Cypress Texas Real Estate Blog

Is It a Good Time to Sell My Home? (v2)

2008-11-10T21:10:00Z

Lately, as I talk with families about marketing their home, one of their major questions seems to concern timing. In other words, they want to know: “Should we place our home on the market right now, or should we wait until Spring?”

Let’s recognize up front that I have a vested interest in their placing it on the market now. If they market the home today, then we sell it sooner and I get paid now, rather than later. Either way, I only get paid for selling their home in a difficult market, so having acknowledged that point, let’s set it aside.

I believe now is a good time to sell your home--or at least start the process. First, if you are considering selling in the Spring, now is the time to talk with me regarding which repairs should take precedence, what upgrades give you the best return on investment, and what needs to be done before listing. Go ahead and get started on those items now, so there won’t be such a rush in the Spring. If you are serious about selling, then now is better than later, in my opinion. Consider the following arguments with regard to entering the market now.

You will be able to list it for more now rather than later. The market value of a home is what the market is willing to pay for it, plain and simple. Determining the market value involves looking at the previous 6 months comparable sales figures for the homes in the area similar to the property being sold. Right now, we are able to use the comparable figures for the past six months--this includes the height of the selling season. We are about to enter 2 down quarters of business revenues, negative news cycles, and continued stock market uncertainty. In the Spring, the comparable sales figures will most likely be lower than they are now. Yes, that means I expect sales prices to decline this Winter. However, discounting $260,000 is much better than discounting $250,000. Go ahead and take advantage of the higher starting point available today.
Everyone else is waiting until Spring. I believe in being contrary to the prevailing herd mentality. This past week was a great time to buy stocks, simply because so many were being sold. If you market your home now, while inventory is low, you have a better chance of getting a higher price for it. Believe me, buyers know it is their market right now and when they make an offer, they often make one that is so low it can be offensive--and they expect sellers to meet them in the middle. If that is the case now, imagine until after the next 2 quarters of negative news passes.
Sales figures (number sold) in the month of December are often as high as at the end of Summer. Over the next couple of months, the best minds in the advertising business are going to attempt to get people to spend money. Like it or not, the Christmas season is a time when people make buying decisions quickly. Take advantage of that. Additionally, people like to close over the Christmas break.
If you decide to place your home on the market now and it is on the market a protracted period of time, then you can adjust pricing during the Spring. Redoubling your efforts in the Spring and making a price reduction then are more likely to see results than if you go into the market in the Spring, then have to redouble/reduce next Fall. At then end of 6 months on the market with no sale, you will be more encouraged to take a proactive stance in the bright days of Spring than if you are looking down the road to Winter.
I conduct 2, sometimes 3 open houses each weekend and buyer traffic is great. As a matter of fact, the people I have met at open houses recently are serious about purchasing their next home--much more serious than the buyer traffic I witnessed in the late Summer.
President-Elect Obama will take office in January. The news media will do everything in their power to make this transitional period appear positive. History shows that during the past 4 recessionary periods, when a new party took over the administration, then the economy recovered. Ideology and policy don’t seem to matter to the markets--what matters is predictability.
Interest rates are going up and the Fed meets again soon. Every time the Fed has reduced the discount rate, there has been a corresponding increase in mortgage rates. That trend will continue. Additionally, we will see even higher interest rates in the Spring, due to increased inflationary pressures resulting from all the liquidity being forced into the markets recently.

So yes, I am confident that for a host of logical reasons, it is the best time to begin marketing your home.

Seizures, Bailouts, and Hurricanes

2008-10-06T21:26:00Z

September was a crazy month in the real estate market! First, Fannie and Freddie were seized and people did not know where this left them in the mortgage process. Then, we had a hurricane which shut down everything--and altered the value of many local properties both positively and negatively. Next, an impending catastrophic event was announced by the Fed. This emergency was summarily dispensed by our congress who worked tirelessly to pass legislation that will undoubtedly create liquidity in the credit markets (there’s a little sarcasm in that last sentence in case you didn’t notice it).

How will all of this look going forward? Let’s discuss the Houston area post-Ike situation first--it is the most positive. Here, there is at least a silver-lining. We will see economic activity due to the reconstruction necessary for our area. This will be financed primarily by insurance claims and Federal grants, etc. Being one of the only major markets in the nation with this type of activity during a nation-wide recession will certainly give us a sense of momentum when everyone else recovers. Once again, Houston should be somewhat insulated from what ails everyone else. I believe the performance of our local officials will not go unnoticed by corporations looking to relocate. The real estate markets here will continue to suffer due to bleed-over from national news and economic affects. However, we should continue to be stable relative to the rest of the nation.

Now that we have covered the good news, let’s discuss the bailout plan. There are a few outcomes which I hope do not happen due to the plan passed by congress last week. Yet, I believe they are going to be inevitable. I am not an economist, nor a soothsayer--just someone who has seen the government do this type of thing before. In any case, I have been wrong many times, there is no reason why this post should prove me to be infallible.

