Sellers’ Musings

[powayseller]

On other housing blogs, some who have never owned and sold a home cannot understand the “greedy” sellers. I know this hasn’t been expressed here, but I know many are wondering why sellers don’t just lower their prices.

It is instructive to get their insights, from gardenweb forums, from frustrated sellers, whose market turned on them overnight.

Notice that the Fannie Mae and Fed predictions of single digit increases this year is keeping laura1202 from lowering her price to the level she needs to sell this house.

* Posted by laura1202

xamsx wrote: If you slash, they will come

LOL! No more slashing here, we already slashed 87K and are at our rock bottom price now (and yeah I know I might have to eat those words).

…in the past seven weeks, there have been NO CONTRACTS (as in ZERO) written on any homes in my price range ($840K-$875K) in the 22039 zip code. So right now NOTHING is moving in this area of NoVA.

Sellers continuing to drop their prices out of desperation and frustration IS what tanks the market and feeds all that stupid “bubble bursting” hype.”

* Posted by anthem

Laura, xamsx pretty much hit it on the head. Sellers dropping their price isn’t what is ‘tanking’ the market. What is dropping the market is supply and demand. If the supply outstrips demand, then prices will drop. ….I see people trying to get out in the single digit adjustment range, and honestly I think we’re looking at corrections to be had in the 15-25% range. And honestly, that isn’t all that significant given the huge runups in the last few years.

* Posted by laura1202

Anthem wrote: honestly I think we’re looking at corrections to be had in the 15-25% range

That’s interesting….how did you arrive at those numbers?

BTW, neither the chief economist for Fannie Mae or the chairman of the Rederal Reserve agree…. between them, they predict a 3-6% annual *appreciation in average home prices (as opposed to the double digits nationally for the past few years). That is nowhere NEAR a 15-25% correction! Interestingly, neither of them predict widespread property value declines as part of the current down cycle NOR do they anticipate mortgage rates to rise significantly higher than today’s rates, which are still on the low side by historical standards….

For us personally, we will never be “upside down” with the mortgage on this house, so no worries there. Naturally, though, we want to get as much money out of it as possible, as anyone would… we don’t have to make a “killing” but we’re not going to give it away either.

Here’s hoping that much buzzed about “August turnaround” brings us BOTH lots of showings AND an offer.”

Read the entire thread here
Slow Market – Frustrated

[technovelist]

Note that this is one of the rare occasions where the seller apparently could sell for the actual current market price without getting killed. But she is going to hold out for “single-digit appreciation” predicted by “experts” instead.

Well, that’s the miracle of the market: she’ll learn her lesson without anyone in particular having to explain it to her. Of course, it is probably going to be a very painful lesson, but that’s life.

[sunsetbeachguy]

Ben Franklin has been credited with a quote to this affect.

Hard knocks runs an expensive school, but some will learn in no other.

[Peace]

Powayseller,
This goes right along with your other thread about real estate that just got too expensive. The market has not run out of buyers, just buyers who can afford the “expected” escalating prices, or buyers (like most of us on this list) who are not willing to stake it all on a roof “over our heads”
I guess that sellers still feel that if they figured out how to buy a too expensive house so should everyone else.

[PerryChase]

I have a friend just like Laura. He’s hates his house and wants to sell. But he’s holding out for a ridiculous price. He’s gonna learn the hard lesson in his own time.

[an]

Wow, so they’re waiting for the August “turn around” now huh? After August, will it be September turn around?

[bigmoneysalsa]

“IMO, there are many factors that can define what the “market” is, and that includes appraised price, assessed price, CMAs, AND the expert opinion of those in the real estate field. The market can’t be *just what buyers wish it was or want to pay, if that were true there would be quite a few areas of this country (SoCA, NYC, San Francisco, etc.) that would have very different real estate pricing than what we see now.”

No, sorry Laura, there is exactly one thing that defines a market: a willing buyer and a willing seller at a given price. Absolutely amazing! Reading laura1202’s posts really gives you some insight into the complete lack of understanding of basic microeconomics that allowed people to justify current home prices in their minds. Really makes me feel sad about the state of education in this country.

[PD]

Her post is a good indication that panic has not yet set in. Most Americans think our economy is just zooming along and will continue to do so and that home prices can’t go down. When the economy starts to really shudder and they see one too many new comps at a very low price, then the ball will really get rolling.
Will the panic be a large, rolling wave or one giant tsunami?

