Buying or selling, the real estate market is back on track

Low interest rates for buyers, low inventory for sellers make for a balanced market

By Steve DiMattia
Resident Community News

After years of languishing in the basement, the Historic District’s real estate market has moved back upstairs and flung open the doors and windows to welcome in the sunshine of recovery. The best news is that, at the moment, both buyers and sellers are living happily together under one roof.
“Right now, it’s good for everyone,” said Anne Rain, of Coldwell Banker Vanguard Realty in Avondale. “For buyers, there are low interest rates and low prices. For sellers, the inventory is low so there’s not as much competition; homes are selling quickly and for good prices – many above asking price. If you’re both a buyer and a seller, then it’s better to sell low and buy low than to sell high and buy high, and now’s the time to do that.”

The numbers bear her out: According to Multiple Listing Service, which tracks real estate transactions nationwide, Riverside/Avondale/Ortega saw a 5.7 percent increase in average sales price in houses compared to last year. Sold properties jumped 34 percent (many in the $100,00, $200,000, $750,000 and million dollar plus ranges), pending sales rose 44 percent while listings dipped to 18.4 percent. Average days on market dropped from 135 to 120. The Northeast Florida Association of Realtors’ January 2013 report (which includes condominiums along with houses in its MLS data) shows area sellers have received 90.8 percent of original list price compared to 83.2 percent last year, and 14.3 percent of properties sold over list price, compared to zero in January 2012.

Murray Hill has likewise demonstrated recovery, with 26 percent improvement in average sales price. Sold properties increased 50 percent (mostly in the $20,000-30,000 range), pending sales climbed 137.5 percent and listings are down 39.2 percent. Average days on market, however, increased from 176 to 216.
“The transition has taken place from a buyer’s to a seller’s market, but there are still pretty good deals for buyers based on what homes were selling for two to five years ago,” said Wade Griffin, Rain’s colleague at Coldwell who was their 2012 top producer. “It’s definitely balancing out and sellers are not as desperate to find buyers now. Buyers have to act quickly and they can’t expect to find the same deals that were available even last year.”

Sheron Willson, broker/manager at Prudential Network Realty in Avondale, agreed.
“The best time to buy is when the market starts to turn. As this trend continues opportunities are narrowed and when a property is properly positioned in market, buyers are met by competition including multiple offers. It appears this is a consistent healthy trend, not a spike or catastrophic movement in the market. Therefore it is a balance for both buyers and sellers to take advantage of this current market to make the move that they have been waiting for,” said Willson, whose office had 2012’s top market share in the Riverside/Avondale/Ortega area.

The current buyer/seller balance is reflected in the absorption rate – the rate at which homes are selling in a specific area. It is currently 5.7 months, with a balanced market being six months; below moves to sellers, above to buyers.
Low interest rates are strongly contributing to that balanced market – currently between 3.5 to 4 percent for a 30-year fixed mortgage. People are still getting a lot of house for their money because of these low rates, but all realtors agree that it is essential to act quickly.
“Inventory is low and sellers are getting multiple offers,” said Beverly Brooke, Prudential’s top producer for Riverside/Avondale/Ortega. “Because of the way it’s been the past few years, buyers haven’t had much sense of urgency. But now they’re finding that if they wait, they miss out. Once they miss a few, they get that the market’s changing, but by then, they’ve already passed on some great deals. ‘If you snooze, you lose,’ so my advice is, if you see something you like, act on it.”
To offset the challenge of low inventory, Brooke sometimes approaches owners whose homes are not on the market.

