Are homes still selling in our area? I hear so much bad news in the media about the current real estate market and our economy that I wonder if anyone is actually buying homes right now. How are Realtors staying in business?
— T.K., North Branch
T.K., Yes, plenty of homes are still selling throughout our area. However, they are just selling for a significantly lower price than they were a few years ago. As of Oct. 1, 2007 there were about 300 homes that sold in our area so far this year. That is on pace for about 400 homes to sell this year. To give you some perspective, in 2006 there were 434 homes that sold. The total number of sales per year has not changed much. One reason the market seems so bad is because the total number of homes available for sale has increased dramatically over the last few years. As more and more homes come on the market it increases the supply, while demand remains the same. As economic theory teaches, an increase in supply will bring market prices down. Another factor in what has brought the values of homes down is the rise in foreclosures. Banks price their homes to sell fast because they want to loan money not own homes. They would rather take a lower price to get most of their money back quickly so they can re-loan it back out on a different home. Other homes have to compete with the lower priced foreclosed homes if they expect to sell. As for your question about how Realtors are staying in business, the answer is Realtors have to work that much harder. The days of just putting in a yard sign and letting someone else do the work are over. This is why many Realtors have left the business lately. However, Realtors that are smart, savvy, hard working and professional will still be able to earn a living even in down markets. For example, my sales volume this year already exceeds $5 million which is the local benchmark for the top Realtors. Keep in mind the media gets paid to sell newspapers or to get viewers to watch. Negative reporting sells because it gets your attention. I'll admit the current market is bad but it is not all gloom and doom!
Alex Lengemann is a licensed Real Estate Broker who operates RealtyVolution.com, a local real estate company. You can Ask Alex your real estate or mortgage questions by phone 810-664-1819 or by email Alex@RealtyVolution.com.