One of the “free samples” of a Realtor’s services we provide to Sellers is the CMA — the Comparative Home Analysis — sometimes referred to as the Competitive Home Analysis.  No matter what you call it, the Realtor takes some time to do some research into what a particular home might sell for given current market conditions, location and condition of the home.  Lots of factors come into play during the research, not the least of which, is the Realtors personal experience both with the area and in the profession, generally.  An experienced Realtor will be pretty close, if not dead on, when determining a recommendation for a selling price.

All that said, Realtors are not appraisers.

I take that back.  Some Realtors are appraisers.  They may have been appraisers that decided to help people buy and sell houses or they may have just decided on a change in career.  Sometimes, Realtors decide to go through the process to get licensed as appraisers, too.  However, the vast majority of Realtors are not appraisers. So, even though an experienced Realtor will, through their own research and experience, recommend pricing to a home seller, it is the appraiser that will determine the valuation for the house for the mortgage company the buyer is using.

The Buyer’s Perspective

Everyone knows that home sellers want to sell their homes for the highest possible price (we’re not talking bank owned foreclosures or short sales). We also know that home buyers want to purchase their home for the lowest possible price.Thus, an experienced Realtor working for the buyer will perform a CMA independently so they can advise the home buyer about strategies to structure an attractive offer.  Again, the CMA prepared by a Realtor working as a buyer’s agent should be pretty darn close to true market value.  What the home buyer offers is a different story.

Regardless of what the home seller and home buyer may agree upon, if the home buyer needs to obtain financing, the mortgage company, bank, or credit union will not (repeat: will not) provide a mortgage to the home buyer for more than the market value of the house as determined by a professional, licensed appraiser.

Many times the appraised value of the home comes in very near the contract price (the price agreed upon by the home seller and home buyer).  Sometimes, it comes in higher.  Some examples include:

• estate sales — the heirs just want to sell the house and be done with it
• divorces — there may be pressure for one of the parties in the divorce or the courts to sell the property
• job relocation — a home owner may not want a vacant property or the mortgage on home they aren’t living in
• illness — a home owner may need to move into a long term health care facility assisted care facility and need to sell the home to pay for it

One particularly sad reason homes may appraise for more than the contract price is that the home seller has over priced the home initially in the hopes of obtaining a price higher than the market will bear.  The house sits on the market for an extended period of time.  At some point, the home seller really either needs to sell the house or has just tired of the constant interruptions to their life by potential home buyers.  The home seller will then either lower their asking price substantially to attract a home buyer or they will accept a “low ball” offer just to be able to move on.

Mr. Market Calls The Shots

The sad truth about home pricing is that neither the home seller, the home buyer, the Realtor nor the appraiser control the price of the home.  The market does. Many economists call this the “invisible hand” — market forces that are not fully understood create the environment for fair value. As much as a home seller wants to sell their home for a high price  and as much as a home buyer wants to purchase the same home for a low price, it is the market that determines the price.

That’s why we saw such wild fluctuations in home prices over the last ten years. Home prices went wildly up because, oddly, the market was supporting the price appreciation (due to exotic mortgage products, mostly).  Now, market value has fallen because  a large number of home buyers can no longer pay their mortgages making huge numbers of homes in distressed condition available for sale at bargain basement prices. Simultaneously, credit has become extremely difficult to obtain reducing the potential home buyer pool even more.

The market has spoken.

Check out the Real Estate Market Trends for your area .  Just click here.  You will get a totally FREE report e-mailed to you.

Beginning on March 1st, I started running stats from a company I partner with — Altos Research — for some of the towns in the area.  I had two goals:

1. I wanted to provide some information that was concise and fairly easy to interpret as well as graphical and,
2. I wanted to see if stats and the accompanying town name would boost my readership or blog visitors.

Goal #1 was easy to achieve. Altos Research provides a nice Wordpress plug-in that enables me to name my parameters and it formats them into the blog.  Pretty neat. Pretty easy.  Goal #2 was another story.  I use Google Analytics to monitor traffic to my blog and it doesn’t seem to have gotten an appreciable boost as a result of a week’s worth of stats.  Maybe that’s just too short.

The other side of this experiment got me wondering if people really care about a rolling blog of stats.  Sure, if you happen to catch your own town, it’s interesting for the day.  If you don’t live there, not so much.  I was picked up by LocalSpur.com the day I ran College Park, MD stats.  That was kinda neat.  It didn’t create a huge spur of traffic, though.

So, now I’ll return to what I think, what I know and what I can find out about the local real estate market and National events (e.g., expiration of the home buyer tax credit) as they affect the local real estate market.

Quite honestly, this chart is just as depressing as the other towns we have been visiting in Prince Georges County, MD. Lots of homes on the market, moderate pricing and long Days on Market. You can also see that just as many homes have come on the market (5) as have been absorbed by the market (5). This shows an extremely slow turnover or "sell" rate.

