Perrysburg Blog

Let’s just compare this year vs. 2009.

Simple.

Elegant.

Same seasonality.  Only 12 months of time to account for.  You can ignore the median price due to sample size.

28% fewer homes pending.

38% fewer homes sold.

50% drop from May/June numbers.

Raw Data with Median Prices:

Want to sell?

1. Be motivated.  Have a good reason.

2. Be prepared.  Have a good plan.

3. Be buyer focused.  Have a good price and good terms/condition.

Macro?

Big.

A simple chart of “big numbers” that covers the whole US economy.

Perrysburg area homes would be included . . . as a tiny little subset of these big, macro numbers.

While these are national numbers . . . they are not good.

By some measures almost 1 out of every 4 new loans is headed for a future default.

This is simply unsustainable.   On many levels.   We will run out of solvent buyers.  We will run out of solvent banks.  And the capacity of the enormous American economy to absorb so much expense and bad debt will run out at some future, unknown point.

Don’t ask me for a prescription for today’s market to get better.

You won’t like it.

But I would remind you about my grandfather, Gilmer Moden, bought his first house in Albert Lea Minnesota.   When he bought his first house, he worked and saved and worked and saved and then put 25% down before the local bank, whose manager and bank president knew him, loaned him the difference.

The idea that in a declining market people can and should be buying homes with nothing down is a fallacy.  It will not work.  Someone is not helping people own homes, but rather helping them take huge bets on the velocity and direction of the housing market with other people’s money.

Could be!

This chart shows that there is a move toward a more balanced supply of houses:

In the cold, cold months of Winter the 43551 had about 10 to 13 months of inventory on the market and moving off the market.

That was too much obviously.

Now?

May MSI (Months Supply of Inventory) was 4.7 months.  It was 6.5 last month.

It always drops in the Spring and Summer (mine is a seasonal business – like picking strawberries).

But the current numbers are indicative of strong demand from buyers, the continuing popularity of Perrysburg real estate, realistic sellers, and sellers moving houses off of the market.

How about prices?

Behold the numbers:

Ignore the bank numbers – and median prices for closed Perrysburg homes are right – almost exactly – where they were last year in May.

In fact, they have declined from this past Winter, which speaks of sample size issues.  The trend is steady – perhaps we have reached the end of the pricing cliff in Perrysburg?

“Unexpectedly”

People are always surprised.

Chagrined.

Shocked!

To discover that paying buyers to buy backfires.

We really didn’t pay the buyers.   WE PAID THE SELLERS.

We inflated values by $8000.   With money we don’t have.  That the Germans and Chinese have kindly loaned us.  That our kids and grandchildren will pay back.

And, “unexpectedly”, sales of existing homes declined.

CNBC has details here.

“Sales of previously owned homes fell unexpectedly in May as delays in processing mortgage applications hampered the closing of contracts benefiting from a popular homebuyer tax credit, an industry group said on Tuesday.

AP

The National Association of Realtors said sales fell 2.2 percent month over month to an annual rate of 5.66 million units from an upwardly revised 5.79 million-unit pace in April.

Analysts polled by Reuters expected May sales to rise 5.5 percent to a 6.12 million-unit pace from the previously reported 5.77 million units in April. Sales were up 19.2 percent compared to May last year.

Sales were expected to rise as transactions for existing homes are measured at contract closing.

Although the tax credit for home buyers expired in April, qualified home owners have until June 30 to close contracts.

“There hasn’t been much of a rebound in housing. We are growing from the extremely low levels of last year. On average, we are looking for a moderate advancing trend,” said Stephen Stanley, chief Economist at Pierpont Securities in Stamford, Connecticut.”

Shocking!

But not unexpected.

A contrarian view here:

“Things are looking worse on the housing front, with a severe drop-off in existing home sales following the expiration of the home-buyer tax credit. It’s hard to overstate how stupid this policy was. The government marketed it as a measure to boost residential real-estate prices by providing new home-buyers with a tax credit in the neighborhood of $8,000. Did you see the ubiquitous ads featuring the couple that gets an envelope full of cash from Uncle Sam? The idea was to convince potential home-buyers that they were the ones who would benefit from the subsidy, when in fact the opposite was true. The tax credit was a subsidy for sellers, not buyers, allowing them to increase their asking price (or avoid decreasing it) by $8,000.

The government’s “gift” to new home-buyers? A house immediately worth $8,000 less than they paid for it, and falling fast thanks to the sharp drop-off in demand that accompanied the expiration of the tax credit. Gee, thanks, Uncle Sam! I’m not sure the “predatory lenders” Obama likes to talk about ever did anything that sketchy.”

Details?

Can’t give them to you.

But in a recent meeting with a Perrysburg homeowner, I realized that they were in denial.

Which can be a serious emotional state that is impervious to reason, evidence, and logic.

These potential clients want their 2005 price.

They “NEED” it as an old mentor, Howard Brinton, used to say.

But it is 2010.

Chrysler is BK.   Toledo, City of, is BK.   Ohio, State of, is broke.   GM has filed for BK.  The entire giant mortgage brokerage that loaned them their money . . . BK and gone.

2005 is long gone.   What you or I paid is immaterial.  What you or I “NEED” is not important.

We should be moving beyond denial to truth.

In fact, we actually have more practice and experience at distressed markets than anyone else in America.

Seriously.

