In preparing a Comparative Market Analysis for an Orland Park home for sale, I wanted to see how Orland Park is faring in today's declining market. The easiest way to check this out is to collect the data created for us by our local real estate board.
The data shows us the following, which is based on what has happened during the first half of 2009 vs. 2008:
Amount of homes sold: 2008 = 124 2009 = 118 - showing a decrease of 4.8% of total sales of single family homes
Median Sale Price: 2008 = $325,000 2009 = $294,500 - showing a decrease of 9.4% in the median price
How does this affect sellers?
I'm reading more and more about properties not appraising. There are different reasons for this, some are as follows:
- The house is simply priced too high for today's market, but something about it made a buyer interested enough to make an offer that was accepted by both parties.
- Because of the new appraisal rules (HVCC), an appraiser was sent out that is not familiar with the area - this seems to be happening a lot since the new rules went into effect.
- There are little to no comparables in the immediate area and the home was difficult to appraise to sustain the contract price.
- The only area activity is foreclosure and short sales, bringing the value of the area as a whole down.
- The appraiser is taking a percentage off the final appraised price to reflect a declining market. In the case of a 12% annual decline rate, for example, if a home appraised at $300,000, 1% would be deducted to reflect the declining market. That would bring the final appraised value down to $297,000. In the above scenario, I'm not 100% sure if only 1% is deducted to reflect a month's worth of decline or if a higher amount would be used.
Sellers can no longer "test the Orland Park market"
OK, technically, they can. If they find an agent that will do this for them (or as we say in the business, an agent who "buys the listing" by taking it at an inflated price, thus making the seller very happy - at that point in time at least) then they can list at whatever price they want to. However, in today's market that will definitely mean a listing that does not sell.
For the agents that take these high priced listings, they have to face the wrath of a seller that is receiving few, if any showings. Without showings, there are no offers.
An Orland Park listing might not sell at market value
In a declining market, there is no guarantee that a home will sell even if it is listed at market value. With a declining market, today's market value is based on homes that have already sold and closed. As prices continue to decline, those prices become stale (and high) quickly.
Other sellers that have been on the market and are motivated are becoming pro-active and reducing prices to spur activity. Even the best agents and very motivated sellers can "chase the market", trying to find the correct price that will bring in more buyers and offers.
The question I always get asked
Many sellers don't want to list at market value. They want to pad the price, knowing few buyers will offer full price, especially during our current recession. They accept the market value, but they now want to add $5,000 or more to that value. And that might be the difference between getting showings and offers or not.
Remember the competition for Orland Park real estate
There are other sellers out there - many others! Some are not so motivated and will stubbornly keep their inflated prices and blame their agents for the lack of activity. Some of those sellers will go through many different agents until something happens in their lives that finally motivates them (they find a home they want to buy or something else happens to make them much more eager to sell). Then they listen to their last agent and finally price their home properly. It's almost a bad thing to be the first agent to take a listing in today's market.
Orland Park real estate isn't suffering a steep downward trend as some other towns. There is a town I work in that has a price decrease of more than 56% for the first half of 2009 compared to 2008. That's debilitating for anyone that has to sell in that town. Many towns have seen a decrease of 20% or more. Only a few have seen very small declines.
When will prices stabilize?
I don't think anyone has the answer to that. I've heard the end of this year (I don't believe that one), next year (we'll see) and others say 5-10 years. Many feel that once the decline stops, prices will remain stagnant for a period of time before rising again. I wish I knew what the future will bring.
It's making our job as REALTORS very difficult. Even appraisers are having a hard time. I actually had an appraiser call me, sounding exasperated, asking me what I felt a property was worth that was located near one I had listed. He didn't seem to have a clue!
If you really need to sell then you must list your property at the correct price if you want to have a chance. If you don't really have to sell then it might be wise for you to wait and see how our economy unfolds. It isn't fun having your house up for sale waiting for those showings (that may never come), and/or showing your house to many buyers without an offer.
The bottom line is, it is simple supply and demand. There are still too many homes on the market in any given area and any price range and too few ready, willing and able buyers, especially with today's new and ever changing mortgage requirements.
If you are interested in selling, give Judy Orr a call at 708-536-8200 or use the Contact Form. If you're a lucky buyer in today's market call Judy or fill out the Home Finder Form to get listings sent directly to your e-mail.