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Today's Market, January 2012REOs Rule Pagosa Real Estate and Prices Slide as the Pace Picks Up...
OK, this one’s not so much Today’s Market as a look back at the past year’s market… Well, if you bought a home or piece of land in 2011 you should pat yourself on the back – you did well. If you bought an REO you paid about $80 per square foot. If you bought from a private seller you paid around $120 per square foot. Of course, that privately sold home was likely in far better condition than the REO, but either way, you got a great deal. If you sold you weren’t so happy, of course. On the other hand, while real estate sales in Pagosa Springs and the surrounding area took a sharp jump this past year, only a fraction of the homes listed for sale actually sold. If you were part of that jump as a seller you must have done something right – either in pricing your property, or staging and marketing it, or both. Congratulations - you’ve sold and you can move on. So let’s take a closer look at the numbers for 2011. There were 353 homes sold in Archuleta County in 2011 and that is a significant increase (37%) from the 257 that sold in 2010. There’s no question it was a real estate buyer’s market in Pagosa Springs, with volume up and prices declining over 2010. The median selling price for a home was $170,000 (the mean price was $248,266, but I’m not convinced that number is not skewed by one or two very high end sales, so I’m focusing on the median from here on out) and the median price per square foot was $103. That compares to a median price of $205,000 in 2010 and a median price per square foot of $111. The total amount spent in 2011 increased 29% over 2010, with $87,637,916 spent on homes in 2011 verses $68,197,731 in 2010. Of course, the amount spent increased less than the number sold and that clearly indicates the lower price per home in 2011. Not surprisingly, REOs (bank owned homes) were a significant part of those sales, representing a whopping 40% of Archuleta County housing sales. That’s not a big change over 2010, when 37% of the homes sold were REOs. Lisa As I mentioned earlier, buyers paid about $80 per square foot for REO homes and about $120 per square foot for homes sold by private owners. The median price of an REO sold in 2011 was $138,103 and the median price of a home sold privately was $222,500. There are a number of factors in that difference but the two big ones would be condition and motivation. While REOs can range from total junk to nearly perfect condition, the majority of the REOs in Pagosa Country were in rough condition. Often they were tenant occupied and as they went through the foreclosure process the owners stopped monitoring the tenant activities and things went downhill. Often REOs had been poorly maintained for quite a while as well. Also, during the showing and selling process they’re rarely furnished or heated and as a result show poorly. Further, the banks are selling them at or below cost – essentially wholesale. Joe LaMastra, © 2008. Best argument for a snow blower, don’t you think? Owner occupied homes, on the other hand, typically are much better maintained, are clean and cozy and show much better. They are usually in much better repair and are often “turn-key”, needing nothing more than to be moved in to. Buyers know they won’t have to do extensive repairs and spend time and hassle dragging our Pagosa service people off the ski slopes. Owners, particularly if they are working with a competent Realtor, have a better sense of the value of what they are selling and are less likely to “wholesale” it, as the banks do. Of course, that $120 per square foot you can buy an owner home for is still very much a wholesale price, easily less than the average replacement value of the home. ________________________________ Article continues below
Table by Joe LaMastra, © 2012 There are some other interesting aspects of the 2011 market to consider. The median Days on Market for 2011 were 141 days, which is a 16% decline from 2010’s 172 days. Clearly homes are selling faster now. Why? Likely lower prices for one and also, from what buyers are telling Lisa and I, recognition that prices are at or close to the bottom now. (By the way, I’m using the total, or cumulative days on market for particular homes, rather than the current days on market. So if a house was for sale from May to October, taken off for winter, and then put back on the market again in the spring, that prior period is included in my numbers.) A related statistic is that 82 homes this year sold at or above the asking price. That’s 23% of the sales and solid increase from the 14% that sold at or above the asking price in 2010. REOs sold in 2011 for roughly 99% of their asking price while private sales went for roughly 90% of the asking price. Again, no real surprise here. REOs are being wholesaled and buyers are snapping them up quickly and often getting into bidding wars, which pushes prices upward Private sellers are holding out for better prices and getting them, though not as quickly as the banks. So if you are a home buyer in Archuleta County (or more likely a home buyer in Texas, New Mexico or Arizona, where most of our buyers come from) considering a real estate purchase in Pagosa Springs or the surrounding county there are a few things to keep in mind. First, you will certainly pay less up front for a REO home (though you may well have to spend some money fixing it up). You’ll also have to be ready to move briskly when that perfect REO deal pops up to avoid getting into a bidding situation with other buyers involved. If you aren’t focused solely on REOs and are also looking at privately held homes, you should expect to pay more for a similar sized house. Most private sellers are willing to hold out for higher prices and the market agrees with that strategy. Sure, those private homes will sit longer on the market, but the better condition and better showing strategies will ultimately result in a higher priced home. Of course, that home will need far fewer repairs before moving in. In most cases the sellers will have fuller histories of the home and will share them, giving buyers a higher confidence in the property. It’ll be interesting to see what 2012 will bring. Likely more of the same situations and prices we saw in 2011. It’s not likely we’ll see prices rising too much as there is still a fair amount of foreclosure activity going on and more REOs should be hitting the market. Lisa and I expect that as sales continue to be brisk, private owners who have been waiting to sell will enter the fray and we fully expect they’ll do so knowing that they’ll have to price aggressively to keep up and that will keep prices low. We expect 2012 is going to continue to be a great time to buy a piece of real estate in the Pagosa Springs area. We also think it will be a very good time to sell, but only if you must and only if you are able to price well enough to compete. If you want more specific information of the market (I’ve got stats out the wazoo I’m happy to share) or if you want a more focused market analysis, don’t hesitate to email or call us and we’ll be happy to scope out a particular neighborhood for you.
- Joe LaMastra, January 10, 2012
Remember, for all of this we’re talking about sales that went through our Multiple Listing Service (MLS) and are not tracking down the private sales that have occurred – we expect they would not change the numbers too much. Also, and crucially, I am using figure and facts as reported by brokers in the MLS. I’ve made no attempt to verify the accuracy of those numbers and while I expect they are fairly accurate, never forget the mantra “garbage in, garbage out”.
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and I fully expect REOs to remain a significant part of the market in 2012, but how significant is unclear.