Perrysburg Blog

I was talking this week with a fellow Realtor.

About the dearth of new REO orders.

In the face of hundreds of empty houses.

“What is going on in your business?” I asked . . .

He is seeing the same thing that I am.

The REO pipeline has been shut down.

It started 3 or 4 weeks ago.

Someone “of a higher paygrade” decided to slow down the marketing of new foreclosed homes.  The news is grim – at least in the headlines.  Then you read the reassuring copy – “nothing to worry about”, “move on . . . nothing to see here”.  Let’s say I agree.  There is no wave of new REO coming.    Then the tactic of the lenders to hold off inventory now is a premeditated attempt to firm up prices and values for today’s buyers and to protect their asset values.

The houses that are foreclosed and not available?

Oh – they are still there.  They are just sitting empty.  Waiting.  Marinating.

Does this make sense?  Does this make money?  Does this “help” the housing market?  Does this increase prices?

Like “Rosebud” in Citizen Kane . . . NO MAN KNOWS.

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?

It is Monday.

72 degrees and sunny.

The Federal Tax Credit program expired on Friday last week.  Back to normal.

Sometime last month the Fed stopped buying/funding Mortgage Backed Securities.   The tap was turned off.   The world?  It did not end!   Investors still want to buy mortgages!   Back to normal.

There are no major Ohio loan/bond issues being promulgated.  Back to normal.

Two offers on Perrysburg listings today:

A buyer just submitted a conventional financing loan/offer to me.

Another buyer . . . . the same.  Back to normal.

In Perrysburg real estate, with no tax credits, special government loans, and other market deforming forces THIS, today, right now is normal.

Rules for this market, now that it is finally normalizing:

1. Price is king.  Queen.  And Jack.  It’s all about price.

2. Perrysburg still get’s the “Perrysburg Premium”.  It just does.

3. Quality of life, crime, schools will continue to be more valuable.  Perrysburg ought to not mess this one up.

4. It has to appraise.  Your wants/needs/sticker price/contract price  . . . all will be validated, satisfied, and hostage to the appraisal.

5.  It’s allright to mow your neighbors yard.  Seriously.   If they are gone – foreclosed – abandoned – you can mow it.  It keeps up appearances.  It keeps out the petty crime that vacant houses attract.  It actually may increase your homes value.   Neighborhoods have to start banding together.

Here’s a three year overview of supply and demand in the entire Northwest Ohio market:

It has leveled out – the new normal has arrived.

In all their gory glory . . .

In their totality . . .

Median price change in Northwest Ohio over 36 months is -$30k.

Median price change in Northwest Ohio of closed single family homes is -$31.5k over 36 months.

EVERY house on average lost 20% to 30% in value.

My observations -

1. Ranches in the suburbs have resisted this trend more than anything else.

2. 80% of the “active” real estate agents have an idea this has happened, but are in “pricing denial”.   They eventually seem to be running out of money after 3 years of not selling any houses they have listed.

3. We really did not destroy 30% of the housing stock in either Afghanistan or Iraq.   But we managed to do it here.   Thanks!

4.  Toledo now has some of the cheapest housing prices in America, for what that is worth.

5.  This has caused some of the strongest and most well capitalized builder/developers to throw in the towel.   I have developed land, sold land, marketed new subdivisions, and done market research for new projects . . . . and I no longer can tell you who is going to do future non-condo/villa development in the suburban market.

Is this one from Forbes . . . about the WORST real estate markets in America right now.

Toledo is on this trajectory:  lost jobs, out of control State government, public school meltdown, and out of control local government.

You can just look north . . . to DTW . . . to see what the potential future holds if some serious changes are not made in Northwest Ohio.

With interest rates rising,  taxes increasing, and a steady grab of diminishing income from private citizens being answered with decreasing city services, things are not on a good path right now.

Toledo does not need this kind of publicity.

This blog is about PERRYSBURG real estate.

And . . . I sometimes have made tongue in cheek comments about Perrysburg gaining at Toledo’s expense . . .

But I do not want to see Toledo drained dry.

I don’t know anyone who does.

It’s the Greater Toledo Metro Area . . . and we are all interdependent economically.

Let’s hope they make some wise decisions up there!

