Let’s Talk Real Estate – July 2021
Southern Oregon, as well as most of the nation, is experiencing record high home sales which is causing record-low inventory and record-high prices. One would think that all properties on the market are faring well, but it always goes back to supply and demand—and not all properties are in heavy demand. Here’s what we’re seeing that is not selling quickly…even in this hot market.
Overpriced Properties—We are seeing robust sales in all price categories up to $1 million, with the strongest demand for housing at the entry level. These appeal to the first-time home buyer fleeing high rental prices, investors seeking high rental prices and those downsizing as their kids move out of the house. It’s these homes, and homes up to $500,000, that we see multiple offers on, pushing the sales price beyond the listed price. It’s simply supply vs. demand. This doesn’t mean you can price a $300,000 home at $400,000 and sell it. It does mean you can probably get $310,000 for a house that may appraise for $300,000 and then negotiate a larger cash down by the buyer to make up the difference.
Buyers can spend a year looking at all homes in their price range, so they quickly become experts in knowing what is a competitive price. Experience has taught us that to get “Top Dollar” for a home in a “Sellers’ Market” is to do a home inspection, fix any major issues, price the home competitively, then put it on the market for a week, and then review all offers. Offers will include both the offering price and any repairs desired from the home inspection. This creates a sense of urgency and competition. Buyers will put in their best offer and the seller can choose the offer that has the highest price and the least number of repairs asked for. If a home comes on the market and it’s overpriced, it will simply sit on the market until the price drops and buyers will wonder what’s wrong with the home since it’s been on the market so long. So, the lesson learned is this—where demand is greater than supply, there is certainly opportunity to increase the price—but that increase must be “within reason,” maybe 10% over all other comparable homes sold—any more and your home will sit on the market.
Project Properties—Many of us are overwhelmed with our life as it is. Kids, parents, work, school, it all adds up, so taking on a project is only for the brave. Project properties fall into lots of categories. We recently came across a home in which the seller had smoked and her dogs had urinated on the carpets, which yielded quite the smell. Instead of listing the property as is, which would have sold for somewhere around $25,000 under market value, we had it painted with Kilz and replaced the carpeting at a cost of $6,000. The home sold over market value and the seller got top dollar. Passing a project on to a buyer is always more costly than just getting the work done yourself. There are many more examples of project properties where the buyers have to complete work once they purchase the property and in almost all cases the discounted sale price outweighs the cost of the work to be completed.
Lots & Land—Buying raw acreage or even a lot in the city is not for everyone. Many people dream of building their dream home and many are intimidated by the process of hiring an architect and builder and then getting the plans approved through the county or city. So, building your own home may be the dream of many, but it’s not the majority. This is why lots and raw land take some time to find the right buyer.
Unique, Un-financeable, Poor Location & Niche Properties—There are lots of unique properties in Southern Oregon and buyers for them can be hard to find. Living in Ashland, Jacksonville, or Old East Medford, you see all these beautiful old homes. Although they are full of character, they can be hard to find a buyer for, and they don’t always sell quickly. We purchased an 1880’s Victorian which we renovated to be our office. It has turned out to be a true learning experience and took patience, time and money to restore and keep it restored, so it’s not for everyone. Location is critical and selling a property on a busy street, under power lines or next to heavy road noise can take a while to find the right buyer. We also have off-the-grid properties, uniquely large homes, uniquely small homes, dome homes, multiple homes on one lot and un-financeable homes; all niche properties that take the right buyer, and extra time.
Over $1 Million Dollar Properties—Million dollar homes are selling faster than ever in Jackson County, but they still can take a while. As of June 1, we had 59 properties listed in Jackson County for over $1 million, with 8 homes selling per month in that price range. That means we have 7 months of inventory of homes priced over $1 Million.
In conclusion, not everything sells quickly, even in a red-hot seller’s market. With that said, for homes that are in demand, this is the hottest market since 2005!