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Buyers Links
Information about Bill Groover
What Customers (and other REALTORS®) say
Piney-Z Home Owners Association
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How much have prices dropped in Piney-Z? by Bill Groover Feb. 16, 2009
Can we start off being honest with each other? I am a real estate sales person. The higher the prices are, the more money I make. You know that, and I know that.
If you are a Buyer, the lower prices are, the more you save. Fine. The question is, do you want to know the truth, or do you want to believe the press? The “press” would include all the media stories about real estate all over the country and how bad it is. And it is worse in the resort areas in Florida. Ft. Myers leads the nation in foreclosures. So, it’s got to be bad here, right?
If that is all you want to believe, I can’ help you.
For one thing, unless you are buying a house in Ft. Myers, what do you care what the market is like there? I’m assuming, since you are on the web site of “the Piney-Z Specialist,” that you are more interested in a house, and the market, here. Frankly, so am I. So I researched all the data, the sales figures in MLS for the last three years, and crunched the numbers. As a Buyer, you won’t like them. You will think I am lying because I have a vested interest, an interest to which I have admitted. But I have a greater interest than selling a house for $10,000 more. If I do that, at most I make an extra $500. Believe me, I’d rather sell a house for $190,000 and make between $4,750 and $9,500 than NOT sell the same house for $200,000 and NOT make between $5,000 and $10,000 (depending on commission percentage and if I sell my own listing or someone else’s). The difference in making a sale and not is tremendous, but the difference in the $10,000 is $250 to $500. And I am certainly not ruining a reputation for honesty over a measly $500! So, before you blow me off as a lying salesperson, download the numbers I downloaded from MLS, go over them yourself, and see. I’m not lying. If I was a liar, it still wouldn't be worth it to me.
Now, everybody has seen the dramatic drops in the market. But, exactly WHAT have you seen droping? You’ve seen the number of houses sold drop. In 2006 and 2007 we were selling 8 houses a quarter under 1800 SqFt. That number has dropped as low as 2 per quarter. That is major. Also, the “Days on Market” stats mushroomed. And “Months of Inventory,” that all important statistic that determines whether we are in a “Buyers Market” or a “Sellers Market” has increased (and yes, we are still in a Buyers Market, though we have seen several months of inventory decrease recently).
But most visibly, you have seen numerous “REDUCED” signs all over the place, so you know prices are dropping. When I show a Buyer a list of homes in Piney-Z, I usually have on the list “Current Asking Price” and “Original Asking Price” to point out the drops. And the right things have dropped and the right things have increased for Buyers to be happy. And you should be.
But don't be mislead. "Asking Price" doesn't determine "value." "Sold Price" does.
But here is what you need to know. The biggest drops in Piney-Z have been in Asking Prices. Look at the numbers on the chars below.
After the “Bubble Burst” in the Summer of ’06, Sellers continued to put their houses on the market at higher asking prices for a year, while actual sales prices remained fairly flat. Sale prices (average $/SqFt) dipped, came back, and had their biggest drop from Jul ’07 to Jul ’08, when they actually bottomed out and started back up a bit. Now the thing my stats won’t show is the houses that went on the market and were withdrawn. These houses, logically, would most likely have really been the ones that went on the market at way too high a price and the Sellers either wouldn’t come down (and Canceled or Expired) or many REALTORS® when changing a price would Withdraw the house and re-enter it as NEW. When they did that, it re-set the “Days on Market” counter (so the Trends and Statistics Committee just quit reporting that number for a while because it was inaccurate) and re-set the Original Price to the new, Reduced Price. So when I say, “Average Original Asking Price $/SqFT rose from $150/SqFt to $153/SqFt, the reality is probably significantly higher than $155/SqFt. Also, houses in foreclosure (“distressed sales”) can go for as much as $25/SqFT below market. These houses are not normally considered for comps because they are “special cases.” I have, however, not excluded them from my stats for either Asking or Sold Price/SqFT. If I had, both would be higher and my point more clearly proven. But, I’m going to have a hard enough time convincing Buyers who don’t want to believe prices aren’t falling 20% a year that the truth, backed up by all the stats, is that the average Sold $/SqFt of a house under 1800 SqFt in Piney-Z has only fallen a total of 11.68% in over two years. And they have actually gone up a bit over the last six months. Now, let me explain something that may help you believe these stats. Again, I’m talking about houses under 1800 SqFT. In the Eagleview section where houses are larger, I’m certain I couldn’t make that claim. I haven’t run the numbers for houses over 1800 SqFt the way I have for under 1800 SqFt because I have no hope that they would be as good! The market has been worse the higher up you go. The other major trend we have seen is that people are buying smaller houses. By that, I mean the same Buyer who three years ago was looking for 1900 SqFt and willing to spend $285,000 is now looking for 1700 SqFt and spending about $50,000 less. One explanation is financing. It is much harder to get financing for a higher “loan to value” ratio than it was. Bottom line, what does all this rambling mean for Buyers? Just this, it has been a strong Buyers Market but prices in smaller houses have pretty well bottomed out. This news is good for the person who wants to buy a house under 1800 SqFT, and tremendous news for the person who wants to sell a house under 1800 SqFT and buy a house around 2400 SqFt. While you may have lost 11.68% of the value of your $200,000 house, your Seller has probably lost more like 30% of their $350,000 house. Subtracting your “loss” of $25,000 from their loss of over $100,000, I’d say it’s a great time to up-size!
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Call Your Neighbor 4930 Heritage Park Blvd. Tallahassee, Florida 32301 FAX 850.205.3100 TOLL FREE 888-749-5926
Licensed Real Estate Brokerage by the Florida Real Estate Commission and Licensed Mortgage Brokerage Business by the Florida Department of Financial Services.
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