Thursday, October 21, 2010

Cache Valley Short Sales Up

The number of homes listed under "short sale" status in Cache county is likely at an all time high. There are currently 49 Short Sale Homes for sale in Cache County. This is the highest it's been since I started keeping track over a year ago.

Total real estate inventory is also at an all time home. Right now there are 873 MLS listings in Logan. This is a 123 more listings than we had at this time a year ago. With inventory high, and prices declining, we will likely see the number of short sale homes increase over the next few months.

Friday, October 15, 2010

What Price Range is The Hardest To Sell Right Now?

The air is starting to cool, and Winter in Cache Valley is coming. The winter months are typically the slowest months for home selling. But which homes will have the hardest time selling? Which type of Logan homes will have the easiest time selling?

For the most part, the more expensive homes will have the most competition if buyer behavior is similar to the way it has been in the past year. Homes priced above half a million have been nearly impossible to sell. There are currently 28 Cache Valley Homes for sale priced above $500,000, but only 5 in this range that sold in the last 365 days. Last year, homes priced between $400,000 and $500,000 had a better chance of selling than those priced between $300,000 and $400,000. Homes priced between $120,000 and $140,000 sold best.

One good metric for determining the health of the market is by determining months of inventory. The months of inventory are determined by comparing the actual home sales over the past year, with the number of homes in each price range that are actually for sale. So, if no new homes were listed for sale, it would take this many months for all of the existing properties to sell.

The graph below shows the months of inventory broken down by different price ranges. Logan Utah Real Estate has more than a years worth of inventory for homes priced above $200,000. Homes priced between $120,000 and $140,000 have just 5.21 months of inventory. I excluded the over $500,000 homes from the graph, because they currently have 67 months of active inventory.

If you really don't need to sell, then don't even try right now, especially if your home is worth more than $200,000.

Wednesday, October 13, 2010

Q3 Cache County Home Sales Down 37.85%

For Cache Valley Real Estate, the third quarter is usually the best quarter of the year in terms of home sales. It encompasses the summer months when most people prefer moving. But not this year. Q3 home sales were way down.

So how bad were home sales during the third quarter in Cache County Utah?

Well, they were down by 37.85%, from last year, and last years third quarter stats were down from the year before that, which were down from 2007, which was down from 2006. To get things in perspective, there has only been two quarters in the last five years that had lower total home sales, both of those quarters happened during the winter.

The prices of Cache County Homes sold was down 3.43% compared with Q3 of last year. The median sales price was $161,000 while the average sales price of $179,171 was at its lowest level in four years.

Wednesday, October 6, 2010

What Will Happen to Cache County Home Prices?

What will happen to home prices in Cache County in the near future? We don't really know. But by looking at past statistics and results we can make some educated guesses.

The biggest factor determining future prices is the amount of real estate inventory. The more houses there are for sale, the more home prices will come down. Another factor that will determine future prices is the number of foreclosures that will be hitting the market. Foreclosures not only add to the total inventory, but they also generally have lower sales prices, lowering overall values. Here are current real estate inventory levels compared with previous years.

If there had never been a boom in home prices, where would prices now be if home prices appreciated at a normal gradual pace? Assuming that Cache County home prices were "normal" from 1997-2001, the green and red lines show what the median and average home price would be if home prices went up at exactly 3% each year. At this pace the median price would be $150,048.92 right now. Last months median sales price was $155,580. The average sales price at this rate would $161,919. Septembers average sold price was $161,482.
Under this model, Logan Real Estate prices are just slightly above what they would be at gradual appreciation. However, this doesn't mean that prices will stop dropping. Real estate values are determined by economic conditions in the area. If the economy worsens, prices could drop well below the "normal" values. With 880 current homes for sale in Logan, we will likely see prices drop well below the normal lines. There are more than 13 months of real estate inventory at Septembers home sales pace.

Monday, October 4, 2010

Where would home sales be, if we never had a housing boom?

Despite what Realtors might tell you, home sales in Cache County Utah are down. With the way things are looking, 2010 will likely be the worst year for home sales in Logan since 2002. Home sales this year actually started off close to average, thanks to the home buying tax credit. But, compared with the past five years, home sales during the second half of the year have been pretty dismal.

While home sales are way down from the past five years, they really may not be that far from where they would be if there never was a housing boom. If there weren't hundreds of unqualified buyers and investors buying homes they shouldn't have bought, where would home sales be now?

This graph shows us home sales in Cache County since 1997. The Logan Real Estate boom really started in about 2002. Annual home sales in 2006 were more than double what they were in 1999. And while Cache County is growing, it certainly didn't double over the course of 7 years. Over the past decade growth in Cache County has averaged less than 3% per year. If home sales increased at a gradual, 3% level each year from 2001's home sales levels, we would have had about 913 home sales this year. About 50 more sales than we will actually have based on my projections.
Now the question is, what does this mean for the future? Because home sales were so much higher than normal levels during the boom, will they be less than "normal levels" during the recovery?

They could be less. There are now a lot of potential buyers less likely to want to buy because of what they saw happen to peers who lost equity. There are also good numbers of people who bought at the peak of the housing market, and have faced short sale or foreclosure. These people will not be able to buy for years.

I think the answer to this question really has very little to do with what happened in the past, but has lots to do with how the economy recovers. If the Logan Utah economy recovers, then we should see, a slow but steady increase in sales of Logan Utah Homes. If the economy digresses, and is hit harder, then home sales will probably continue to fall.

September Home Sales an Prices Down in Logan

September was another awfully bad month for real estate in Logan Utah. Only 59 listed homes have been reported as sold on the MLS so far, and the average sold price is down nearly 12% from a year ago.

Cache County home sales were down by 33.7% compared with September of last year. They were down 13% from last month, which was a really bad month for home sales. This marks the lowest September of home sales since 2002. I thought that the tax credit hangover was over, and that the real estate sales numbers would normalize, but it appears as if it will be more time until we see home sales numbers increase.

Cache County Real Estate prices also appear to be dropping. The September sales price was just $162,582, down 11.96% from a year ago. The median sales price was just $155,850. Prices will likely continue to drop as inventory is still too high. There are currently 871 residential homes for sale in the Logan Utah area. This is 116 more listings than at this time last year.

The next few months don't look like they will be much different for home sales. There are currently 99 homes under contract. This is down from 108 under contract properties at this time last month.