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04/26/2009 - More would-be home-sellers stay on the sidelines this spring - STLtoday.com (http://www.stltoday.com/stltoday/business/stories.nsf/developmenteconomy/story/A5DF3B02CF429BD7862575A300019C73?OpenDocument - broken link)
Seems to me like the more people sit it out and don't sell, the lower the supply of homes for sale, and the quicker prices will rebound!
I agree lower inventory will help. But obviously, these people are part of a growing "shadow" inventory.
The thing that strikes me (and I could be wrong) is what a mistake the first couple appears to be making. They bought in 1986. If prices in their area have rolled back to, say, 2003, they're still up for an incredible profit. Instead, they are holding out for "top dollar," when those nominal prices may not return for upwards of a decade and when they do, they'll still be less if you adjust for inflation.
Since these are older people, retiring, there's a good chance they won't really want to wait out the decade long ride. In the meantime, there's a possibility they're shooting themselves in the foot by not selling today at the 2003 price.
"Through the end of last month, there were nearly 1,000 fewer new listings on the market in St. Louis County than in the same period last year. That's down 17 percent. The pace of new listings was off 28 percent from its 2007 peak. Other parts of the region are seeing similar figures. Simply put: Those who don't have to sell right now, aren't. "
Imagine that.
People who do not have to sell or who can't sell for as much as they need/want are taking their homes off the market and staying put. And this is having a effect on local inventories and price stabilization, in some areas, like St. Louis.
The thing that strikes me (and I could be wrong) is what a mistake the first couple appears to be making. They bought in 1986. If prices in their area have rolled back to, say, 2003, they're still up for an incredible profit. Instead, they are holding out for "top dollar," .........
Another way to look at this is that the first couple may have prematurely extracted paper equity from their home and cannot afford to sell for less. There are many long time owners out there who have done the same and in effect are not too different than those who speculated and bought at the peak and cannot afford to sell for less.
Another way to look at this is that the first couple may have prematurely extracted paper equity from their home and cannot afford to sell for less. There are many long time owners out there who have done the same and in effect are not too different than those who speculated and bought at the peak and cannot afford to sell for less.
I thought about this possibility, and if that were the case, it would explain a lot and make more sense. But since the article mentions the financial dilemma of the second "seller" and didn't mention one for the retiring couple, I figured it wasn't an issue for them.
Don't know which would be worse for them: HELOC trouble with a need to break even or no HELOC trouble, but a downward slide in their eventual sales price.
Another way of looking at it is that those who are selling to trade up can usually make up the difference on the buyside, assuming they remain in the same market.
This does not work out as well for those who are downsizing.
04/26/2009 - More would-be home-sellers stay on the sidelines this spring - STLtoday.com (http://www.stltoday.com/stltoday/business/stories.nsf/developmenteconomy/story/A5DF3B02CF429BD7862575A300019C73?OpenDocument - broken link)
Seems to me like the more people sit it out and don't sell, the lower the supply of homes for sale, and the quicker prices will rebound!
No, it means the opposite. Prices will not go down as far, but they will stay down for longer.
No, it means the opposite. Prices will not go down as far, but they will stay down for longer.
There is a huge difference between having and wanting to sell.
There is gridlock in many markets, wannabe buyers who have homes to sell. Many must sell at $X to realize sufficient equity to trade up. In many cases, paper equity was either prematurely withdrawn or has evaporated.
In other words, a lot of the wannabe buyers with homes to sell are not going anywhere, any time, soon. In the meantime, they contribute to the vast inventories that put pressure on home prices.
Stabilization of home values is a balance between the rapid appreciation in the not too distant past and the market free-fall, many buyers hope for. That the buyers and sellers are often the same people is ironic.
I agree lower inventory will help. But obviously, these people are part of a growing "shadow" inventory.
The thing that strikes me (and I could be wrong) is what a mistake the first couple appears to be making. They bought in 1986. If prices in their area have rolled back to, say, 2003, they're still up for an incredible profit. Instead, they are holding out for "top dollar," when those nominal prices may not return for upwards of a decade and when they do, they'll still be less if you adjust for inflation.
Since these are older people, retiring, there's a good chance they won't really want to wait out the decade long ride. In the meantime, there's a possibility they're shooting themselves in the foot by not selling today at the 2003 price.
Pigs get fed, hogs get slaughtered.
When you use the term "shadow" inventory, you seem to be indicating that this is a negative thing. Maybe I am wrong and you don't mean that. But if you do, why do you consider it a negative? To me it just indicates that people who don't need to sell are doing the smart thing and additionally are not putting further pressure on people in the market who need to sell.
Maybe you are a wannabe buyer and want sellers to hurt more. Since I am neither a buyer or seller, I don't see this "shadow" inventory as bad, but could be good by decreasing the number of houses on the market. When the market turns around and credit loosens up, if people want a bigger or smaller house then they will return to the market and help to further the recovery.
When you use the term "shadow" inventory, you seem to be indicating that this is a negative thing. Maybe I am wrong and you don't mean that. But if you do, why do you consider it a negative? To me it just indicates that people who don't need to sell are doing the smart thing and additionally are not putting further pressure on people in the market who need to sell.
Maybe you are a wannabe buyer and want sellers to hurt more. Since I am neither a buyer or seller, I don't see this "shadow" inventory as bad, but could be good by decreasing the number of houses on the market. When the market turns around and credit loosens up, if people want a bigger or smaller house then they will return to the market and help to further the recovery.
I guess I see the shadow inventory as a negative because it means the inventory problem (which feeds the price problem) won't go back to "normal" any time soon.
Between sellers who pull their listings because they're holding out for a price, banks who won't list foreclosures because they don't want to realize a loss and the run-of-the-mill folks who would've listed this year and last, but are "just holding off for a while"....there's a huge bottle neck of inventory building up.
So when the current inventory "clears," this shadow inventory will once again swamp the market and causes prices to stagnate or drop.
I don't wish pain on anyone. It's the prolonging it that makes me crazy.
I want stability. And I'm impatient.
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