Lets talk turkey! 

Many people ask me

How is the real estate market doing? Are homes really selling. What are they really worth? Is it a good time to buy?

 Let’s look at what has closed and the data that is available.

This report is for homes (single family residential) that closed in Alachua County between September 1, 2011 to  October 18, 2011 from the MLS system.

There were 153 closed residential properties in this time period. Of these, there were 11 that were short sales, 28 Bank Owned, and 114 somewhat normal sales.

SHORT SALE information:

The sold prices of the 11 short sales  ranged from $80,000 to $275,000 with the average being  $153,992. The average asking price was $160,958. The average asking price was $160,958. The average ratio between asking to closed prices was 96%. The price per square  foot range was $44.40 to $116.43.  (Yes, $116.43 for a short sale home!). The average days on the market was 258, ranging from 134 days to 456 days.

BANK OWNED information:

In this same time period, there were 28 bank owned properties that closed. Their sold prices ranged from $12,000 to $330,000 with an average selling price of $112,617. The average asking price was $118,177. The average ratio between asking to closed prices was 95%. The price per square foot range was $14.93 to $101.14. The average day on the market was 124 ranging between 24 days on the market to 418 days on the market.

NORMAL SALES information:

There were 114 normal sales. Their sold prices ranged from $30,000 to $725,000 with an average selling price of $197,561. The average asking price was $207,838. The average ratio between asking to closed price was 95%. The price per square foot range was from $24.04 to $164.10 with an average of $101.25. These homes sat on the market an average of 174 days. The shortest was zero days on the market to 667 days on the market.

Interest Rates

Interest rates are low for some borrowers. If you have a great credit score, the rates are great. I suggest the first thing to do when you are contemplating buying a home, is to have a chat with your local lender. They can give you all the details of what YOU can expect when getting financing on a home. Also have them look at your credit. You can be surprised if something shows up that would stop the loan process.

As for the low home prices, it may not be quite what you expect. For example, don’t think you can put offers in 20% below asking price and get the seller to even respond.  Also, if you see a home you like, don’t wait too long or it could sell to someone else. We are also seeing many sellers getting multiple offers on their homes at the same time.

How can you use this information?

Well look at the ratio between asking and selling prices. The average is close to 95% of the asking price. Then look at days on the market – the more a home needs work, the longer it sits on the market.

A home that is in great shape, asking price is within reason, can expect to get 95% of their asking price, and sell within a few weeks to a few  months.

Any Action Today?

There are three homes waiting to close (after inspection and other hoops are jumped through). Their heated and cooled spaces were between 1,545 and 2,347. They were built between 1997 and 2003.Their closing prices ranged between $189,900 to $244,000. Average they sat on the market was only 86 days.

We won’t know their selling prices until the closings happen, hopefully within about a month.

Selling in 2011

There were eight homes that closed so far this year in Mentone.

Their heated and cooled spaces ranged between 1,366 to 2,508. They were built between 1998 and 2001. They were asking between $174,900 and $249,000. The average they sat on the market was 177 days.

click to see Homes for Sale in Mentone

What’s for Sale Now?

There are seven homes listed for sale.

Their heated and cooled space range from 1,433 to 2,911. They were built between 1996 to 2004.

They are asking between $168,000 to $335,000. Average days on the market is 68.

What Does it Mean?

There is about a 6 month supply of inventory in Mentone.  That means it is almost a balanced market in this small corner of the Gainesville market (not a buyer’s or a seller’s market).  However, overall the area is in a buyer’s market and that is keeping the market action index (mai) on the buyer’s side.

If you have to sell your home Mentone is a good place to do it.  Make sure you have it looking beautiful and priced well, and plan on marketing your home for 6+ months (based on neighborhood averages)

Activity in the Whole Zip Code

Historical Sales Prices

Any Action Today?

Nothing has gone under contact in the last 30 or so days. The usual time it takes to go thru the closing process from contract to closing for a resale property is about 30 to 45 days.

There are no new “Pended” contracts in Longleaf.

What has Sold this Year?

There have been 9 sales this year.

These homes were built from 2004 to 2011. Their heated and cooled areas were 1,553 to 2,103 sqft. Their sale prices ranged from $205,000 to $241,779. The average days these sat on the market was 102.

click to see Homes for sale in Longleaf

What’s for Sale?

There are 21 homes for sale in Longleaf today.

They range in price from $192,679 to $398,773. They range in size (heated & cooled area) from 1,469 sqft to 3,045 sqft. Their ages range from 2004 to 2011.

The average days these have been on the market is 139.

What does it Mean?

There are about 14 months of inventory on the market in Longleaf if you run the numbers above, but since new homes are also being built that number is bigger – maybe 20 months of inventory.

That is definitely a buyer’s market.  If you have to sell your home now make sure you have it looking beautiful and priced well, because you are competing with builders, short sales, and cheaper homes in Willow Oaks.

Activity in the Whole Zip Code

This is info about Asking prices on the market today:

With 1667 homes for sale in Alachua County, there are some “great deals” and investors are starting to look closely at these properties.

