The State of Real Estate Professional Opinions by Don Carr, ABR, GRI, REALTOR

The State of Real Estate

What is happening in Real Estate? In this economy that is a real challenge and I feel a little like the start of A Tale of two Cities, “it was the best of times; it was the worst of times.” The economy across the country has helped to stall the Real Estate market in Austin. We hear a lot about how our “market is the best in the country” and that is partially the truth. The latest figures we have from the board of REALTORS show an 18% drop from the last year in the number of homes sold with the average sales price of $232,403. The Real Estate Center at Texas A&M shows we have a balanced market with 6.4 months of inventory. The national average is 10 months.

So what does that mean in practical terms, especially if you are seller sitting there with your home on the market, not many lookers and the very real possibility of having a long wait or dropping your price to sell your home. These are a few things that it means.

First, homes must seek their price in the market. Comparable sales are not telling us very much, since what sold last month or last week for one price may not even get showings at a similar price now. It is like fishing, you drop the line with the bait in the water and nothing happens. You have to keep going lower and lower until you find the fish.

Secondly, it is a real beauty contest out there. Remember when a nice house at $250,000 would sell pretty much as you bought it ten years before . Now the old adage that a house has to be updated every ten years is truer than ever. Colors change, styles in tile change, countertops, cabinets, etc. change as do styles in appliances. Granite counter tops (or at least hard surface) and stainless appliances are expected by today’s buyers. These characteristics may not seem very important when compared with your greenbelt lot and wonderful floor plan, but they are what keep the buyer in the house long enough to notice your floor plan and greenbelt lot. If you were assessing your house for sale to see what you might do to make it ready, think about what you want when you begin looking for your next house.

Next, think about value. What does value really mean? Value is what someone will pay for an item, in this case a house, at any given time. I find it very hard to believe that someone would not think that my house was not worth what I paid for it plus an additional 5%-6% increase for each year that I have owned it. Isn’t that how it is supposed to work? In California and many other parts of the country not that long ago , home owners were expecting their homes to increase 50% a year and selling them in days that way. Now many people understand that value is totally related to what the market will bring…often far less than what they paid. We are very lucky in Austin that most homes are still selling for pretty good prices, although the days of rapid increases are probably over.

Fourthly, always buy a house with the idea in the back of your mind that you might have to sell it. That does not mean to buy a house for investment only, but it means you must keep the factors that make a good resale in mind. When a market is soft the small flaws that might not have made a difference can become glaring. For instance, backing to a busy street may not have bothered you, but when you consider that it bother one in twenty buyers and you now have ten buyers who look at your house in a three month period instead of a hundred…well you do the math. Buying the best characteristics is always important . Schools, location, ease of getting around, and here in Austin, water and hill country views can make the difference between interest and no interest.

Finally, with all of this reevaluation of what used to be the American dream, is home ownership a good thing. Yes, definitely. For one thing the real estate market is always cyclical. What goes down goes up, when the pendulum swings one way it will swing back the other. I have never looked at the stock market or the real estate market as short term way to make money. Staying in for the long haul, although not as exciting will result in a slow and steady gain. I this case the tortoise not the hare is still the model. Over a period of time buying a home gives, in addition to the pride of ownership and the joy of having “your own place”, the most solid investment most of us ever have.

Sill, sometimes life brings changes and you have to sell or buy when you do not want to. Maybe it is just the wrong time, but you do not have a choice. When that happens I still believe that there is a silver lining somewhere in there if we look. Some days real estate is not as much fun as it used to be; sometimes I feel like a social worker. But I am always happy to share in your joys and in your troubles, if you will give me a call. It is one of my greatest honors in life to call you friends and clients.