Many homeowners looking to sell have found themselves in the unenviable position of owing more money than their property is worth since the market shifted in 2006. Those who need to sell, in many cases to get out from under rising monthly payments tied to adjustable rate mortgages, are left with few options. As a result, a wave of foreclosures has hit as borrowers simply walk away.
How are these foreclosures affecting the Bullhead City real estate market?
There are 569 Single Family homes for sale in Bullhead City, 72 of which (13%) are foreclosures. What impact does this have on the market? More specifically, what impact does it have on the 497 houses that are not foreclosures?
My friend Todd Tarson is a REALTOR up the way in Kingman. He did a great write up on foreclosures in his market, delving into how homeowners selling in today’s market are competing with properties owned by banks (“non-humans”). The takeaway is that those non-human banks make non-emotional selling decisions. Their eyes remain on the prize, which is disposing of the collateral they received when their borrower defaulted on their loan. That means selling for what the market will bear.
Single Family home sales in Bullhead City in the last 90 days:
Foreclosures Sold
Sold: 33
Average Price: $164,757
Price per Square Foot: $102.13
Days on Market: 111
Non-Foreclosures Sold
Sold: 57
Average Price: $272,791
Price per Square Foot: $158.10
Days on Market: 176
Foreclosures sold for 35% less per square foot and sold 37% faster on average. They also happened to sell 1.5% closer to their asking price. But there’s a catch. Foreclosures are usually in worse condition than your average home. It can also be challenging to jump through the hoops of addendums, releases, and other bank requirements. However, with foreclosures representing 37% of the Single Family home sales in the last 90 days, if you are a seller in today’s market they are the competition.
Here’s how foreclosure competition stacks up in the Bullhead City real estate market:
Foreclosures for Sale
Average Asking Price: $176,885
Days on Market: 87
Months of Inventory: 6.5
Non-Foreclosures for Sale
Average Asking Price: $360,001
Days on Market: 172
Months of Inventory: 26.2
What really jumps out to me is the difference in supply. If foreclosures continued to sell at the same rate they have been selling over the last 90 days, it would take 6.5 months to sell them all. That’s a fairly balanced market. Compare this to the non-foreclosure inventory at a staggering 26.2 months, with an average of almost 6 months on the market. This aging inventory is a clear sign of a buyer’s market talking, reacting to what is being offered.
As long as buyers continue to have so many homes to choose from, those sellers looking for yesterday’s prices are unfortunately likely to continue to contribute to the aging inventory until the market balances out and the supply shrinks.
In the meantime, with low interest rates, low prices, and lots to choose from, it’s a great time to be a buyer. And the trend this year has been that buyers are stepping off the sidelines to take advantage of those favorable terms. This is good news for all sellers.
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