We read so many posts here on Activerain, about the market, the inventory, the lack of buyers, frustrated sellers, the economy, and the sub-prime mortgage industry, foreclosures, and the media.
There is tons of finger pointing.........the buyers signing things they didn't understand, the lenders for selling mortgages to uncredit worthy people, the appraisers for appraising houses higher than they should have, Realtors pricing too high. We have seen and read it all.
As a licensed Broker, in Ann Arbor, Michigan, we saw the market turn back in summer of 2001. Yes, I said summer of 2001, before 9-11. For example, I had a client who had purchased a home in Saline, Michigan in 1998, the market was HOT. They made several offers on homes and weren't able to get them. or they were gone when they went back a second time. They learned the hard way that if you find a house, you better make an offer right then as it wouldn't be available when you wanted a second showing.
So they purchased a very dated, shag carpet, orange and brown wall-paper house on 1 acre with a swimming pool. You could literally stand in one room and see 5 different colors and patterns. However, they were excited to finally be in their home.
Over the next three years they updated everything. All the tacky wallpaper was removed, new neutral paint everywhere, new light fixtures, beautiful landscaping, and new appliances. The house really had a "face-lift". It was hard to believe this was the same home. 
My sellers had a new baby and wanted to move into a larger home, so we found then a gorgeous new home in a new sub-division. I put their older home on the market, at the lowest comparable price. After showing them the comparable solds, they wanted to go the lowest so they didn't risk owning two houses.
Welcome to 2001 in Saline, Mi.
The dated house sold 3 days on the market, the remodeled house took 6 weeks. In Saline, before the economy shifted, homes were gone it a week. It was so much fun!! All the sellers were happy, happy.
Realtors "felt" this shift first. At the time Ford, GM, and Chrysler were "restructuring". Which is a nice way to saying, they were starting to lay off lots of employees. Those of us in Real Estate thought this would be a temporary slow down and then 9-11 came. Oh, at first, we didn't really notice much, all the Big 3 were giving tons of rebates on cars and the housing market was moving along steady just taking longer to sell.
The "housing boom" according the national statistics officially ended in 2004-2005. But, in Michigan it ended way before that.
So how will we know when the market is going to turn? Not, just here but in your towns and communities?
According to John Tuccillo, former National Association of Realtors, Chief Economist, between 1987 and 1997, "you can predict that change is coming when you see a correlation between jobs and people." For instance, Michigan is still losing people. Our population is declining, and then you compare that to my favorite place on earth, Nashville, TN. Nashville and all the suburbs are growing. Our home prices are declining, Nashville is stable. There is a direct correlation between people and jobs.
How can we as Realtors know when the sift is going to occur from a buyers market back to a sellers market or a stable market?
Yes, you heard me the MLS, that old antiquated system, (tongue in cheek) we have access to all the data. The consumers have access to the listings but not all of our data.
Look in your MLS for these 4 things:
•1) The number of new listings coming on the market goes DOWN. Inventory starts to decline.
•2) Decline in the Days on the Market, or DOM.
•3) The difference in the List Price and Sales Price ratio.
•4) The number of homes that are selling without a price change.
Sellers start to get realistic, if they can't get what they want for their home, they don't put their home on the market, builders stop building spec houses, homes start to sell faster, and those houses selling are closer to the original asking price. Buyers start to think, if they don't buy now, they will miss the market.
There are plenty of buyers out there..........they are waiting. 
There are homes selling in Ann Arbor and Saline, Mi. They are the homes that are the lowest in the neighborhoods. I see it everyday. At first, it was the Pfizer homes selling the best, now it is the lowest price homes, selling first.
Are we there yet? Not in Ann Arbor or Saline. But, the amount of homes being listed is decreasing for the past two months, so that is a good sign. One down, three to go.
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Missy,
I hope you're right and your market comes back strong. It'll take a paring down of the homes on the market for the shift to pick up speed and it sounds like you're starting to see it. It takes a smart and alert Realtor to have their finger on the pulse of their market. If there's anyone who would know about Ann Arbor, it's you!! Good luck!!