Median Price for homes in LAUREL, MD 20707 as of March 5, 2010 is $310,069

Inventory for homes in LAUREL, MD 20707 as of March 5, 2010 is 81

Average Days on Market for homes in LAUREL, MD 20707 as of March 5, 2010 is 230

The charts are trying to show positive news. Median pricing is trying to find a level but still bouncing around. Inventory was declining which was a good thing but it is now beginning to creep up again which will increase downward pressure on prices as home compete with one another for buyers. Days on Market is moving in the right direction although the number of days is still extremely long.

The pricing chart is interesting because it shows a kind of delayed reaction to outside stimulus and home owner wishful thinking. Check this out: home prices are pretty steady up through November of 2009 when the home buyer tax credit was due to expire. Certainly there was a lot of activity and probably a lot of homes got sold during that time period.

Homeowners heard about the activity and started to raise prices in response (big spike), winter came on with the Holidays and then the snow storms and a very lethargic market. Prices started to plummet, again. Now, we have returned to August 2009 levels.

Home owners that want to sell their home would be advised not to chase the market but to lead the market with aggressive pricing to sell their home.

As you can tell by this stats table there are a lot - 74 - condos and townhouses on the market in Beltsville, MD. You can also see that that are taking a long, long, long time to sell - 299 days (on average).

Median Price for homes in BELTSVILLE, MD 20705 as of March 5, 2010 is $131,696

Inventory for homes in BELTSVILLE, MD 20705 as of March 5, 2010 is 74

Average Days on Market for homes in BELTSVILLE, MD 20705 as of March 5, 2010 is 299

The orange line is the 90 day moving average. This is a trend line. The black line is the 7 day moving average which shows more what house prices are doing week to week. What I am seeing is a steady downward trend in home prices. I also see a huge jump in housing inventory. Since these are condos and townhouses, I can only assume that there are a massive amount of short sales and foreclosures that are entering the market.

Foreclosures are OK. The short sales will take close to eight months to flush through the market. Meanwhile there will be continued downward pressure on home prices.

Even though these are condos and townhouses, the pricing for these homes will also continue to put downward pressure on single family home prices.

Think about it. If you could buy a nice townhouse for several tens of thousands of dollars or even one hundred thousand dollars less, would you?

Beltsville is also home to the US Department of Agriculture - Agricultural Research Center which operates a huge research farm. Driving through the USDA - ARS is like being out in the country.

Beltsville has a mix of single family homes, townhouses and condo. Today we look at single family homes.

As you can see the Days on Market here are longer than any of the other towns we have visited, thus far, and it looks like a new home is listed for every home that is sold. Pricing is moderate for single family homes.

Median Price for homes in BELTSVILLE, MD All ZIP Codes as of March 5, 2010 is $269,315

Inventory for homes in BELTSVILLE, MD All ZIP Codes as of March 5, 2010 is 88

Average Days on Market for homes in BELTSVILLE, MD All ZIP Codes as of March 5, 2010 is 280

These charts show a slightly positive upturn in home pricing in recent months. This may indicate that home prices have fallen to the level where the homes are attractive to home buyers. Housing inventory has also risen, though, and this may create some pressure to keep pricing low.

Days on Market, as mentioned above, is extremely long. However, that chart appears to be moving in the right direction (i.e., down). So, to me, these stats look mildly positive for the Beltsville, MD housing market.

Low prices, relatively high inventory and extremely long days on market. As we have been winding our way through some of the towns in northern Prince Georges County, MD you may have seen a trend. In case you missed it, here it is: falling home prices, lots of homes on the market and a long time to find a buyer for those homes. The only remedy for this is to price the home so that someone, anyone will see that it is a good value. Whether you call this a "bargain" or "giving it away" the sad fact is that unless a home is in pristine condition and priced aggressively you can expect the house will sit on the market without a buyer for a very long time.

Median Price for homes in COLLEGE PARK, MD All ZIP Codes as of February 26, 2010 is $216,165

Inventory for homes in COLLEGE PARK, MD All ZIP Codes as of February 26, 2010 is 96

Average Days on Market for homes in COLLEGE PARK, MD All ZIP Codes as of February 26, 2010 is 278

Median Price is the only bright spot. Of course, median price only helps with showing a trend and does not speak to particular neighborhoods (e.g., Hollywood, College Park Woods, Yarrow, etc.). It is mildly encouraging, though, that after a precipitous drop, prices seem to be bouncing back slightly.

Someone mus have told all the home sellers that prices had started to bounce back a little because, all of a sudden a lot more homes are one the market (the inventory chart). This is not an encouraging sign. It just means that there are a ton more short sales and foreclosures or that people are trying to catch the wave of the home buyer tax credit combined with the spring market. Either scenario puts downward pressure on home prices.

