Real estate tips and tricks from Armando Montelongo
All Real Estate is Local, After All
I recently was interviewed about the pros and cons of selling a house in today’s market. As you can imagine, I wanted to make myself perfectly clear.
And the perfectly clear answers are — It’s never perfectly clear.
There are huge variations among markets from coast to coast. It’s tough to make generalizations about the housing market. That may be common knowledge to real estate investing professionals, but for the average homeowner, it’s not clear thanks to a mainstream media focused on national numbers.
For example, if you live in Florida, there aren’t many pros to selling your house right now. The foreclosure rate is the highest in the country, which means there are lots and lots of houses there for sale. A big supply of houses is slowing down growth in values.
In other words, it’s tough to sell a house and get your money out of it in Florida right now.
It’s a similar situation in California. The supply there is huge. A combination of the overall downturn in home prices and the thousands of foreclosures out there on the market means you’re going to have a hard time even breaking even if you sell your house right now.
Oversupply also is keeping values from rising very fast in places like Illinois and New Jersey. Even the threat of oversupply has depressed prices and made things tough for sellers.
But then there are places like Phoenix. Many of the foreclosures there have been cleared out of the market, which means the supply of houses is shrinking. As a result, values are rising. They’re still off their peak levels, but they are climbing rapidly.
There are other places, like our big markets in Texas, where we didn’t have those big drops in value when the price bubble burst and we didn’t have that huge wave of foreclosures. Supply isn’t out of whack, so people are more likely to have price appreciation – and the ability to sell at a profit.
Another factor that can have a big effect on home prices is the odd collection of state foreclosure laws.
In states where foreclosures have to go through a court system, it’s going to take many years for the market to return to a normal supply of homes. It just takes a long, long time to resolve foreclosures in the judicial states like Florida and New York.
Places with the non-judicial foreclosures, like Arizona and California, are seeing a lot of the inventory getting cleared out.
So no matter how much people want to look at national numbers for trends, remember that real estate, like politics, is all local.
So true, Armando! I live in Michigan and it is a judicial system where empty homes are everywhere. Plenty of folks are unaware that the slow process of foreclosure here in MI has less to do with the banks and more to do with the local laws of foreclosure.
True! We are trying to sell our home and move to Florida for a lot of reasons. While buying a house in Florida is GREAT, selling our home here may not allow us to leave. Right now that move is our life line and it may not happen. It is also my in-laws life line as they want to help us with our 12 year old son and move from Puerto Rico. I am HIGHLY motivated, but we need some money for a down payment, especially since we had to do a “loan modification” last year, and we need money to MAKE the move. BUT, everyone is looking for a deal and buying foreclosures, and short sales. Our home was renovated and we CAN NOT just give it away.