Oy. That’s busy….

It has been a really, really crazy month here at Copperwest. For that matter, all around town. We seem to be tracking a bit behind everyone else, but that’s a good group of offices to be tracking with. I think our big issue on playing at the top level, now that the offices are awake from their slumber, is our number of agents. We’ve got really great agents, but just not enough of them at the moment. All Brokers are looking for a way to change that, and it’s a constant beast that needs feeding and tending.

I was scanning the market report for items to write about when I noticed that the median sale price jumped 4.5% last month from $189,000 to $198,000 That’s an indicator of prices firming up for sure.

Out on the ground, it seems that’s the case. A decent number of Buyers, but there is the feeling of blood in the water. Frothy. As I mentioned in the last couple of months, Sellers are quick to raise prices, and buyers are balking. But in this last month there have been backups, and backups of backups.

Wrote a bunch of deals, that weird nervousness has returned to transactions. I’m not sure if I’m reading it right, but it’s like that same nervousness of people worried that they are going to miss a plane, so they start acting unreasonably somehow. I’m not sure what the nervousness is about, in most recent situations it hasn’t been about getting the deal, it’s been about DOING the deal. Funny.

The trickle of foreclosures continues around here. Man those are tough! Rents remain high, everyone still wants a downtown building lot for under $100,000 to build on. I’m pretty sure those days are gone for good, on a fundamentals scale, and an inventory scale.

The concept of underwater lockdown is beginning to ease (I’m sure a few of you are liking the sound of that). It’s been around for awhile, and these last few years have brought new meaning to the phrase “suffer in silence.”  But finally, people are able to move about, out from underneath their mortgages.

And that’s how prices begin to rise. These people are not out from underneath their mortgages entirely, they are just able to rationalize any way they can accept a price that is low, and often they will bring a tiny amount of cash to close a deal. But if they just reach a bit…they can put that chapter of life behind them, and reshuffle the deck.

Reshuffle now, everyone… Reshuffle now….

Maui Meyer

The Newswires this last week have been that usual “choppy” thing. Prices are up, according to Case Schiller (kinda happening here, but give it another 30 days) but volume is down in February. Only slightly. And who is shopping for a house in February?

More fundamentally, the large animal passing through the snake that is the shadow and foreclosure inventory, appears to be – in the near term at least – getting smaller. We are not out of the woods, by ANY measure. But in my world, today is better than yesterday. Tie plenty of those together, and someday my nose will peek over the rim of the hole.

I just love that one…

30 Days later, and the inventory crunch continues. Now we are tight over $400,000, especially downtown. Under $300,000 is virtually gone. Last year I asked if you had a property in the $200,000 to $250,000 range, and now that range has jumped to $400,000.

There was/is a lot of pent up demand, and the last two weeks have been outright looney. Frothy, even.

I strongly dislike frothy. I’m a cautious guy, but I’m also in sales, and the two don’t often match. I want my clients to get a place, but I don’t want them to overpay, or make an unwarranted jump. But, if we don’t, we will lose the house…. This causes me to occasionally use the “ask them three times” rule.

“Are you sure.”

“Are you sure you’re sure?”

“Are you positive? Because if you tell me you want this house, I’ll move Mt. Hood to do it….”

And away we go.

May is when the annual sales season kicks off, but April is when we sell it all. I expect a very, very busy month.  Please Please Please, remember the small sample rule! There is often only one choice if you have very specific requirements! Waiting in a market like this means you’ll probably pay more!  And here comes the salesman line of the week:

“IF YOU LIKE IT! BUY IT!”

See you next month, probably for more of the same.

Well, early results are starting to trickle in. Inventory is really really tight under $300k. Over $300k not so much, and over $400k it seems to be ok. Buyers are still going after anything under $300 that is livable, and new construction starts are off to an early start. Look for a lot of presales on units, thereby leaving the second tranche of builders to follow on, meaning, narrower margins, riskier deals, and eventually someone getting wiped out. I can see it happening again. Don’t we ever learn?

Buyers are going from trickle to flood, I expect pricing to firm up pretty quickly here, given these conditions. EVEN WITH the appraisal standards being so tight, and underwriting being mercurial at best, I’m going to go out on a limb and say we are going to see some price increases in the under $300,000 to 350,000 range. To date, inflation there (under $300) has been masked by the soft over $400 market, but that’s starting to go away. You’ll see some bumps (as we have all year, really, remember this time last year? The “cash flowing under $250,000” Month?) But they will be quick, and brief.

Our charts from the MLS tell a similar story. Inventory down, AVERAGE AND MEDIAN PRICE FLAT, but volume up, and statistically so. Average time on market remains static as well.

I recall a similar time in early 2000 when this same thing happened. Most people who earn near the average wage in this county had to buy under $300,000 and got, quite frankly, less for it – if they could even find anything at all.

Then things that sold over $400,000 were truly a function of inbounders, people moving to the area from other high cost areas so that a $400,000 house was a lateral, or even downward step.

Then things heated up, and many people started buying $400,000 second homes… ah yes, those were the days…

But no more. The $400+ range is becomming the domain of full time residents, and some specific, bankrolled second home owners, but not the flood of 2006-2007.

So the market is developing two lobes, under $300 Working in our community types, and Over $300 in a higher paying job (though few) or Inbounders, but even in both instances less than the number of buyers under $300 by a long shot.

Why does this matter? Because what sells in those ranges is important, because the Buyer’s makeup has shifted. There simply aren’t buyers of homes over $400,000 for second homes (or, there are, but very few) There used to be, but not much any more.

So as Sellers are updating the prices on their homes, they should also be thinking about WHO is going to buy that home. Up the valley over $400? It will be a tricky sell, because many of those second home buyers are now gone.

Not only do we need to update our prices, but we need to update our mental map about who is really coming out to buy those places, otherwise, it’s mark to fiction.

Until next time,

Maui