“I drive through neighborhoods with my clients and when they spot a house they like, I’ll contact the owners to see if they are interested in selling,” said Brooke. “Even if my buyer doesn’t end up in the house, the owner may decide to put their home on the market because they see the potential for a sale. Whatever it takes to bring buyers and sellers together.”
Creative strategies aside, most buyers are going to face the hurdle of multiple bids, but there are ways to maximize their chances of getting the house they want.
Gil Pomar, banking veteran and president of CenterState Bank, said that buyers with pre-approved loans increase their likelihood of winning a bidding war. “I think the key is the buyer needs to produce a pre-approval letter from a bank with a short (less than 30 day) closing date, Pomar recommended. “No seller wants to take the risk of waiting and then having to start over. A bird in the hand…”

Lorri Reynolds, vice president/broker with Watson Realty’s Avondale-Ortega office, strongly concurred with the advantages of pre-approved loans.
“Loan approval must be submitted with contract. The market is too hot to not have that insurance. Any agent that doesn’t send a pre-approval letter with an offer is putting the buyer at a disadvantage,” Reynolds emphasized.

Those buyers with limited resources or damaged credit might consider visiting a mortgage broker who has relationships with a variety of lenders.
“I marry ‘need’ to ‘supply’. Different lenders specialize in different niches of the market and credit scores and I can help people find the best deal for them,” said Alec Boriss, owner of Oak Street Financial in Riverside. “It’s a myth that it’s difficult to get a mortgage. Conventional, FHA, USDA and VA all offer viable options for those with decent credit and the ability to put down a 3.5 percent payment.”

In addition to low interest rates, realtors also cite decreased unemployment numbers as well as the resolution of the 2012 presidential election as reasons why the real estate market is recovering.

“Although we haven’t seen any huge increases in local employment figures yet, people are slowly getting back to work, so there’s more money available. Also, regardless of your political views, the fact that a decision was made in the presidential election brings more certainty,” Reynolds observed. “Buyers are more relaxed about home ownership, so sellers are responding.”

Appraisals is one area that realtors feel is still lagging. “Appraisal figures are still six months behind. Since the new seller’s market is only a few months old, they are still operating off of old comparable prices. Also, short sales or foreclosures on the block can lower appraisal figures so they are not reflective of the current market value,” Reynolds explained.
Coldwell’s Rain added that historic districts present difficulties because of the uniqueness of the homes. “The homes are not ‘cookie-cutter,’ so you can have one not remodeled since 1940 and another entirely gutted and redone.”

Regardless, veteran real estate agents mark this as a watershed time in their profession.
“It’s as good as I’ve seen for 20 years,” said Fred Miller, who founded the Fred Miller Group, along with his wife, Carol, in 1995. “We are a mid-sized company but we’ve sold 30 homes since January. That’s more than we’ve sold in any seven-week period for the past five years. We’re up 35 percent over last year. It’s not just us; all agencies are up.”
Maxine Kelley, an Ortega Farms resident and 28-year veteran top producer with Watson, still sees it as a unique buyer’s market.

“We have a good market of all price ranges to offer and the interest rate is wonderful, so it’s definitely a great time to buy. If they qualify for $150,000 I can get them into a nice home,” Kelley said.

Jon Singleton, another Watson top seller, noted that those in the real estate business that made it through the recession are now armed with extensive tools to succeed.
“The realtors, appraisers, mortgage brokers and lenders that are left standing have all been ‘battle tested’ so they survived some difficult circumstances and are very capable,” he said.
Prudential’s Willson put it another way: “People that learned to dance in the rain are the ones who
succeeded.”

A large part of sustaining that success involves marketing and the use of technology. “Fast-paced, hi-tech marketing tools have become vital to real estate sales. Marketing over the next decade is going to make companies or break them,” Rain predicted. “We must compete not only in our community but also on the World Wide Web using social networking, nationally recognized branding and innovative tools to direct buyers from anywhere to our local homes.”

Beyond marketing, technology, interest rates or even the conditions of the market, all of the top realtors agreed that the key to successful transactions still rests in
relationships. “Those of us who did make it through the recession did so in part because we truly valued our customers and understood that, whether it’s a $20,000 home or an $8 million home, it’s a big deal to that buyer. When you do it wrong the results can be devastating but when you do it right the rewards are phenomenal,” Watson’s Singleton said.
Both buyers and sellers are poised in the current balanced market to reap many phenomenal rewards – as long as they act fast.

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