If you are thinking about or currently trying to sell your home on the Central Coast, things are not getting any better for you based on the July statistical report I just ran and analyzed.
– Sales are slow, even slower than last year
We had 263 solds in July for Residential properties in San Luis Obispo County. This is less than the 285 we had in June and also less than the 285 solds we had in July 2009, which was a slow year too. The Buyer incentives from the Government are over but interest rates are at an all time low. Even with the low interest rates, sales still aren’t picking up. I don’t even want to think what will happen to the market if the fed increases interest rates.
– Inventory continues to rise
Inventory in SLO County and Santa Maria took a big jump in my last month’s report. I was holding back a bit on commenting too much on it because I thought it may be a blip and we’d see inventory drop this month. Unfortunately, that isn’t the case as inventory rose in SLO County and Santa Maria over last month too. Look at the graphs below and you’ll see reality. (click graph to enlarge it, hit back button on browser to return to this page).
The inventory in some cities is a lot higher than it was last year (and higher than it has been in years). The city of San Luis Obispo continues to add to its inventory. As of a few minutes ago, there were 288 properties on the market while last August, there were 193 properties. Other cities (besides SLO) with inventory levels we haven’t seen for years are: Avila Beach, Cambria, Los Osos, Morro Bay, Oceano, Orcutt, Paso Robles, and Pismo Beach. I updated the inventory levels on the slowatch.com page here.
– For July solds in SLO County, 42% were foreclosures (24% REOs, 18% Short Sales)
Banks are wanting to get foreclosures off their books and want them to sell fast. This is fine with the Realtors that the banks use to list these homes as they can get a quick sale. Unfortunately, since neither of these parties have a priority to get the most money for the home, foreclosure properties continue to be priced aggressively (meaning under market value) which results in driving down the prices in an area. With almost half of the properties being sold in SLO County being distressed, most neighborhood values in the County are being effected. With reports from companies like RealtyTrac saying that notice of foreclosures are still peaking, this is going to be a situation that is going to exist for some time.
So what is a home seller to do?
If you are trying to sell your home, you first have to accept the facts. The odds that a home buyer is going to give you an all-cash offer for a price over market value (meaning you don’t have to have your home appraised) are slim to none. The second thing I would do is not sign a Listing Agreement with a Realtor that is more than 3 months. If you’re happy with the Realtor but your home hasn’t sold in 3 months, you can extend the listing agreement by another 3 months. I wouldn’t sign any agreement longer than 3 months though because you want your Realtor to be working to sell your home. Also, the price you list at is extremely important in this market. You don’t want to overprice it or it will sit, the Days on Market will increase daily, and it will become “stale”. If you are competing with a lot of other houses (and foreclosures), chances are that the market value for your home will continue to decline so you are losing money if you let your home sit on the market. The challenge is to price your home so you will attract a buyer (or buyers!) but you won’t leave money on the table. The best chance you have to do this is to make sure you choose a Realtor that understands what is going on in the market and provides you data to back up the price they are suggesting. You can’t afford to allow Realtors who don’t understand economics and market dynamics to tell you a price you want to hear so they’ll get the listing and then let it sit because you signed a 6- or 12-month listing agreement!
I’m sorry if this bums any of you out. I feel that a professional Realtor should provide opinions based on facts, knowledge, and experience. To sugarcoat what the facts are saying is a disservice, but if you’ve read my blog for any length of time you know I try to be upfront with what I find. I’ve heard some local Realtors saying that the market has bottomed out but I don’t know what data they are using to give this opinion. Believe me, the slowness of this market isn’t helping put food on my family’s table too but that doesn’t mean I’m not going to be upfront with the statistics. While the current situation isn’t too rosy for home sellers, it’s actually good news for Buyers if they use the stats and current market condition to their advantage.