Here are the comments and the list from Forbes:

1. Milwaukee, WI: Some cities’ housing crisis stemmed from rampant overbuilding. Others can blame the decline of the manufacturing industry. Milwaukee has felt both. The worst-selling housing market saw a 47% increase in unsold homes between 2008 and 2009, thanks both to underlying economic problems and overzealous development during the housing bubble.
2. Denver, CO: Denver doesn’t come to mind as a housing-crisis hot spot, but the city that once looked like it would escape the housing bust unscathed now shows signs of strain. More than 42,000 homes are on the market in the metro, 27% more than last year.
3. Los Angeles, CA: Los Angeles has yet to recover from the blows it took when the housing bubble burst. Home sales fell by 5% in the metro between 2008 and 2009, while they rose, if only modestly, in most other large metros. Home sale prices peaked in late 2006, and it looks like the remnants of overbuilding will continue to clog the housing supply.
4. St. Louis, MO: The city has shed jobs and seen housing prices plummet. Inventory in the metro is up 36%, in part as a result of its 11% unemployment rate. Manufacturing jobs no longer drive the city’s economy, and slow sales are just one symptom of its economic maladies.
5. San Francisco, CA: Unemployment has reached 11% here, and home prices fell by 6% between 2008 and 2009. The area’s poor-home-sale performance shows that California’s housing woes spared no city.
6. New York, NY: New York likely made the list in part because the condominium market, which drives much of Manhattan real estate, wasn’t included in the analysis. Still, not everything’s rosy in the Big Apple: Sale prices were down 13% between 2008 and 2009, and inventory has seen a 13% rise.
7. Cincinnati, OH: Like Cleveland and other Rust Belt cities, Cincinnati suffers from a lack of jobs–the city is 11% unemployed–which has cut sales dramatically and left a glut of unsold houses behind. Inventory in the city rose 48% between 2008 and 2009.
8. Cleveland, OH: Cleveland was suffering before the housing crisis hit, but the bursting of the bubble surely didn’t help. Unemployment is at 10% in the metro, which has hemorrhaged manufacturing jobs. That means families don’t have the means to buy, and homes remain unsold.
9. Atlanta, GA: Inventory was up 6% in 2009 from the previous year. That may not sound like much, but together with flat quarter-over-quarter single-family home sale prices and sluggish sales rates, the overbuilt city shows significant signs of strain.
10. San Diego, CA: Scores of new condominiums were constructed before the market peaked in the first quarter of 2006, driving up prices and spurring overbuilding. Many units were built for speculative buyers, but today the brand-new luxury buildings sit empty.

A new upcoming listing on Indiana . . .

An old REO listing on Indiana . . .

And . . . a sharp split level on secluded, hidden, hard to find Carolin Ct.

One thing to add is a clear, shoveled driveway and sidewalk.

But that will become less and less important as we hit March and April . . .

AVID Ratings does a big survey every year (LINK).  Here is what the survey said!

1. Large kitchen with an island
2. Energy efficient appliances, insulation, and windows
3. Home office / study
4. Main-floor master suite
5. Outdoor living room
6. Ceiling fans
7. Master suite soaker tubs
8. Stone and brick exteriors
9. Community landscaping, including walking paths & playgrounds
10. Two-car garages

Now – these all sound reasonable.

I would add a few Perrysburg-focused items that will BOOST your homes value:

1. A three car garage (you can’t “add” this, but you can plan it for your next house . . . )
2. Kitchens and Baths – update them!  There is nothing wrong with changing out a 20 year old microwave . . .
3. Do something to bring light into the house – glass front door, Solatubes, skylights.
4. Landscape lighting.
5. A “moderate” finished basement (carpet, black painted ceiling, painted walls, lights).

These features add “zing” and “POW!” to the buyers memory banks when they compare your home to another when it is time to sell it.

They have both a high “return” in that you can enjoy the improvements while you live there and then get some resale value out of them when it’s time to move.

For the month of July and as of today:  Perrysburg City and Township.

Active Listings

148 houses for sale.

Price Range $59,500 to $650,000

Contingent Listings

7 houses contingent on another house closing

Pending Listings

17 houses went pending in July.  $89k to $265,850

Sold Listings

49 Houses closed in July.  $52k to $480,000

Withdrawn Listings

8 Houses withdrawn from the market in July

Failed to Sell / Expired

19 Houses failed to sell in July and went off the market.

Median Price

$185,000 in July 2009

Days on the Market

95 Days on the Market for SOLD listings in July

Months Supply of Inventory

6.2 months in Perrysburg

My oh my!

Some better numbers!

Green shoots?

Nope.

Buyers remain very, very cautious.

We are seeing sellers who MUST sell and who are VERY motivated.

They can easily sell in today’s market.   But then – they always could.

I think we are back to a more seasonal pattern of sales.  I think that the panic is now gone out of the market.

I am always asked  “When will _____ (you fill in the blank: prices, sales, values, etc) come back?”

I always will answer:  when the JOBS come back.

Everything else is window dressing.  Goosing today’s sales with $8k credits, looser FHA standards, cheap money – not going to help in the long run and will help bankrupt our country oh, in about 2 years.

Jobs.  Get that right and the real estate market will ROAR back.

Toledo double taxing its’ citizens.

Bowling Green sending us a new corporate HQ.

Toledo laying off their police force.

All of these things tend to increase residential housing demand and values in our little town of Perrysburg.

