Market Conditions In The Country
Last revision August 30, 2013
Except from 90 to 93 and 2007 to 2012 country properties have averaged an 10% increase in value of per year.
MARKET CONDITIONS IN THE COUNTRTY: They are not the same as in town. From 1990 to 1996 we saw the first real recession in the real estate market since 1929-35. We have now been through the second and it was by far the worst.. The worst hit is the low end subdivision house and bare land in The Sea Ranch . The Sea Ranch land is now down from 66 to 75%.
The country market is more resilient. That market was flat from 1990 through most of 1993. In late 93 it came back to life. By 97 we had sold our way through the built up inventory and prices were rising. In 98 through 2000 they were going up about 20% each year. In 2001 & 2 about 5% and then back to 15 to 20% through late 2004.. Then it started slowing down. My SWAG is it is down about 30% in the country market and it will stay flat for another year.
The tract house under $800,000 have now been hit hard by the sub prime fiasco. Those under $600,000 are 80% Mexican families who have been screwed by Mexican Agents and Mexican Mortgage Brokers.
Selling motivators are usually death, divorce and job changes. Country property usually is extremely recession proof due to it being held by fewer financially stronger people and they typically are not as effected by job changes.
I am tracking about 250 properties on my Rural List. Unfortunately, less than five percent are realistically priced and have a nice ambiance. The list includes my listings but it is primarily to keep track of other agent's listings that fall into my guidelines. If you want a copy let me know. I cannot have it on the WEB as it violates our MLS rules. I often modify/correct agent's fliers and make up a brief report of their inventory. I do not want other agents to know when I think they have a good deal. They are often not in a position to evaluate it against the competition as THEY HAVE USUALLY NOT SEEN THE COMPETETION.. This was proved dramatically last year when a local agent put a very nice parcel on the market under market value. It sold immediately. On the other hand we are still seeing listings coming on to the market at ridiculous prices. "The Seller set the price" is the excuse or rationalization.
About 25% of listings are on the market at a reduced commission. These usually do not sell well as agents will avoid them if they can. It is very easy to do. "You don't want to go there, they have a terrible neighbor." They often sell for below market because of agents blaming the price as the problem. This is often the result of their inexperience and trying to BUY A LISTING by giving it an unrealistic value and offering to work for less money. I do sell these properties but I ask you to guarantee me a reasonable paycheck. The lower the commission the less they perform and the harder I have to work. They often represent a very good buy after they have aged..
Selling this kind of property is like looking for a new outfit for a particular function. No matter how nice the inventory is, it doesn't fit, you do not want it. It has to feel right. It has to match your requirements. This is not a cookie cutting process. Due to the lack of good inventory, it may take time.
FROM May 2006 to June 2007. During that time loosely defined as country properties sales have been about 344 units and have exceeded 500 million. Volume is only off 5% as compared to the previous year which was a record at that time. In the price range from 1 million to 2 million there was no apparent decrease in prices. Under 1 million and over 2 million there is a small price break. It is more pronounced in the over 2 million range. Overall there seemed to be a 3% price decrease in value over the previous year. The time to sell increased by about 18%. We were still suffering from agents taking/buying listings at un realistic prices. There is very little good inventory on the market.END OF 2007 AND 2008 Investors stepped into the market and were active until money became extremely difficult to borrow. In mid 2008 the banks finally got their act together and are easier but not great to deal with. The sales in country properties were somewhat limited due to only a few being brought to market. Prices were surprisingly strong. 2009 Obama made a difference. Only hind site will tell us how much. The situation we are in is not what it is. It is what we think it is as emotions make a difference. We saw very nice high end properties sell quickly if they are brought to market at a fair price and well merchandised.
January 2010.The downward slide of low end subdivision houses stopped due to investors. There is some fear that there would be a slug of new foreclosures that were being held back by banks. I doubt if they are that bright. I bought a REO in October 2009. I was ready to close it on the first of November. The bank finally was ready to close in early December. Activity has been spotty and was emotion driven. It is also weak above $400,000. Lenders were hard to find a bankers are more concerned on covering their ass than making loans. August 26, 2010 The dip is sales activity in July become a self fulfilling prophesy. It along with an increase of people filing for unemployment for the first time created an emotional down turn. Sales in the country were still weak.
February 4, 2011 2010 Was the worst year I have seen since I became licensed in 1960. The house I bought and flipped in late 09 is now a comp and only the purchase by me is showing. The appraisers who use it are not aware that most of the structure did not have permits,. It is dragging down values of others that it should not. Activity was picking up but financing was and is extremely hard to find.
March 24, 2011. Activity picked up quite a bit. Several old dogs have died. 11520 Skaggs Springs started 8/08 at $525,000. Just sold for the $300,000 I had predicted. 401 Brack started at $1,695,000 in 6/10. It sold for $937,. I estimated it at $900,. 4353 W Dry CK. Started 7/07 at $1,650. It just sold for the $937, I estimated $900.
November 12, 2012. The election is over and prices have stopped going down. It is hard to tell as agents listings are still being bought with inflated values. I had indicated a value of $550,000. Another agent got the listing at $725,000. I sold it a year later for $550,000. Buyers with spendable assets are back looking. More old dogs are now gone. The sales above 3 million have picked up dramatically. FINDING THE RIGHT FIT AND WATCHING PROPERTIES AS THEY COME DOWN IN PRICE TO REALITY IS WHAT I DO. IT OFTEN TAKES YEARS OF BEING ON THE MARKET. THEIR AGENTS THINK PRICE IS THE ONLY REASON AND THEY KEEP PUSHING THE PRICE DOWN. SOME TIMES BELOW MARKET.
August 30, 2013. Prices have firmed up but not as fast as lower priced houses in town. We seem to be back to about 2003 in values.