Over and over we see these 2 bedroom and 1 bathroom houses in Grass Valley in all kinds of condition and with a wide number features and amenities. And every month so far this year the list price of one of these homes has been creeping upward. At the beginning of the year this home would have been in $280,000 price range. Homes over $300,000 were reserved for upgraded kitchens, which this home does not have, new fixtures, which this home does not have, and new appliances, which this home lacks. It has a very nice yard, and is in a good neighborhood, so if it has the upgrades, then it would be a $300,000 home, but in its current condition, while it is clean and ready for occupancy, it has a long way to go to be a “darling bungalow.” Has the market moved that much higher or is this seller dreaming? That’s the question that will be worked out by buyers in the next 30 days and will set the stage for the coming spring market.
We have looked ad many similar homes in Grass Valley, this one happens to be in Cascade Shores, but the market for these 2/1 bungalow style homes is fairly well fixed through out the surrounding region by the price for these same homes in Grass Valley. This one is typical and priced right about where it should be based on recent sales numbers.
The first quarter saw slight increases in value for these homes. This home is up 5% from last fall.
This fixer compares almost exactly with 11148 Glenn Meadows, a home I featured on my blog a year ago and sold for $295,000. That home was a bank owned repo, this home is a regular equity sale, but the condition of the home, and various features of the homes make for a good comparison. In both cases, the finished home would be worth something on the order of $500,000. Whether a contractor can fix this up and flip it for a profit depends on what can be saved and what will need replacement or upgrading. We can see plainly the siding has failed, and it likely needs a new roof, but the kitchen looks like it can be salvaged. The home also lacks covered parking, and has relatively little usable land. since it almost certainly will only sell to a contractor and investor, it will be interesting to see what value buyers put on this home, and what price they pay to have the opportunity to make a profit on their remodeling and upgrading of the home.
We have seen a large number of ranch style homes in Wildwood over the course of the last year. Some are nicely update, and other have been fixers, some are on flat lots, some are on steep hill sides. This home has a very lot, one of the oldest homes in Wildwood, built in 1974. Clearly the original owner had a wide selection of properties to chose from, and picked a quite cul-de-sac with a flat lot to build a very conventional ranch home. It has been maintained well enough, but has none of the updating that justify a price of $280,000… At least, 90 days ago, this home would have been $260,000 home, but today, if it gets the asking price, then the market is pushing up. That is exactly what we want to know, have buyer conceded that the days of the $250,000 home are gone? Is nothing left to be sold under $275,000? If this home sells at this price, then the market has set a new standard for what home buyers are going to have to pay to get a move-in ready house. We will keep watching.
Either this seller is way over the top with the list price, or the market has substantially moved higher this spring. Low inventory encourages sellers because listing agents cannot find comparable sales. The result is, listing agents who are not constantly previewing inventory, and are only using the MLS pictures to determine what the list price should be don’t have a grip on the relative condition of the home. This home is dog, listed for the price of palace. Will it sell at this price? If it does, then the market has moved higher by a full 10% in just the last 60 days. That would be highly unusual.
You might think I would be happy with rapid price increases, but rapid price increases in the spring often time lead to volatility and declines in the summer. Stable prices mean that buyers and sellers know what to expect, and transactions can proceed smoothly. When prices rise rapidly, and then fall just as rapidly buyers and sellers get whipsawed, and nobody is happy.
We will watch this one.
The home is set very far off the street. It has many upgrades, including granite counter is the kitchen and bathroom, upgraded floor covers, and there is a golf-cart garage as well as a 2 car attached. This home is a great value at $249,000. So much so that I expect there will be multiple offers. The seller has turned this into an auction, which will give a very interesting measure of market straight right now. Looking forward to see what happens with this one.
I was told there were multiple offers for this modest bungalow. Not the greatest house, located in a neighborhood where one end of the street is considered highly desirable, and the other end is considered undesirable, this home is in the middle of the block. Listed for $299,000- that’s $380 per square foot. Nothing in this home would seem to indicate that high of a price tag. What’s happening?
