It’s a question I get asked a lot. To a buyer, it means there must be some reason why so many people want to get out of the area. It makes them nervous about buying.
The truth is that rarely is there some circumstance that is causing everybody to sell all at once. The last time I saw a situation like that was when there was a shooting at an apartment complex in NE Lexington. The next week, a whole lot of the houses on the street across from it were for sale.
Another situation where I see many people selling all at once is in neighborhoods that were built about 2004-2006. Many homeowners bought not only before the market collapsed, but they also did the crazy loans that were available back then. They owe more on the house than it is worth and price it based on what they need to get rather than market value. There was one builder in town that had their own mortgage company. I think their credit application only had one question on it: DO YOU HAVE A PULSE? If you did, you got a loan for any house they built. Most of the houses in their neighborhoods have been foreclosed by now though. In this case, it isn’t that people were wanting to leave, it was that they couldn’t afford to stay.
Most of the time, when you see a street with many houses for sale, it has more to do with how fast they are being sold than any problem with the street. If you have a street in a neighborhood with slow sales or over-priced listings, they just don’t go away…..they just stay on the market. Meanwhile, another neighbor puts their house on the market too….and it doesn’t sell fast. Well, before long, you end up with every house on the street for sale. In a neighborhood that moves faster, you still might have the same number of people moving in the same amount of time, but since their houses sell faster, you don’t see all the signs in the yard all at once.
In most of these situations, I usually advise my clients not to buy. I always tell people that backing to apartments, multi-housing or commercial usually bites you in the rear at some point, as the people across from that apartment complex discovered. When all the houses were getting foreclosed in the builder/mortgage company’s neighborhood, I told people that there was a good chance that investors would buy them as rentals, so let’s skip it. I think the only real risk a buyer takes on a street with a lot of sellers is that they might have a tough time selling when it is their turn to do so. Often, the reason for the slow sales is that it is a second or third choice neighborhood in a time when most buyers can still get into their first choice location. If the buyer is okay with that and can get it for a price that takes that into consideration, I give it a thumb’s up.