Days on Market seems to be taking a little bit of a dip which is a good thing. Still. Do you want your house on the market for close to a year?!?

There are quite a few of these in Greenbelt and, if you compare the two posts, you will see there is a huge difference in the amount of home in the mix. Condo communities include Greenbriar Condominiums, Greenbelt Lake Village and Chelsea Woods. Townhouse communities include Windsor Green, Greenbrook and Green Holly Woods.

As you can see the pricing is considerably less expensive. The average and median home prices can be misleading, though. Condos are considerably less expensive than townhouses even though the condo fees are considerably higher than the Home Owner Association fees associated with owning a townhouse.

Days on Market are comparable to single family homes which is an indication of the number of foreclosures and short sales which continue to put downward pressure on home prices.

Median Price for homes in GREENBELT, MD All ZIP Codes as of February 26, 2010 is $158,233

Inventory for homes in GREENBELT, MD All ZIP Codes as of February 26, 2010 is 118

Average Days on Market for homes in GREENBELT, MD All ZIP Codes as of February 26, 2010 is 219

The charts do not tell a pretty story. Home prices for condos and townhouses are continuing to drop rapidly. Hopefully, some of this downward price movement is because the banks are finally willing to reduce the number of homes they hold. This is not the entire story, though. Even though Greenbelt is in an excellent location in a much sought after school district it still attracts low to moderate income home buyers who have a harder time obtaining mortgages at higher prices, if they can qualify for any mortgage.

Age and condition of a lot of these condos and townhouses also come into play. There is only one "newer" condo community (Greenbelt Lake Village) and that was built about ten years ago. The others were built in the 70s and condo fees are extremely high to cover the cost of utilities and common area maintenance and upkeep.

This stats chart shows a higher median price vs the average price which is a good thing. However, the days on market is still very high (almost 9 months) so prices need to come down to move the inventory a little more quickly and bump up the absorption rate.

Median Price for homes in GREENBELT, MD 20770 as of February 26, 2010 is $358,232

Inventory for homes in GREENBELT, MD 20770 as of February 26, 2010 is 12

Average Days on Market for homes in GREENBELT, MD 20770 as of February 26, 2010 is 259

You see the home prices are bouncing up and down like a three year old after two pieces of chocolate cake. This indicates that prices have not stabilized and from the looks of the Days on Market and increasing inventory home prices will be under downward pressure for some time to come.

This stats table still shows about a $15,000 spread between the median home price and the average home price indicating that the actual closed home sale price is pretty close to the listed price. Days on market are a little shorter here than in the 20720 zip code. This is probably due to the lower price ranges for the homes.

Median Price for homes in BOWIE, MD 20715 as of February 26, 2010 is $281,099

Inventory for homes in BOWIE, MD 20715 as of February 26, 2010 is 96

Average Days on Market for homes in BOWIE, MD 20715 as of February 26, 2010 is 198

These charts tell the same sad story of the housing market, generally. Median prices have fallen dramatically. There has been a recent uptick in pricing but I suspect that will fall, again, after the home buyer tax credit ends on April 30th (the date people must be entered into a legally binding contract).

Housing inventory continues to increase and Days on Market continue to increase. Both these charts indicate a large number of short sales and foreclosures combined with entrenched pricing by Sellers with equity. My guess is that prices will fall more before Days on Market and the number of homes for sale (inventory) start to see significant decreases.

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As you can see there is a small gap (about $15,000) between the median sales price of homes in the 20720 zip code area and the average sales price. This indicates that homes are selling pretty close to the listed price. However, the average Days on Market is 244 days which is a little over 8 months. This indicates quiet a lot of short sales and foreclosed homes.

To be competitive with homes in the short sale and foreclosure categories, home sellers with equity need to be very aggressive with their home pricing or risk having their home sit on the market for an extended period of time.

Median Price for homes in BOWIE, MD 20720 as of February 26, 2010 is $388,168

Inventory for homes in BOWIE, MD 20720 as of February 26, 2010 is 95

Average Days on Market for homes in BOWIE, MD 20720 as of February 26, 2010 is 244

The charts show tat after a prolonged decline, home prices saw a quick spike. Then they fell very quickly back to the "pre-spike" level. The price fluctuation took place within a very short two month period. It also appears as if the number of homes on the market - housing inventory - is starting to rise after a prolonged decrease. This will put pressure on home sellers to price their homes aggressively to compete against other homes on the market.

Days on Market has increased dramatically which is a negative for home prices and home sales, generally. Sellers with equity in their home are up against some serios competition and would be well advised to hold tight or be prepared to price their homes aggressively.

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