Now I just learned that in one years time – which if you hadn’t noticed seems to arrive very much faster today than it did years ago – in April of 2010 the rules re. lead based paint are going to change.

Currently any Realtor selling any home built before 1978 has to provide a Lead Based Paint Disclosure to the buyer.   This is a trivial thing – for not once have I ever met a seller that had known that he had lead based paint in their house.  No one tests – so no one knows.

So the disclosure has what value?

Zero.

Nada.

None.

Year after year Realtors have been giving disclosures that say nothing to people who know nothing so that people can not read them but sign them anyway.

All at the behest of the Federal government.  (And you are worried about them running GM?)

But that is ALL going to change.

Starting on 4/22/2010 ALL regular consumers and normal Joes who buy investment property – duplexes, triplexes, 4-plexes, and even single family houses – for use as rental properties have to abide by the rules that giant “Market Rate” owners of thousands of properties have to abide by.

Such as:

-Testing each and every unit ($500+)

-Building and keeping and supply an audit-proof paper trail on all work done in each rental unit.  Fine for bad paperwork?  Up to $33,000!!!!

-Containing ANY work area in ANY pre-1978 rental unit just like it is an asbestos contamination zone.

-Only using  power tools with HEPA attachments in such units.

-Seeing that ALL personal that do ANY work in such units are trained and certified.

Painting more than 6 square feet of a pre-1978 built rental property?  You are most likely going to have to hire a professional  and PAY BIG MONEY.  Or else test and prove you have no lead in your unit.

How in the world does this help Perrysburg?

Think about it . . . the NEWER suburbs with NEWER rental properties are EXEMPT from this madness.

If you have a post 1978 rental property you can just smile at this insanity.  If you want to sell it, and I am your listing agent, we will make sure to point out in our marketing that it is LEAD FREE and EXEMPT from the new law.   This will, in my opinion, have a huge impact on values and investment property demand.  Most of Perrysburgs RENTAL units are post-1978.

I could go on . . . trainers need to be EPA certified, firms need to be certified, if a child comes into contact with dust from a building as they walk on the sidewalk . . . you cannot imagine what this is going to cost.

But not to the majority of Perrysburg rental units.

Duplexes “in the Boundary’s” are hit.

Some units in Southwood Park . . . maybe.

Three Meadows  – safe.

Most of the Township – safe.

The City of Toledo – in 10 months you won’t want to own so much as a stick of wood in that town if you are a property investor.

Not unless you are either a lawyer or a commercial painting contractor.

Do you see it?

Not many do.

I will share with you my current take on the Perrysburg/Northwest Ohio real estate market.

First – there are TWO markets.   Not surprisingly you may have already figured this out.  There is the REO/Bank Foreclosure market.  And then there is everybody else.

Two markets – in the same market space.

Competing with each other.  Interacting with each other.  Together making up one single market.

I believe that every single buyer and seller has to understand this in all its’ implications.

Second:  There is a giant elephant standing the corner of the Perrysburg market.

Many agents are willfully blind.  Many sellers are deluded.  Many people don’t want to talk about him.

But I will.

That giant elephant in the corner?  He is representing the lack of “move up” buyers in the current Northwest Ohio real estate market.

Move up buyers?  They have been Perrysburgs’ bread and butter.  People “move up” out of their Toledo/Sylvania/Maumee/Point Place home to a larger, better, more expensive house in Perrysburg.

These move up buyers made our market work.   They bought the $189,900 house.  The $320,000 house.  The $499,900 house.

Now we have a market in NWO full of first time buyers ($8000 tax credit) and full of investors (Heh!  This is better than my stocks!).     This dearth of move up buyers is NOT unique to Perrysburg – see this story.

I talk to many homeowners today – they CANNOT afford to sell and move up.

I can also report, in an anecdotal manner, of buyers who buy who tell me that this is their last house.  They plan on being buried in the yard of their home!   A mental shift has occurred-  houses in Perrysburg are no longer investments, or financial stepping stones on the upward path to The Sanctuary.  No – they are hard-nosed financial purchases that have to work in a families budget.

The upshot – the lack of move up buyers is felt especially hard in Perrysburg and other former “move up” suburbs (Sylvania, Monclova, et all)  and shows no signs of abating.

People who bought at the peak of the market have no reason to sell now and then “lock in” their paper losses.

People who bought and have mortgage problems?  They can’t move up.

Seniors and older buyers?  They are not buying up – they are buying down.

First time buyers?  They ARE buying in Perrysburg, but not in the traditional move up price ranges.

If you have a “McMansion” that you HAVE to sell – I can sell it.  It is salable.  But the price will have to be compelling to attract buyers.

I have sold close to 40 homes in the past 60 days – the highest number in my career.   But that is because I and my team are pricing to today’s market.