Sales of homes seems to have slowed down - any good reasons ? (bank owned, rentals)

[dannl]

It seems to be taking long to sell a house now. Is it because the interest rates have gone up or because there are a record number of homes on the market at this time.

[Sadida021]

I think sellers and their agents are pricing the homes slightly above what they expect to get for the home based on past sales and profits of owners who sold during the "boom" of the late 90's and early 2000's. I've heard of many past cases where the home gets an offer on it, but the sale is canceled because the assessed value of the home is below the sale price and no banks will finance it. If a home is priced correctly, or slightly below market value, it should sell quickly. The main cost increasing trend I've seen is that there are a lot more forclosured and "AS-IS" properties on the market now than 5 years ago. I feel this is due to the buyers who signed on a 3 or 5 year ARM and can't afford the new payments now that interest rates have gone up. Not to mention the down state of the economy in gereral. If a bank owns mutiple liens on homes in a specific neighborhood, they will do everything they can to keep the values of those home rising. This means that they will try to get every cent out of their forclosed homes as possible. Bank owned homes are priced at "market" value based on location and square footage, but almost always have significant cosmetic updates that need to be done to the home. If an owner can't keep up with the mortgage, how can they upkeep the home? Banks generally don't fix most cosmetic defects of a home. Also, a bank can sit on a home and wait for an offer a lot longer than someone like you or me who has bills to pay, and/or a contigency to fulfill. This will spin the statistics a bit away from the norm.

I, among others, feel that the market will slow down and sellers will be forced to lower their asking prices. Many people will play the waiting game to minimize their debt. Profit will also drive the sellers at times. If a homeowner sells their house for $10,000 less that what they expected to get for it, they will lower their "limit" of what they will pay by $10,000 or even more to try to make as much money as possible on their sale. The market is all profit driven, and that combined with interest rates going up will cause the potential buyers to hesitate and be double sure when they buy a home.

[midwest456]

http://www.marketwatch.com/news/stor...E000DF9E74D%7D

Highest % of vacant home properties in more than 40 years. I would imagine the end of the housing bubble will hit a lot more in south Florida, Vegas or California than the midwest, but a glut and slower sales elsewhere should still affect the market in the rest of the country, because if someone in another state can't sell their home, then they are less able to buy one here. A lot of property owners reportedly are converting their properties that aren't selling to rentals.. that might glut the rental market and bring rents down for tenants, who knows.

[mudmuffin]

Another possibility is that the majority of homes are too high.

The economy still stinks for most of us.

No one has the kind of money needed to buy a home.

Don't mean to be negative just how I see it.

How is the average person who makes $10-12 and hour supposed to afford a $800 mortgage payment not to mention heat and electric. It's just not possible for the majority of what would be new home owners.

[midwest456]

my thoughts exactly. the lending industry just got very loose with loans in the last few years, apparently...used to be you had to put 20% down, lately there's been a lot of no-money-down, interest-only-payment loans and people went out on a limb more thinking that the big year-to-year increases in their home value would keep them ahead of trouble. increased money supply (even when it's loans, not money that you have already earned) = inflation.

like you said, there's something wrong when there is a gap between median income and median house price/value in a city.

[midwest456]

one thing i've heard is that builders would make more affordable starter homes but the banks only want to loan for bigger mcmansions and condo towers and whatnot that will make them more money. instead of working on making modest homes more affordable for younger and lower-income buyers the industry solution is to push them into signing riskier loans for housing they can't afford bring back indentured servitude and let people get even deeper into debt.

Bloomberg.com: Worldwide

[yellowsnow]

All of the above.

Prices are all over the place. It's really hard to know how to price. Just for example, I can find homes in my area that appear to be comparable to mine with a 300K spread in price. That just shouldn't be. As a seller, I'm scared! I'm losing money fast!

Numbers in MN are actually worse than we know because many people(myself included) take their properties off the market in the winter. In 60 days or so, there will be many more back on the market. If I was a buyer, I'd be scared too. Scared to buy today because what if the market drops another 15%? Will I end up owing more than the home is worth?

From both sides, the market is ugly!

[Robert P Stewart]

Where is all of this coming from? No - the market isn't that bad. Sure, it's slow - but not really even that slow.

Winter is usually a slow time for us Realtors - and this past January I was working my tail off - busy busy busy!

Of course, sellers need to be reasonable with the price they ask for their home - but they should never give it away. A home has been, and always will be, a good investment. The growing population needs a place to live, and those are just the facts.

And if your home isn't selling (I tell this to clients all the time), its for one of three reasons:
A) Marketing
B) Condition
C) Price

I always try to fix problems associated with a long-listed property with new marketing strategies and updates to the condition of the home before I ever recommending touching the price. A price reduction is, in some cases, money out of the pocket of my client - and I wouldn't be doing a very good job if I was costing them money. That's how I see a price reduction, anyhow...

Price it once, market it once, sell it once - and get on with life.

Robert

[midwest456]

Good points.

Say a house just needs a new paint job or cosmetic work (but no termites, structural damage, etc). What percent would this generally lower the market value?

[golfgal]

Originally Posted by midwest456

Good points.

Say a house just needs a new paint job or cosmetic work (but no termites, structural damage, etc). What percent would this generally lower the market value?

We don't have termites in Minnesota . Needing cosmetic work doesn't lower the market value because the market value is what the house can be sold for and it should be priced accordingly anyway. If you have a house that sells for say $300,000 and in good structural shape but needed some cosmetic updates then the house is worth $300,000. Next door you have the same house with all the updates and it sells for $325,000 it is worth $325,000.


Robert, if you look at the date of the first post, this is from last summer so her question makes more sense.