Foreclosures set tone for home-price drops
The median price for single-family homes sold in Grand Junction dipped to $175,385 in January, the lowest the market’s median has been in nearly five years, according to the Colorado Association of Realtors.
It coincided with 79 foreclosures appearing on the market that month, a 15 percent increase from December.
Foreclosures and short sales, which lenders are trying hard to get off their packed books, set the tone with low home-sale prices, according to Richard Blosser, an associate broker with Coldwell Banker.
“The poor people who are not in foreclosure have to lower prices or take them off the market,” Blosser said.
Blosser currently is working on a short sale for a home that was appraised recently for $280,000. The home likely will sell for less than $200,000, he said. Another home that was not at risk of foreclosure was worth $260,000 in 2008 but will sell for less than $245,000, Blosser said.
Like it or not, when a foreclosure sells for less in a neighborhood, appraisers use that information to determine the worth of nearby homes, which can automatically limit where a homeowner sets their sale price.
“It does really effect the private seller because that’s the competition out there, and the (other) sales are a lot of times fire sales or bank-owned,” broker Sharon Vaughn of The Vaughn Team said.
Those who sell for less come from all income brackets, Vaughn said. She recently sold a home for $480,000. The homeowner was upside down on the home and had to write a $100,000 check to his lender to complete the deal. Another homeowner who paid $100,000 for her home is selling it for $50,000.
Vaughn said now is a good time to buy, but she sees plenty of homeowners who are looking to sell choosing instead to rent or lease their homes to avoid the real estate market. However, there’s no guarantee waiting will help.
“Who knows how long it will take to get better?” Vaughn said.
Coldwell Banker Managing Broker Olan Clark believes prices are unlikely to increase in 2011.
“I would assume it’s going to come down another 5 to 10 percent this year,” he said.
Clark said competing with the price of foreclosed homes isn’t the only reason sellers will keep a price low. Private home owners may set price points low to stand out in a crowded real estate market. But it certainly doesn’t help that about 30 percent of homes sold in Grand Junction last year went through a foreclosure process, according to Clark.
“That has a pretty big effect on prices,” he said.
In the early 1980s, Black Sunday mostly meant people from northeast and southeast Grand Junction and Clifton were trying to sell their homes or went into foreclosure, according to Clark. Now, no neighborhood is immune to foreclosures or competitive pricing.
“This is widespread. This is million-dollar homes, apartments, town homes, acreages. It’s national,” he said.