Traditional Sellers: It’s "Go" Time

Or so says local REALTOR® and our data-friend (is that a word?), Aaron Dickinson in a recent blog post.

With foreclosure inventory dropping like a stone and often subject to multiple-offer price wars, and short sales still requiring a substantial amount of time and effort to close, Dickinson argues that traditional sellers have a unique window of opportunity in the fall market to nab a buyer. And that’s especially true for first-time buyers who need a quick close to get in before the November 30th tax credit deadline.

From the post:

• The first time home buyer $8000 tax credit expires on November 30, 2009 and most transactions take 3-5 weeks to close after an offer is made.
• Buyers will have to have chosen and negotiated on a house by the end of October to have a reasonable assurance of closing prior to the expiration of the credit.
• Banks do not have great concern over deadlines when dealing with REOs, so they are not likely to consider November 30th a “make or break” date even though the buyer will.
• Buyers making offers on short sales risk missing the tax credit if the answer from the seller’s lender takes to long or isn’t acceptable.
• In the coming weeks Buyers will find that the only option they have available to them has been the one who has been ready and waiting for this moment: the Traditional Seller.

If you are a Traditional Seller and your house is currently listed, keep it listed through Halloween if you can.  In past years the market quickly quiets after school starts but this year appears to be very different.  If you’ve been considering taking an additional price reduction, take it as soon as you can so you are priced correctly when the buyers’ interest swings your way… this will likely be you last-best-hope for selling till March 2010.

As we noted in our post from last week (see "Neighborhoods Where Traditional Homes are in Shortest Supply"), this has already started, to a degree. Sales of traditional, non-lender-mediated homes are up below $150,000 where first-time buyers can afford.

Sounds like "go" time for sellers.

Thanks to Minneapolis Area Association of Realtors

I would also like to insert my prediction of what might take place prior to the tax credit expiring.  With many single family homes selling in multiple offers, many buyers are going to take a second look at townhouses/condos.  This segment of the market has suffered immensely as many buyers want and demand single family homes in what used to be a buyers market.  With shortage of affordable single family homes more buyers will be buying townhouses.  So by looking in my crystal ball, my prediction is that we will see a rise in pending sales of townhouses and condos!!!

Reprinted from The Skinny Blog from the Minneapolis Area Association of Realtors:

Neighborhoods Where Traditional Homes Are In Shortest Supply

Last week we looked at which neighborhoods were seeing their inventory of available foreclosures and short sales dwindling. The general conclusion: lender-mediated properties are going fast and buyers have to be quick and aggressive to secure them.

This week we’re looking at the other side of the coin: homes listed by traditional sellers. In general, these properties are not selling quite as quickly than their cheaper lender-mediated cousins and are still facing challenging conditions. As of September 1 there was 10.1 months of traditional supply compared to 4.0 months of lender-mediated supply.

But there are some areas where traditional properties are moving relatively quickly. Let’s take a look at the Top 30 neighborhoods by Months Supply of Inventory. You’ll probably notice some patterns. Think urban and first-ring suburban, dudes:

Homes Listed by Traditional Sellers              Months Supply    Active Listings

1  303 - MPLS - Longfellow                               2.7                     55

2  744 - SP-Como                                              3.8                     51

3  361 - Crystal                                                 4.0                     62

4  304 - MPLS - Nokomis                                   4.3                     192

5  750 - SP-Mac/Groveland/River Road             4.4                    72

6  363 - Brooklyn Center                                   4.8                    73

7  378 - Richfield                                               4.9                    118

8  306 - MPLS - Northeast                                  5.1                    123

9  752 - SP-Highland Area                                   5.1                   82

10  308 - MPLS - Powderhorn                             5.7                   92

11  379 - Bloomington-East                                6.0                   93

12  362 - New Hope                                            6.1                   60

13  602 - South St. Paul                                      6.1                   67

14  360 - Robbinsdale                                         6.1                   72

15  746 - SP-St. Anthony/Midway                       6.2                  69

16  310 - MPLS - University                                 6.4                  42

17  309 - MPLS - Southwest                                6.4                  287

18  748 - SP-Town & Country                              6.5                  41

19  301 - MPLS - Camden                                     6.8                  150

20  742 - SP-Central                                             7.0                  70

21  738 - SP-Home Croft/W 7Th                           7.0                  30

22  768 - Fridley                                                   7.1                  85

23  770 - Hilltop/Columbia Heights                      7.2                  78

24  771 - Spring Lake Park                                   7.3                   22

25  766 - Moundsvw/New Brightn/St.Anthony   7.3                   150

26  391 - Saint Louis Park                                    7.4                   301

27  702 - Falcon Hghts/Lauderdale/Roseville      7.5                    159

28  716 - SP-Hillcrest/Hazel Park/Dayton’s Bluff 7.5                    191

29  720 - SP-Southeast St. Paul                          7.5                    39

30  714 - SP-Phalen                                             7.5                    113

There’s not a second- or third-ring suburb in the bunch. You’ll also notice that these neighborhoods tend not to contain too many expensive homes. The median prices in these neighborhoods tend to fall in the low-to-mid ranges that are affordable to a larger swath of home buyers. And when you think about perhaps the largest factor driving buyer demand right now, it makes a lot of sense: the first-time home buyer tax credit, dummy.

Let me show you what I mean:

I’d call that a pattern.

First-time home buyers are extremely active due to the tax credit and—unless mom and dad have chipped in a ridiculous amount of money to help—first-time home buyers don’t typically buy homes in the $500,000 and above price range.

What we’ve got is an extremely bottom-heavy market (insert inappropriate metaphor here) with robust activity in the price ranges typically populated by first-time buyers, and a declining market still searching for a bottom in the higher price ranges.

Takeaway: traditional home sellers in the mid-to-low price ranges have a serious window of opportunity for the next month to find a willing buyer, especially with foreclosure inventory becoming so scarce. When the tax credit expires in November, the landscape might look a little different.