State of the Local Real Estate Market

Anyone paying attention to national politics these days is hearing a lot of discussion about the nation’s housing market. There’s a lot of finger pointing and a lot of solutions flying around amongst folks running for, or trying to stay in office. Fortunately, Montgomery County hasn’t had plummeting housing prices like many other parts of the country since the crisis began around 5 years ago. But then again, we never had the high run up in prices they enjoyed prior to that time. Prices around these parts have been relatively stable throughout the last five years. The main impact around here was a significant drop in real estate activity.

Looking back, 2006 was by most measures the peak year of the last housing cycle. The total number of all closed transactions reported in MLS that year, including single family residences, condos, lots, and rentals, was very robust. Transactions declined steadily after that, and bottomed out in 2009 with 24% fewer transactions than in ‘06. Since then, transactions have modestly increased but are still down 16% from ’06 levels. The last two years have been encouraging and with continuing low interest rates and a fairly good local economy, there’s reason to be hopeful that these numbers will continue to improve.

But Montgomery County has a diverse real estate market and while the county as a whole has an optimistic outlook, certain segments have not fared as well. For example, while total transactions are down 16% since ‘06, single family residential and condo sales are down by 28%. Rental transactions mostly make up for the difference with an astounding 64% increase since 2006. Unfortunately, this reflects the human toll of the housing crisis as the American dream of home ownership has slipped away from so many families as they lost their homes and subsequently moved to rental properties. It also reflects how much more difficult it is these days for prospective buyers to get home loans due to tightened credit standards.

Another segment that has not fared well is the sale of residential lots which are still down by 47% from ‘06. This is an indicator of the level of new construction by local builders. It is not so much an indicator of the level of new construction by large builders as much of their new construction is in planned communities where lot sales are sold directly by the developer and not through MLS.

The above discussion all relates to Montgomery County as a whole. But as we all know, various areas of the county have been affected differently and have had a different rate of recovery. The county wide recovery in single family residential sales, for example, is mostly being driven by increases in the southern part of the county. And the area with the highest growth rate is the southeastern part of the county which has actually grown to a level that exceeds 2006.
These statistics also tell the story of how the real estate business has changed for the typical realtor. The smaller number of transactions has caused some realtors to leave the industry to pursue other employment with a more reliable income stream. And many of us who remain now spend more time assisting landlords and prospective tenants than we did five years ago. While that line of business may not be as lucrative due to its lack of complexity, it is just as rewarding as it still involves finding homes for families to enjoy.

While these numbers are interesting, what does it tell us about the future? Unfortunately, past history isn’t always a reliable predictor of the future. There are simply too many uncontrollable variables for this humble Realtor to make a sound prediction. But it does give reason to be hopeful. Like most local residents, it’s easy to understand the attraction of Montgomery County to newcomers because of its geographic qualities, proximity to major employment areas, and recreational attractions. Those characteristics make our county an attractive draw to many demographic groups, from young families starting out to retirees entering a new phase of life.

So let’s raise a glass to hope and continued recovery.

Timing the Sale of a Home

Late last year, I was contacted by a client who wanted to sell their home. Since they wished to synchronize the sale of their home with the end of the school year, they were wondering when the best time to put their home on the market was. They were rightly concerned about setting the optimum time to introduce their home onto the market as a quick sale would force them out of their home too early and a sluggish sale would disrupt their relocation plans. In many cases, the seller’s personal circumstances necessitates an immediate listing. But when a specific relocation time frame is known well in advance, certain factors should be considered when selecting the right time to list a home. Here are some of the factors that I look at when working with my clients:

Historical Days on Market (DOM) – We all know that historical data is not always an accurate predictor of future results. But it can help define some general expectations. Since January, 2007 the median time from a home’s initial listing date to its closing date in Montgomery County has been 71 days. But within this group of over 20,000 homes sold, DOM’s have ranged from 1 day to several years. The DOM can vary significantly according to market conditions, season, price point, and location. For example, the median DOM for Montgomery County in 2007 was 61 days, but due to deteriorating market conditions, the median DOM had increased by almost 50% to 90 days in 2009. Results in 2010 indicate a slight improvement over 2009, but not yet to 2007 levels. Seasonality also affects the length of time a home stays on the market. Historically, the largest number of closings occur in May through August and, as expected, many of the homes closed during these months have been on the market the least amount of time. Price point is another factor as more expensive homes typically take longer. Finally, location is an important factor. While the impact of location varies considerably among neighborhoods, homes sold in the southwestern part of the county generally have the shortest DOM’s.

Pricing of the Home – Perhaps the most important factor affecting the length of time on the market is the pricing of the home. Setting a realistic price cannot be stressed enough. If priced too low, a home will sell the quickest, but the seller could be leaving money on the table. If priced too high, a home sells the slowest and could even eventually sell for a lower amount than if originally priced more reasonably. Local market conditions, features of a property and condition of home should all be taken into consideration when pricing a home. Unlike a commodity where the fair market value is readily assessed, all homes are unique and should be carefully analyzed to maximize its value.

Listing Product – A home’s listing should be entered into MLS and a Realtor’s personal website. It should be comprised of accurate quantitative data along with a descriptive narrative of the virtues of the home. Accompanying pictures should be well framed and vivid. Print advertising and signage should be well placed and have a professional appearance.

Listing Process – An effective listing is a process, not an event. Once a listing is initiated, data continues to develop that might warrant a change in pricing, home presentation or marketing strategy. Feedback from showings, changes in competitive listings and general economic data can dictate a change in course. Realtors should continually monitor a listing’s pulse and keep the seller well informed at all times. A listing should never be viewed by the Realtor solely as a tool to attract buyers for their business. Its overriding focus should always be to attract a buyer for the listing.

When a specific closing date is targeted, work closely with your Realtor in timing the introduction of your home onto the market. There are many factors that determine how long it will take to sell a home, but having a full-time, local, experienced Realtor will maximize your chances of meeting your objectives.

I have been a local Realtor in Montgomery County since 2000 and am the owner of HomesPlus Real Estate Services. My office is located between Conroe and Montgomery at 19755 Hwy 105W. I can be reached at 936-537-1656 or emailed at Claudia@ClaudiaHohlt.com.