Missy- Great positive thinking and perspective! You are so right, sellers who do not NEED to sell must not put their homes on the market. It was the end of 2005 for us when the bubble burst. We see a decline of about 2% per month and with these artificially inflated prices the decline will continue well into 2008. Now is a great time to buy a home in Florida! Katerina
Excellent post! The days of mulitple offers and homes being "sold" before the sign went into the yard are gone. In my area we first saw the shift right around the spring of 2002. You could almost feel the "cooling". Now I watch my area weekly, it's interesting and I hope will give me the pulse on the turnaround that I believe will be coming.
Great, great post! This is one of the most important things we can talk about at AR...our changing markets and where things are growing vs where the market is soft. I think one other important statistic to watch is the months of inventory/absorption rate. I do an extensive quarterly analysis by price point (check out my blog, I won't put a link) with includes all of the things you listed plus the absorption rate. I do this so that I get a good handle on my market. I share it with others in hopes that they will benefit from it as well. Great job Missy!
Man, I wish our MLS would show how many houses sold without price changes. We can go into the archives house by house but that would take an amazing amount of time. But I digress. I was intrigued by some number-crunching that went on in Brian Brady's blog earlier this week, stating that buyers buy again when positive cash flow exists at 20% down. So you can also look at where house prices are in relation to the rents you get as a market indicator.
Knowing your numbers is definitely critical. =)
You're right Missy. In some areas, because of local market conditions, they can experience market declines any time.
Ours, Maryland and Northern Virginia, with the preponderance of government and high tech jobs, then Homeland Security, it was easily 9/11 related. Not over yet. Incomes still sorely lag for the very high prices.
Missy - My part of North Texas is very steady. I'm thankful for that. We're growing and adding jobs and that's always a good thing. The only problem we're having is there's too much inventory of new builds that are just sitting empty. Our builders are practically giving them away...sometimes as much as $100,000 off list!
We have found that a lot of buyers are wanting more established neighborhoods now which is very good for the existing homeowner.
Missy, we left Michigan for Illinois in 2000. Our home in Clarkston, MI sold in just a few months, but we made over $90,000 on it and we had only lived in it for maybe 5 years (it was new construction when we bought). Before that, we lived in Chelsea, MI and that house sold in just weeks. The market here in Illinois at the same time was crazy...the "good" houses were already sold by the time we could make it out here for the weekend to take a look at them. We ended up spending over $100,000 more than we wanted to to get a "decent" house. Too bad I wasn't a Realtor then...!
The market here in Illinois didn't start to really decline until 2006...and by September 2006, we were chasing the market down. Market times went from 30-60 days to 90-120 days in the blink of an eye. We are now around 140 days, and that's when they are priced well. Homes are only averaging about 2 showings a month...even under the best of circumstances. I'm definitely trying to get rid of un-motivated sellers and only listing those that price "lowest."
We have yet to see the signs...price reductions are rampant. A hotsheet from yesterday shows 2 under contract, 7 new, 21 price reductions (ouch), and 3 closed. We have a long way to go.
I have a new listing (priced very well) that was emailed to prospective buyers through the MLS 227 times since Monday. Obviously these are buyers who are sitting on the fence. They are out there...waiting...
Nice post Missy, but I think it is also important to point out that your personal success has nothing to do with the market - and everything to do with you. Market, market and market again! Don't take listings from unrealistic sellers and believe in yourself. The results are amazing.
If you look at the charts of real estate trends, the "shift" is approximately, every ten years. We have returned to the "real" real estate market. The increasing credit ratios had to stop. If people cannot save and manage their funds, how can they own a home? All those foreclosures, well most of them, are because they gave too much money, to people who could not manage their funds. Ratios over 36%, no-income verification, are you serious? People refinancing their home, that they bought less than 1 year before. They refinanced, bought vehicles, bought furniture, took vacations, etc. Now, they find out the property is worth less than they owe? Big surprise!
