75 months which I will round up to 19 months supply of inventory.  Which means if everything stayed the same and NO NEW HOUSES came on the market it will take 19 months to clear the market of inventory.

I use this number – as expressed on the chart below – to show my clients what is happening with the trends in Perrysburg real estate.

Today?  The absorption rate is going UP.

Got a question?  Ask!  jon@modene.com or 419-874-1188.

Some key information . . . .

446 MLS Properties for Sale on 10/16.

38 Properties Closed/Sold in September.

27 Properties went Sale Pending in September.

42 Properties Expired in September.

92 New Single Family and Condo Listings in September.

Comparing September 2008 vs. 2007

2007 vs. 2008

For Sale 503 vs. 446 -11%

Under Contract 35 vs. 27 -22%

Sold 35 vs. 38 +9%

14.0 Months Supply of Inventory now on hand, up 18% from 2007

Average Days on the Market now 97, up 41% from 2007

Interesting Chart #1 – Median SOLD Price in Perrysburg. Note that the median selling price is down 10% in the past year, on average, from $195,000 to $175,000, a HUGE $19,500 decrease. Own property in Perrysburg and need to sell today? Ouch!

Interesting Chart #2, for your edification -

This shows the graphical representation of current supply/demand trends in residential real estate in Perrysburg (43551 zip code only).

11% fewer houses on the market vs. 1 year ago.

23% drop in average “Sale Pending” price vs. 1 year ago.

And . . . 9% more homes sold vs. 1 year agon (month to month comparison).

Some thoughts and conclusions:

A. Price matters.

B. Price really matter!

C. The buyers will buy – if the price is right.

D. Some people have “given up” and taken their houses off from the market. This is good – because they will not sell unless they price to market, and if they do not NEED to sell today, why try to sell and fail?

E. The residual inventory is trending down, thus the absorption rate is trending higher, and that means that the local Perrysburg residential market is now rapidly moving to a more balanced position, however now at the new price points that this market demands.