As of this writing there are 281 short sales, 51 bank owned properties on the market, and 284 homes are for sale UNDER $100,000.

Finding the Right Property

What makes any real estate a great buy for you as an investor?

Just like any investment it depends on what you are are trying to get out of your investment.  Of course you want to be able to get your money back out of the property (called return OF investment) and you want to make money too (called return ON investment). But what else are you looking to accomplish?

Here are some questions to ask yourself

What kind of return do you need to have to make a real estate investment worth having? (compared to your other investment options how much more/less do you need from real estate?)
The cash flow will be a starting point to decide what properties to consider when you buy real estate for investment.

Are you trying to protect your money for retirement?
Then you probably want a property that is in a stable area with a long history of no vacancies.

Do you want to buy a retirement home today and rent it out until you are ready to use it?
You may like a home that can be rented to a professional that will take care of it so you can take advantage of today’s low prices.

How involved do you want to be in managing it? Are you going to manage the property or have someone else handle it?
Residential real estate takes more work to handle than commercial real estate.  In commercial you may even get tenants who will handle all the maintenance on top of paying their lease.

Do you need a tax shelter?
Maybe a fixer upper is right for you – you may be able to deduct your improvements to offset a positive return on investment.

Your motivation and the money you have available is what will drive your decision for the right purchase. Any time you can buy real estate and lease/rent it for more than your expenses (i.e. a positive cash flow) you should have a great investment.

First Time Investor?

If you are a first time investor thinking of buying a home as a rental property, think about the effort it takes to be a good landlord… If  your tenant’s dishwasher breaks on Saturday night at 6 p.m. you may want to check it out yourself before calling for help. Sometimes it is just the circuit breaker that has tripped, other times it is the real deal and the dishwasher broken.

If you don’t have the time to maintain this investment you may want to shop for a good property management company.  They will charge you a monthly fee but the property manager will be the one going in at 6 p.m. on Saturday night. Don’t forget to figure this in to your expenses – they don’t work for free.

Professional Help

Once you have decided this is the way to go, get with a realtor who knows investment properties.

Go over all the costs involved on each property you are considering. You may get a low purchase price, but what will it cost to make the home livable? What are the average rental rates? Be sure to set some of this rental money aside each month for when the roof, ac, or water heater need repair or replacing. If you are financing this transaction, be sure to check with the banks beforehand. Investment properties require more money for the down payment (usually a 20% deposit) and higher interest rates. Also be sure to include insurance on the home and the property taxes – and their expected escalation each year.

There are many great “How to be a great landlord” books available that give you great advice.

The Best Way to Evaluate an Income Producing Property

1. Look at the projected gross income (How much rent will your receive?)
2. Subtract for vacancies and non paying tenants/collection losses (ex: banks will use 3 months worth of rent as the amount to set aside for vacancies).
3. Now you need to deduct the operating expenses. Some are fixed expenses like taxes and insurance, while others can vary like utilities or maintenance. Save a portion of each month’s rent for replacement of items like appliances, air conditioners, roof repairs, etc.
4. Then you need to subtract your monthly payment if you have financed this purchase. You may be eligible for a tax deduction but it won’t offset the whole payment. Get with a good accountant!
5. I always felt that if I was paying less than $200/month the first year to obtain a rental property, I was doing great. These days I am seeing many new investors buying a property that has a positive cash flow in the first year.  As rents and prices go up over the years, you should be able to see your investment grow, and one day when you sell the property hopefully it will be worth more than what you paid. You can calculate your  tax deductions or income received.

There is a risk involved in investing in rental property, and you need to look closely at the risk versus the reward.  Only you can decide if the numbers work for you.

If you are looking to “flip” a home in this market, be sure to look very closely at comparable sales. Also look for clauses in your purchase contract that prohibit immediate re-sales of some homes!

Dear Photograph, When will I have this much swag again? - tineyluu http://dearphotograph.com

In my daily routine I see a lot of buildings.  Living rooms, kitchens, bedrooms… I’m looking at the quality of construction, the finish work, and evaluating the floorplan for my customer’s needs.

Dear Photograph, I wish I had as much swag then, as I do now. @landonjonez http://dearphotograph.com

I know a lot about the houses they buy and move into, but I don’t get to see the magic that happens as the family turns their new house into a home.

And then one day they call me again when it is time to move on.  New baby, new job, new life… for some reason their home isn’t right for them anymore and they want me to help them sell it.

I get to see the ghosts of their life in the house, but making it sell-able means reversing that magical thing they did – turning the home back into a house so the next family can fill it up with their imagination.

It’s the time between buying and selling the house that is important. I love my job and feel honored to help people with the big transitions they face at these times.  I’m honored by the fact that families open up to share their quirks with me, so that I can help them find a proper home.  But, I do understand that what I do is the means to an end – the goal is having a happy life.

Ok, enough nostalgia… sorry for the outpouring of sentiment.  Here is a napkin, I think I got some on your shoes.

About  http://dearphotograph.com/

The website’s thesis is to find an old photo, then go to where it was taken and take a new photo of it in the same spot.  The awareness it creates of passing time is pretty amazing.  Visit the website to see more photos, or to post your own!