Well, I went and put a lock box on and all these comments, just like Bertha, I love comments and love to see what is happening in your markets.
Andrew: You got it !! We are suppose to have a pulse on the market, see the shifts and be able to tell our buyers and sellers. They only know what they read in the paper. It's not about the houses, it's about our knowledge of the market.
Katerina, being in a second home market is perfect for the baby boomers. You should have many more good years ahead. Baby boomers are buying 2nd homes all the time.
Kris, keep up the good work, you are on top of it.
Diane, please feel free to put a link in here. I hire a company locally to do the Absorption rate. I email it to all my sellers every month, so they know what is happening. It helps them get such a clear picture and then they don't feel so lonely.
Leigh, yes our MLS does show what the house started at, the original list price. Then we go to the history to see the downward progression. But, it is easy. I read Brian's article good information.
Linda, you are in a stable market and that is good. Stable markets are those markets that dont' shift over 5% either way. Most of our builders are dumping inventory too and the banks aren't lending them more for spec houses right now. So I think this is helping sell our existing re-sales.
Kelly, wasn't that fun ? I loved it back then. I am confident as in all economics this is cyclical. I expect a turn around in late 2008 and early 2009 for us in Michigan. There are buyers waiting, and buyers being born every day, graduating, getting married, retiring, down-sizing.
Simon, of course we learn to sell in any market. At least those of us that are committed to our professions.
Francis, I have to remind my sellers that they really did make money on their homes, they just chose to take it out and spend it before they actually sold. You should see the light bulb go off.
My market is in the Poconos of NE PA. More second home owners than primary. Avg days on the market 176. There really arent many real jobs here. (We lived in Brighton and Pinkney MI in 1986 when I worked for IBM in Southfield). For evey 5 homes that come on the market 1 sells. Just have to hang in there.
Missy, here is my Third Quarter Sales Analysis. Thanks, let me know what you think!
Missy,
Good bellweathers worth watching. I believe our inventory has begun to whither, but I think this is because many are waiting to put their homes on the market! Thanks, Fran
We had a decline right about that time - then we soared and now we are on a plateau - which could be a good sign - at least we are not moving down :o)
That's what it is...our population grew....and grew....and grew.... Can't keep building on what land we have left....and a lot of what's left is going to be only preservation/conservation/ag land anyway.
Our numbers for listings went down as well (mostly because they thought they could sell at outrageous prices still and of course agents who entertained the idea)
And you have a nice shiny gold star for this great post! A wonderful analysis Missy, that will get us all going to our MLS and start looking up statistics. I read a post the other day (I wish I could remember whose it was) about how the market is V shaped, and knowing where the bottom of the V is is tough to figure out.
I agree with you too. Berkeley Heights is one of the most desirable towns in the area. Multiple bids were a common occurrence. There haven't been any foreclosures in town that I can track, however our MAR is up to 6.3 months.
Missy-
I enjoyed reading about how your market changed. That direct correlation between jobs is something to consider.....and indeed the MLS has pretty much all the statistics for most areas. Oh, and I really liked your comparison of 3 days and 6 weeks....for an even better house...that to me said it all....thank You.
oh, and nice star :) :)
Richard, do you know Charlie Koengetter ? Your name is so familiar.
Diane, looks good, thanks for sharing, who does your outside blog. I like it very much.
Fran, well I hope your market remains steady. Do you have many buyers ?
Thesa, a plateau sounds good to me, right about now. Equal listings and equal sales, steady. Good for you !
Sally, we are are land locked in Ann Arbor too, we have just started to build up. But, most of the new developments in the last 10 years went out into Saline, Dexter, Chelsea, Manchester, Ypsilanti. When the market got soft in Ann Arbor and more affordable, people go there first. I think the high gas prices have hurt our out of area homes.
Joanne, I read that blog too, I thought it was interesting data. Was it Brad or Brian ?
Maria, we have very few forclosures in Saline either. Right now only about 4, two are builders.
Kathy, Amazing what 4 years can do, I look forward to the "good old days". If it is a 10 year cycle then I figure we have been in it since 2001, we should start to come out soon.