We (Northwest Ohio) went into this market first – along with Cleveland and Detroit.    (“Why?”, o student of history, you ask.  I will tell you:  we shipped our manufacturing jobs over to China first.  Before we shipped our tech jobs and info jobs and pharma jobs.  We – first!, but I digress.)

So – no excuses.   We are experienced in these matters.   Or we should be.

Nationally, 30% of the ENTIRE U.S. market is distressed.

Perhaps 50% of the total market activity in Toledo is now “distressed”.   That means short sales, REO, foreclosures, deed in lieu, and upside down, underwater sellers who have to bring cash to the table just to close.

Half.

One out of two.

We have to move beyond denial now.

There are some very good Realtors that I know that have not closed a single deal yet this year.

They are in denial.

There are some very good homes that will not sell for their owners.

Denial.

“But . . . the tax credit!”

“But . . . ”

Denial.

It hurts.

But you have to move on.

If you want closure.

A empty shell.

Crabs like them.

But they are terrible for helping homeowners to pay their mortgage.

And if you drive along Alt20 – aka Illinois Ave. in Maumee, you will see a lot of empty shells.

And “FOR LEASE” signs.

And vacant factories, offices, and businesses.

It’s a vivid reminder of what has happened and what has helped residential real estate to collapse in value.

The collateral damage from this one street’s empty and shuttered businesses and factories is felt in every subdivision in Perrysburg.  I know clients that have lost jobs in Crandenbrook and other Perrysburg neighborhoods who used to work on this street.

But now their jobs are gone.

You want reports of the economy getting better?  You want to know when the residential market is better?  You better go for a drive . . .

ALWAYS asked at every listing appointment.

The answer is . . . “it depends”.

On your price.  Your motivation.  Your vacuuming.  Your pets.   Your kids.  Your collection of stuff.

Overall, in Perrysburg, the average DOM or “days on the market” is right about 90 as of last month.

However it changes month vs. month and week to week.

Why?  Houses are coming on the market.   They are going pending.  They are coming BACK on the market.  And with a 300 to 500 house sample population it does not take much to whipsaw the numbers for one month.

So the TREND is what I look at.

With REO sales red hot right now (so says this report from California and my own Perrysburg REO’s are pretty much all sold or under contract). . . is that activity helping move other, non REO houses?

Inquiring minds want to know:

You can too – on this chart.

And the trend is that houses are selling FASTER (fewer average days on the market) and there is less “wait” (which we call MSI or “months supply of inventory”)   The Perrysburg MSI is now 1/2 of what it was a year or two ago – down from 21 months to a more manageable 7.1 months supply of inventory.

Price still rules.

So get your house priced right, cleaned up, and then the numbers will play out good for you.

I get asked this question all the time – at least seemingly to me!

By my agents.   By my clients.  By my corporate clients.  My buyers.   By vendors and suppliers that work with or for me.

Everyone wants to know.

I repeat:  The downward price trend in Perrysburg real estate will not change, in my opinion, until people are making more money and taking it home.

The State of Ohio and the Federal Government can goose demand for a quarter or a year, they can push loans onto people who should not buy, they can do all sorts of tax credits . . . but the market will always trump the politician.

Always.

Look at this chart.

It is breathtaking in its simplicity.

We can talk all we want about jobs.  (Or “JOBS, JOBS, JOBS, JOBS” as our leaders put it)

We can call unemployed people “no longer seeking employment”.  We can tell part time employees that they are fully employed even as they march into Perrysburg Christians United for food to feed their families.   We can call part time seasonal workers fully hired back.

Not going to change the real estate market price trend in Perrysburg.

That chart above – it simply shows tax witholdings from working people and companies.

Zero Hedge Blog interprets it thus:

Even as the BLS and the administration are trying to cover up the real state of unemployment affairs using assorted semantic gimmicks of just what it means to be unemployed, and as companies provide adjusted EPS numbers, while actual earnings continue to collapse, the true barometer of spending, provided by the Financial Management Service, tax withholdings (net of refunds), continues to paint the truest picture of just what is really happening with both America’s consumer and the corporate world. And it ain’t pretty. On a rolling 12 month basis, individual tax withheld has dropped by nearly 8% YoY, from $1.42 trillion to $1.31 trillion, while company witholdings are down a whalloping 64%, from $274 billion to just under $100 billion! This is money that will never be used to pay down the skyrocketing US deficit, because both the US consumer and average US company are simply not collecting the required cash to line the Treasury’s pockets with the one traditional way to pad the deficit: taxes. Expect much, much, much more debt issuance in America’s short, medium and long-term future.

Wage payers- people with great full time jobs in Perrysburg are the ONLY way to get demand and prices improved.

Period.

Not wages paid to pizza delivery drivers or census takers or package wrappers for 30 days.

Wages paid to machinists and car assembly line workers and engineers and chemists.

Then Perrysburg will get better and your home will be worth more than it is today.

More words than I am going to write.

“When is the market turning around?”

“Is it getting better in Perrysburg?”

Many questions . . . . and I continually believe that until the job market changes, nothing will change for the better in Perrysburg real estate.

The data from all the various states has been combined into an info-packed graph:

When companies are expanding, hiring, and adding employees that is when real estate will turn around.

Not until then.

Down 40% . . .

Thanks for asking!

But I am having a great month . . .

Ouch.

Good homes?  They are still slowing.

Overpriced, underwhelming homes?  You can only imagine!

-44% drop in NUMBER of closed sales means that you need an agent who knows the market, knows how to market, and knows how to sell your home to a buyer, a bank, and an inspector.