Somehow, immediately after the presidential campaign, the sky will suddenly turn blue. Congressional leaders will reassure us they are at the helm and our economy is great. Your neighbor next door will disagree, but what do they know? Really, people are trying to get re-elected here--no need to listen to that type of negativism this far from the next primary. Additionally, congress will find it wise to remove the ‘mark-to-market’ rule or suspend it. This rule is the reason most of the large banks have suddenly had liquidity problems--they had to value their mortgage portfolios at the value of the underlying collateral (homes), rather than the outstanding principle owed by mortgage holders. Since property values have decreased, the bank’s asset base did so as well. The Fed will begin buying these distressed loans, but will need to make a profit (remember, people need to get re-elected). Therefore, the easiest way to do this is to remove mark-to-market and voila, we have increased value in the Federal mortgage portfolio overnight. Never mind all the money everyone lost before the Fed saw the wisdom of suspending the rule. That happened during the last administration, right?

The credit markets will loosen and the word ‘sub-prime’ will be replaced with a more palatable one. Not all at once mind you, but slowly like before. The ‘Community Reinvestment Act’ has not gone away. Banks will continue to receive pressure from congress to lend to people who don’t qualify and the FHA guys and gals will be right there reassuring them they will be covered by the government just as before. I would be really surprised if buying bad loans is not somehow tied to issuing new ones--maybe I’m being pessimistic here.

The housing market will rebound. Of course, this would have happened anyway, but we would have had to wait on ‘market forces’ to work their way through the system and learn a few painful, yet valuable lessons--who needs all that? I could be wrong about the preceding points. As stated earlier, I’ve been wrong before and certainly will be again. Some things you can just count on, like when government officials say, ‘It is likely that if we do this correctly, then we could see a profit from our actions today.’

So where does this leave the Houston/Cypress real estate market? As stated earlier, due to Ike and a few other characteristics unique to Houston, we should continue to see moderate activity in our area. People will still buy and sell homes here. Financing should be more readily accessible to us due to the strength of our local economy. Simply make certain you choose a high-quality Realtor® who is a local market expert.

Is it a Good Time to Sell My House?

2008-07-09T22:48:00Z

With all the national media attention devoted to gas prices, the falling dollar, and the credit crunch, I'm thankful they seem to have moved past the real estate market for awhile. However, many of us have in the back of our mind doubts about the local market. Houston is doing well with regard to real estate. Our economy is solid due to its overall diversity and strength based in energy. We have the ship chanel, NASA, a growing creative community, strong bio-tech presence in the Woodlands and other places, and much more to offer.

That still doesn't answer the question, "Is it a good time to sell my house?" Well, just a couple of years ago, people were asking, "Is it a good time to buy a house?" You see, back then, we had what was known as a 'seller's' market. Then, prices were higher and you could just about get what you wanted for a house within reason. Now, the pendulum has swung the other way and it is a 'buyer's' market. That's the problem with the media--very few of the media types know a thing about supply and demand or simple economics in my view. Here's the supply and demand truth: real estate markets are not a zero-sum game. NO part of our economy is. Many people look at it that way, but it just doesn't work in reality to say that, "Houses are not selling as high as they used to, so it must be a bad time to sell my home."

Think about it for a second...if you are selling a house at a bit of a discount, and SO IS EVERYONE ELSE, then you will be able to realize a profit when buying your next home, right? Don't most people that sell a single family dwelling need to purchase a new one to move in to? Therefore, if you sell a bit lower, then you will also be able to buy a bit lower and probably on the same percentage of discount/savings. Economics doesn't support the zero-sum or total loss theory.

Either way, here are the stats for the month of May regarding overall sales in Houston:

ALL CATEGORIES	May 2007	May 2008	PERCENT CHANGE
Total property sales	8,574	7,110	-17.8%
Total dollar volume	$1,746,802,462	$1,487,163,376	-14.9%
Average single-family sales price	$213,430	$214,732	+0.6%
Median single-family sales price	$155,000	$155,000	0.0%
Total active listings	51,676	53,305	+3.2%
Total pending sales	5,722	4,828	-15.6%
Months inventory*	6.0	6.6	+9.6%

In MLS Area 10 (where Coles Crossing is located) for the month of June, there were 216 properties sold at an average price per square foot of $74.05 and 64 days on the market. HOWEVER, in Coles Crossing for the month of June, homes sold at an average of $90.76 per square foot and only 47 days on the market. Shows where some of the best value in Cypress is doesn't it?

Knowing this, it does make sense to utilize a professional when selling or buying a home, doesn't it? In a market like this, are you willing to employ a discount broker to market and sell your largest asset? I didn't think so. Give me a call 713 259 9848.