Hi Missy,
San Diego is at the stage of having it's job market reveal some troubling evidence. New job creation has been slowing down dramatically but the worst of it is that the pay has been held flat and the opportunity for job expansion has been curtailed. Our housing market has slowed and is predicted to become slower as the new year approches. Conversely afforability has not really improved and prices have not lowered enough to encourage more business to expand in the area. I think our adjustment period will continue a bit longer than was predicted. But when the sun is shining in this beautiful place is so hard to concentrate on those negatives trends.
Missy, Great post. Our inventory has slowed down, but it always slows down this time of the year due to the holidays. Only if the developers could stop adding more new constructions to the list of our inventory. What developers have to offer home buyers is far too much for a regular home seller to compete with.
Great post Missy. We observed this starting a couple of years ago when the demand for housing in Seattle caused prices to skyrocket. The ongoing correction is overdue ... but correctly priced properties are selling rather fast.
William, I know how you feel, when we have those 70 days and the sun is shinning, I think about people that get to live the dream all the time.
Mana, New home sales use to eat our resells alive too. Thank goodness it has slowed down up here. Everyone wants the latest and geatest.
Larry, yes I so agree, we needed a correction. Houses could not keep going up at that rate. Yes, homes will sell in any market priced right.
Missy,
Like I said before...every-time a HO puts a home on the market to hi is just adding to the problems that were created not just by one entity...but all entities. And you can bet it will be quiet a while for it to change. I am hoping sooner than later and for everyone.
Missy, I love this post. It gives a logical explanation of what to look for. Thanks so much for writing this!
Neal, as I said the homes are selling but they are the lowest ones in the subs, unless they are on a busy road.
Tracey, you're very welcome.
Missy,
We have many listings, some showings, and few buyers. Then we must work like heck to keep those transactions from 'falling apart'! Thanks, Fran
Missy...aka Ann.... yes, those were the years when homes were selling like hotcakes. Congrats on the feature.
On another note, I sent you an e-mail. I am returning your call? thanks, jeff
Well done Missy. The boom in Poinciana was very short. The 3 hurricanes we had in 2004 devastated my market. Then in early 2005 it took off like a rocket. By mid 2006 we were done. So we really only had about 18 months of the real boom period. Now values are declining rapidly. So......I'm hoping we will bottom out sooner than most areas and recover quicker. At least that's my optimistic spin for today:)
Fran, sounds familiar but the buyers will come....they are just waiting.
Jeff, I got your email, I was traveling when I called and was in a hurray to find out an answer. The question was about FHA Loans and site condo's. In Michigan we have site condo's for new developments. They are not condominums but a way developers could get approved without going to the State for approval of platted subdivisions.
BB, are the prices going back to 2004 or are they going further down past that year ?
One out of four is a great start, at least here in Michigan. Wouldn't it be great to see the economy here turn around! Thanks for the informative post.
It is amazing how prices vary by market. Real estate is really local!! Here in Provincetown at the tip of Cape Cod, business is fairly strong compared to the national average. Volume here on the Cape is up about 3%. prices have not fallen much- but, inventory is very high which makes it feel like nothing is selling. Here in Provincetown, $350,000 will get you a 500 square foot one bedroom condo with no views. Take a peek at my website http://www.ricktourgee.com/ to see some of my listings an what you get for the money.
Rebecca, IT WILL turn around, has too.
Rick, I'll check it out. 500 S.F for 350,000 sounds like the West and East Coast. The only people not sticker shocked when they move here are from the east and west coasts.
Hi Missy,
It seems all MLS are not equal, we do not get all that information without some time consuming digging. I do agree with you that the numbers you mentioned will give us the answer to that all important question. Thank you.
Missy, great perspective, here in the Northwest in Bellingham WA things are slowing down, that is number of sales and down and days on the market are down, but prices are still on the rise. We have a pretty good economy, a beautiful area that has been recently discovered, a new waterfront redevelopment building happening over the next 20 years. It's a great place to live, it's a great place to be.
