[quote=sdrealtor]WOW! CAR
Spoken like a truly frustrated buyer. While alot of what you wrote sounds perfectly logical and is correct just as much isnt.
Denying sellers have any power is silly. Particularly sellers with tons of equity. Yes, you chose to sell quickly. Would that have been because you felt prices were at a peak that would not soon be seen again? Would you have been so quick to sell if you watched the property values drop a few hundred thousand dollars and knew you could rent it out for a very nice annual net income while you waited for prices to recover?
The difference between places like here and many other parts of the country is the strength of the rental market. While Dad’s ranch in West Texas would sit and deteriorate, his free and clear 1800 sq ft house in Encinitas will rent every day of the week for $2200 to 2500/month. Would a smart investor buy one today for $550K and rent it out for that? Of course not, but would an heir whose Dad paid $20K for it in the early 70’s rent it out for a $20K+ annual profit (due to a $500 annual tax bill) and wait 5 years to see if the market recovers. It happens everyday!
Sellers control the inventory side of the equation and that is the supply. Prices are not just set by demand they are set by the balance between demand AND supply.[/quote]
Yes, I’m a VERY frustrated buyer, but not because I don’t want to compete with other **equally-qualified** buyers. I resent having to compete with people who have no skin in the game, who do no research of their own, and who are not being held accountable for their actions (not being foreclosed on if they don’t pay as agreed). I resent the fact that inventory is being artificially constrained while demand is being artificially stimulated via insane tax credits, govt-backed loans (that us, the taxpayers — and we have yet to see the tremendous losses that are going to result from transferring all the private losses to the public via govt-backed refinances!), and artificially low interest rates.
Yes, sellers have some pricing power, but only when they price in a range where a sufficient mass of buyers are willing and able to buy. Like my minivan example above, if they are pricing way above what the market (buyers) dictate, then they are not really in the market; they are deluding themselves into thinking their house is worth $X when it’s really worth $X-25% (or lower).
In a market where there are very few buyers who qualify for the prices these delusional sellers are listing for, the few buyers who exist are likely to be some of the smartest buyers. They will NOT volunteer to bid against themselves in a market that is clearly slow and when there are plenty of better properties available for less money in equally desirable areas all around the world. I’m not sure why this fairytale describing fabulously wealthy, and painfully stupid buyers keeps being recited (first, it was Baby Boomers who were going to save housing, then the “wealthy” foreigners, now?), but there is nothing to back it up in reality. The only thing propping up the high end of the market is the govt/Fed. As soon as they get out of the way (if they ever do, admittedly), prices will come back to reality, in all areas, and with all properties. This means that historical ratios between certain areas and houses will reassert themselves. We are not there, yet.
Actually, I sold in some of the hardest-hit areas during the worst part of the downturn (second half of 2007, when the govt hadn’t yet stepped into the mortgage market and things were really frozen). I sold my mom’s house for over $100K less than what the house across the street was in escrow for at the time (mom’s house was smaller, but had a better view, the other house backed up to a busy street), and for about $150K-$200K less than what it would have sold for at the very peak. You have no idea how many people suggested I should “wait to sell until the market gets better.” I could have easily rented it out for a very nice income because it was paid off (and had Prop 13 protection), and it was very easy to rent, but I knew prices were still going to go down, and wanted out. About a year later, the house across the street (that sold for $100K+ more at the time I was selling my mom’s house) ended up in foreclosure, and the house next door ended up selling for over $100K less than what we sold my mom’s house for.
My point is that some sellers, be they the long-time owners or heirs, don’t really feel the need nor desire to get “peak” prices. Some of us understand that prices may well go down for many, many years, and would rather sell and get what they can vs. rent it out and deal with tenant problems, maintenance, etc…with the *hope* that they can later sell for more.
There is NO guarantee that a seller will get more for a house 5 or 10 (or many more) years down the road. IMHO, this is a secular downturn that may very well wipe out much of the “wealth” we’ve seen amassed since the Great Depression, or at the least, a reversal of the trends we’ve seen since Reagan and his “trickle down” nonsense and massive deficit spending which fed the credit bubble mentality. People are trying to look at the past 50 years as a guide, mistakenly believing that this is a “normal” cyclical change. I’m not in that camp, obviously.