Inventory is really tight right now.
Interest rates are rising, and buyers may be panicking that they will be unable to afford the mortgage in the future.
But I don’t think these two factors alone can explain why the sudden rise in prices on the least expensive homes. There seems to be another factor.
For the last couple of years the low end of the real estate market has been defined by sellers flipping homes they bought in the great recession years between 2009 and 2012. People who bought in those years did not sell immediately after the market started to rise in 2013. Some sold in 2013, but more sold in 2014 and every year since thereafter there were homes being sold that were purchase in the down years. This year, that inventory seems to be fairly fully exhausted, and there are no more homes, bought in 2009 or 2010 that are now being flipped. The result, is- sellers today paid more for the homes they are selling than the homes that have been sold in the last few years and so base prices are rising, and seller equity is dropping. Sellers feel confident and comfortable squeezing the extra money out of the home they are selling precisely because they paid more for it to begin with. That is actually a sign of a normal market, and it might just be an indication of the long term trend in pricing.
Homes that are sold before they are exposed to the public market place are fairly common. Realtors meet sellers that are motivated and will accept a lower price to avoid the uncertainties of the marketing process. If a realtor has an investor looking for a good price, and that realtor puts the buyer and seller together- then there may be no need to expose the property to the general public until after the purchase agreement is signed. These homes, then show up on the MLS as “pending sales” just as this one did. Nonetheless, short or fraud or scam, we have every reason to believe the price agreed to by the buyer and seller is a fair one, and it will impact the sale of other similar homes. That’s why I go look. This might well be one of the best deals in a while, or it might be ho-hum. I want to know. Watch the video and find out.
If you have been following my blog you know I don’t usually pump houses. I see everything under $350,000, and there are such a huge number of homes I hardly get excited about any one house, but this home really is a charmer. And it is priced right. I know, I priced it.
This home probably will not go FHA. It was built in the 1930’s, and the septic system pre-dates modern systems. It is called, “non-conforming” because It would not be allowed under current requirements. However, the system is functioning properly now, and seller is willing to get it inspected. The price reflects this. Have a look for yourself.
There are not many three bedroom and two bathroom ranch style homes for sale under $325,000 outside of Lake Wildwood. A couple of fixers in Grass Valley, the occasional home in Alta Sierra, but nothing on over 1/2 an acre, so when this home was reduced from $349,000 to $325,000 I went out to see why is hadn’t sold.
First note, the home is tenant occupied. The tenants are accommodating, but not the best house keepers. Sellers may think that getting that rent check every month is important to their cash flow, but in fact, the tenants may cost the seller tens of thousands in lost valuation on sales end of the transaction. If this home was vacant and move in ready, I believe it would have already sold, and probably closer to $350,000 instead of where is will likely end up, a bit south of $320,000. Besides the general discouragement of having to deal with the tenants poor house keeping habits, what else is causing this home not to sell?
the home has a long narrow gravel driveway. That might be expected with 1.6 acres, but for buyers looking for a “ranch floor plan” the long driveway might actually look more like a maintenance issue, and potentially limit access in low clearance vehicles, motorhomes, or trucks with trailers. While the privacy is desirable, there are plenty of buyers who have toys that need easy access to the parking areas, and this home might scare them off.
The home itself is pretty much exactly what you expect from a 1979 ranch single story with a 1990’s era facelift. Nothing special. Worn in all the ways you would expect, and well lived in by the tenants, who also have several dogs. The home does have some kennels in the back, so for pet lovers or buyers with ambitions to have several dogs, this property might fit the need.
One last negative point. The home had a one car attached garage that was converted into a bedroom. No covered parking. The bedroom conversion looks like it was a “home-owner” job. Structurally it looks well enough made, but clearly, converting a garage to bedroom makes for uneasy tension in the floor plan. It is also quite likely no permits were obtained for the conversion, so lenders may not give any valuation to added room.