Cynthia, Leigh Brown said it is not easy in her MLS either. Perhaps just checking the number of homes listed compared to other years would help.
Michael, sounds wonderful, not all area's are in decline. Those that rose quickly like a jet are.
Missy - This was a terrfic post. Congratulations on getting featured! I always look at those stats as a gauge of the Austin market - well done!
Missy - excellent post, as realtors we need to figure out market changes before the public does. I love number so I am always reveiwing the data provided by the MLS for tell tale signs.
Missy, Wonderful post with excellent information. I don't think the media is helping this market turn around at all and I find that a shame. I'm glad to hear that some homes are selling and your positive attitude.
Missy - excellent post. I personally am not concerned about the market turning one way or another. Like all markets, it's going to fluxuate.
Jason, thanks buddy.
Jennifer, I hate numbers but this is important so I will learn. LOL
Carole, no the media doesn't help. But, we work around them with accurate data.
Missy, I believe we are studying the same data. I watch the days on market and the price/sold ratio. Although my market in Kenner LA is still long and hard, the market in St. Bernard LA is hot. I listed 9 properties three weeks ago and have 3 under contract. This market is different than most.
Missy, For the last 20 months I have been collecting very specific date for Fort Myers Beach, Florida. The date consists of the following: New listings, solds, price increase and price decrease. I than graph it and share it with my broker. It presents a very clear empirical picture of what our market is doing.
Hi Frank, that's great. Different parts of my county are doing better than others. Some are really over saturated.
Bill, excellent I love graphs, they give such a visual on what is happening. Hope it's doing well for you in Ft. Myers Beach.
Joshua, your are right, it fluctuates and we work in any market.
You will know you market has turned when the News Media reports it about 24 months after the actual fact.
James, you are so funny, hopefully with the right data we will know before the media, but you're right they will report it after the fact.
Missy, We are starting see a slight decline in inventory...not enough to make me smile but enough to have noticed. We saw the market start to shift in 2005.
Missy, Great post, thanks for the signs. As a newer Realtor I came in on the down slide, but as they say... everything has to correct itself, and I can already see some better days!!
How will you know when your market has turned?
Forget the MLS. It's too easy to game.
You'll know the market has turned once realtors will stop telling everyone "it's a great time to buy!' In other words, they'll be spending more time selling and less time cheerleading to other realtors on blogs.
Good post. Thanks for sharing the information.
People are out there. In Grand Rapids my phone has been ringing more and the websites have been looked at more over the past month. Maybe it's a little jump but it a jump for me.
Nicely done Missy! I agree 100% about identifying the shift. I chart new listings versus sold and inventory every month, looking for the next shift. I don't see it coming in the Tallahassee real estate market for a while though.
Monika, You fit the profile of what John Tuccillo said in his seminar. Hopefully it will get better in 2008.
Renee, the advantage of you coming in to the business at a slow time is you have no historical perspective on how easy it use to be, when it turns you will have so much fun. Plus, you are learning to work hard right off the bat. Thanks for stopping by.
Robert, I think I know what you're saying, but I do believe the MLS can help us predict when the market is turning, if we study the data, which I mentioned above. Also I will still blog, and cheer people on, good or slow market.
Bob and Carolin, :)
Steve, you are watching the signs and that is good. We can and must work in any market. Our phones must ring in any market. They will if homes are priced for the current market conditions.
Hi Missy - great post and this should really help people figure things out in their markets with regards to changes.
We are seeing new listings coming on the market decline somewhat, and we're also seeing a slight decline in the average days on the market, and more houses selling with no changes in price. We also have been seeing some, SOME, multiple offer situations, too.
My last few listings all went under agreement in less than 2 weeks, right at or very close to the asking prices, and we had multiple offer situations. This has happened with several agents in my office, too. PRICING has got to be realistic in this market or what's the point?
Anyway, we're seeing some indicators there that things are changing ever so slightly, and I wonder how many are actually noticing this??
Great post and congrats on the feature!!
