In the last 2 days, 93 properties have pended, or gone under contract, in the Central Virginia Multiple Listing Service ("MLS"), the real estate database. Of those 93 properties, a total of 86 had list prices of $400,000 or less. That means almost 92.5% of pending sales are $400,000 or less. Sixty four of the 93 pending sales, or almost 69%, are for less than $250,000.
It's also interesting that the over $400,000 sales are concentrated in a few specific areas: Area 10 (Urban City of Richmond), Area 20 (City's West End), Area 22 (close-in western Henrico County), Area 24 (Goochland) and Area 34 (western Henrico/Short Pump).
What does it mean? Well, there are the same number of agents chasing significantly less business. I am hearing from some experienced agents, 20+ year veterans, that they are having their worst years ever, while some newbie agents are knocking the ball out of the park. How is that possible? The newbies have lower price point buyers and sellers, and they're making up for smaller commissions with volume. And interestingly to me, many of the first time buyers, the folks who could most benefit from experienced representation in the purchase of a home, seem to start searching for houses first, without having an agent. [ASIDE: Why? Why? WHY?? I just don't get this]. So, if you are a young or inexperienced agent, and if you get one or two listings in the $250,000 price range or lower, you can pick up a LOT of prospects at open houses and through property inquiries. Aggressive listing agents in the lower price ranges are converting those unrepresented customers to buyer clients.
All in all, it's just more evidence to me that the purchase activity is concentrated with three groups right now:
- First time home buyers: The broadest segment of the market, almost all of whom are concentrated at the $250,000 price point or lower;
- Investors with cash or access to ready capital: These guys and gals are taking advantage of the huge volume of foreclosures and short sales and making CRAZY GOOD deals; and
- Opportunistic buyers at the upper end of the price ranges, $700,000+: These folks have the resources to make moves up into larger and more extravagant homes. Often these buyers do not need to sell their existing home to purchase the replacement home, or if they do, they are willing to sell their home for less than they would have gotten 2-3 years ago, recognizing that the margin they will make on the move up home far exceeds their figurative "loss" on the current home.
I don't see these buyer profiles changing in the near term. Now, agents with strong listing businesses should be OK, if their sellers will listen to the hard news about this market and if those sellers will price compellingly, not just competitively. There will always be some listing activity, even in a down market, because there will always be people who have to sell. Unfortunately, these "have to sell" people often also are dealing with difficult personal times, such as divorce, illness, death, or relocation for employment. The stress of selling a home in this market, on top of stressful personal circumstances, can make for a very difficult transaction. Which is all the more reason, in my opinion, to price it right and get it DONE, and to move on down the road with your life.
Once again, evaluating the broader market, I really want to be optimistic, but the picture seems to me to be murkier and murkier. I'm starting to wonder if the housing market is going to fall off the cliff after April 30, 2010, when the first time home buyer tax credit ($8,000) and the replacement home buyer tax credit ($6,500) come to an end. If we don't start seeing the "trickle up" effect from the first time buyers SOON, if 69% of the buyer disappear as of May 1, 2010, it's not going to be pretty. I'm trying to be a "glass is half full" girl, but the facts are what they are. Although Mark Twain did famously say, "There are lies, damn lies, and then there are statistics."
[Ed. Note: This was actually written on Sunday, and inadvertently not posted. So the figures are for that Friday-Sunday, February 26-28, 2010].
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