[salo_t]

I too have a friend that is trying to sell her home. She’s around 60 and her and her husband were planning on selling it to help supplement their retirement that is coming up soon.
Its a very nice 3/2 in Rancho SD but its been on the market for three months now with only one sort of sketchy offer that they declined. My friend has often tried to sell me this home but at over 500k there is no way I want to shoulder a mortgage that big. I’m in my 30’s and between my wife and I we clear about 80k a yr so I’m not sure if I could even qualify.
When she first put it on the market she asked us to come out and look at it. After stating that it was higher than I intended to spend I got the “oh I see, don’t lose hope ok” I hated the attitude I was seeing when I know darn well this market has run its course. I had tried to explain why she has not gotten any offers in the last three months and it just falls on deaf ears. They honestly can’t fathom the thought of not being able to unload their house for some ridiculous price. Recently her attitude has changed though, I noticed when I see her she’s more upset about the house and actually a little spiteful towards me because of what I was saying about the market I guess.
In short, I too feel that most Americans live in a dreamy world that often keeps reality out if it doesn’t fit their dream criteria. It bothers me because I wonder what the next big scam will be that will heard the masses into another terrible decision.

[SD Realtor]

Guys it is the classic 5 stages of grief. Unfortunately the majority of sellers are in denial right now. Personally I think the realization will start to set in next summer. People who listed this spring/summer and who sat and did not sell because they refused to price competitively are still of the mindset that they can come back next spring and test the market again. Also there are still plenty of “soft landers” and other real estate professionals who are not acknowledging the market data in the same way that many of us do. The best thing for the entire market will be for people to accept it. I guess they have to go through thier own denial.

[powayseller]

I know the toughest part for realtors now is dealing with seller denial. Isn’t there something to be said to wake them up?

Does the seller understand the concept of competition with other sellers? With inventory at 23,000, and only 3000 sales per month, that is 8 listings per buyer. I know you adjust this for their own neighborhood. I guess some neighborhoods might have only 3 listings/buyer, while others could have 12 or 15, right? What does a seller do with information like that?

Does the seller say anything at all when you show them a list of properties which have lost value since the last sale? There are many presented on this blog. Do you tell people “Hey, we are back at 2004 and 2005 prices”.

I bring this up, because I stopped by the Help U Sell office last week, and my realtors told me the hardest part is getting sellers to price their properties at a realistic price.

[Bugs]

Except for maybe some outmigration, I don’t think the number of potential buyers who can “afford” the current prices has declined. What I do think has changed is the number of potential buyers who think that it’s worthwhile to stretch and pay 50%+ of their income on their housing in hopes of big returns. No signs of short term increases = no incentive to stretch.

[no_such_reality]

Denial is coming to an end

Some sellers may still be in denial, but the wake up call is coming fast and ugly. In my neighborhood, there’s several homes, needing work no less, at $1.1M to $1.3M. There are also several homes at $799K. When the July and August numbers start showing up as comps, they’ll get their wake up call.

[jacksandgo]

This is the part that bothers me the most about Laura and others like her….blind faith in political speak as the gospel:

“BTW, neither the chief economist for Fannie Mae or the chairman of the Rederal Reserve agree…. between them, they predict a 3-6% annual *appreciation in average home prices (as opposed to the double digits nationally for the past few years).”

[powayseller]

Are you sure Bugs? With housing prices so high now, and interest rates up, who can really afford these homes? Remember that the majority of buyers qualified for teaser rates of 3%. How many people qualify now for those same houses, with teaser rates at 5%, i.e. a payment almost 50% more? I really think the bubble was popped by high prices and high mortgage payments in the low end, and this started actually in 2004. That’s when inventory started rising.

In April 2004, inventory was 3,000, as it had been for the past few years.

By June 2004, inventory was around 6,000, and by fall, it was 12000. Realtors, feel free to correct those numbers if they are off.

The market softened in 2004, and then the price declines followed after ward.

After the low end softenend, those people could not sell their homes and move up to the 2nd tier, so by 2005 the mid tier softened also. Homes above $500K started dropping in price in 2005.

Now, all homes are dropping in price, as the chain was broken. But remember, the chain was broken in 2004. It takes a long time for these ripple effects to move through the market and economy.

This was explained to me by Bob Casagrand.

If interest rates had stayed low, the chain would have been broken eventually anyway, because people can only afford to pay a certain amount for their home. There is NO way that a starter home could ever end up at $1 mil. How would someone earning $40K/year ever afford it? So it had to top out sometime.

The double whammy of high prices and higher interest rates killed this bubble. Now what brings it down is the reverse psychology. Housing no longer is a sure money maker. Like Bugs said, why stretch into a home if it is no longer going up?

Most people have no idea the market will really fall. All they know is they see the For Sale signs up for many months, and they don’t have that sense of “housing only goes up” anymore. So the rush to buy is gone. Others are turned away when they apply for a loan.

How many people can qualify for a starter home now with interest rates almost double what they were in 2003? So definitely, the number of people who can afford the current prices has declined, because 80% of our buyers were relying on ARMs, and those ARM rates have really shot up.

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