Ann
Anne, thanks. That is good news for Portsmouth and you. I'm not sure anyone is noticing it much, but the buyers that lose out on a house they wanted will notice it. We have declined in listings the last two month too, so that is encouraging.
One thing to keep in mind is that we won't know the market has changed until after it has changed... and the media won't figure it out until it's almost ready to change again.
DOM rules, I watch DOM for the best indicator, all of what you listed is right though.
Take care!
RJH
The portion of our market that I work in began to slow in 2006, then slowed quite a bit at the end of Aug 2006. It seemed to stay at that slow rate until the Aug 2007 mortgage problem, when it slowed even more. The good news seems to be fewer builder specs and homes sell pretty close to list price, but the prices are somewhat lower than in 2005.
Columbus is #3 on Forbes list of stable markets. The OAR sent us emails on that data so we could promote the news. Our local CBR is running ads on why it's a good time to buy, and are sending us emails asking for us to help promote the 'news'. Got a chuckle out of Robert Kerr's comment. There's a lot of truth to it.
Missy, your post was excellent!
Missy,
Excellent post! If we can get all the sellers who can still keep their homes by renting them out, we can decrease the inventory. On our MLS, I don't believe we have the option to check "# of house selling without price change". Bummer, it has to be done one by one to get that statistic. Congrats on the featured post as it is well deserved! :)
Dave
Lane, I think we will know before the media knows. We always do !
Robert, thanks DOM is extremely important as well as the inventory continuing to grow.
Elaine, I read that about Columbus. That's good news. Thanks !
Dave, it's right at the bottom of ours under complete view. Original List Price, Price Change and day of change.
Missy - those buyers that lose out on a house they wanted will certainly have a slightly different level of motivation when the next house they want comes along. Before too long, each of those buyers will, in turn, help the market move along. The motivation levels of those buyers who've been in the market change from 'they have all the time in the world', to one of 'we need to do what we can to make sure we get that house'. No more 50 cents on the dollar offers, no more asking for their cake and the icing, too. Then we'll find out way back to a market that's actually moving.
May this be the case all over the country before too long!
Ann
thanks DOM is extremely important as well as the inventory continuing to grow.
And there's the problem: DOM is so easy to game, even in the few states with new restrictions.
Anne, I think that will be a great clue as well. I really believe there is lots of buyers in wait mode.
Robert, true but in Ann Arbor we can go back and look at the history by address, it shows all the Realtors that ever listed it. What price it started at, all the reductions, etc.
Hi Missy, the above comment was from me, for some reason my pc kicked me out of AR.
Missy,
What a great barometer of the market in Saline and Ann Arbor. Your list should apply anywhere - great information and thanks for providing it to us.
Missy - great post and glad to see it was featured. We should all be keeping a close watch on this and tracking when it moves in a positive direction.
MISSY: I think that MLS is a great tool, even when a specific one is outdated. I have always been one to study market trends, and knowing how to use spreadsheets makes it even easier.
Karen, thanks for the comment, if you do BPO's you do see it.
Cyndee, :)
Adam, yes spreadsheets work wonders.
Anonymous, you are so right on with your comment, thanks for stopping by.
Hi Missy-I noticed in our MLS that less listings...finally! Hope it helps us all. I do believe our MLS is a great tool and helps in measuring the inventory.
Missy, Thanks for a great post. Our MLS is a great tool and we can look at statistics on a weekly basis. We do not have to wait for the media to announce the quarterly reports. From my experience with people that I have met recently, I see a strong spring market..
Eric, thanks for stopping by.
Midori, hopefully we will absorb the inventory. I think sellers are finally staying put if they don't have to sell.
Gita, thanks and I hope the fall and winter markets are OK too. The MLS is a good tool and we can use it for alot of information.
Excellent information Missy! I can't think of "anything" you missed in this post. This is great for new-er agents who haven't been through this before and sellers who are lucky enough to have found YOUR BLOG and are reading it to stay informed. GREAT JOB! (and well deserving of a feature)