The following pins were supplied by The National Association of Realtors in their latest report, CNN reported.
- 7.3 month supply of homes on the market, largest since April 1993 (13 years)
- Number of homes for sale up 40% from last year, a new record high
- Pace of sales slowest since January 2004.
I’m no supply side economist (though I play one on this blog post), but if there is a huge supply of homes for sale and sales slow (less demand), home prices should go down, not up. It happened to widgets in Econ 101. Was it Bob Dylan who once said, “You don’t have to see the charts on Matrix to know which way the wind is blowing.”
So what does this mean to buyers and sellers? Buyers may be better able to negotiate and sellers will have to price right.
An alternative explanation: Many sellers are not motivated to sell for anything less than top dollar, leaving a balanced market buried under a snowdrift of pro forma paperwork. Time will tell, but my theory seems to fit the facts better so far…
Certainly an alternative explanation, of which there are I’m sure many. The NAR report attributed the results to overbuilding. And David Lereah, their chief economist noted in the report that sellers “are pricing to reflect the current market reality”. But hey, Dave’s been off the mark before.
But to your point: If a seller puts their home on the market, they usually want to sell it in a reasonable time. If they are putting it up and intend to hold out for full asking price & can wait, fine. I just don’t know if “many” of these unmotivated sellers equals most. Now that’s something NAR should be researching.
In any case, as the market pool grows and your house sits, something has to give. Those savvy buyers & agents who look at “days on market” will not help you get your hold out top dollar price. I’m curious, what do you do with a client like this?
Thanks Greg for stopping by. BTW, how about a poetry corner on your site for the weekend. I quite enjoyed our little exchange of Roman lyrics.
> I’m curious, what do you do with a client like this?
We don’t take listings unless absolutely everythign makes sense. It surprises some people. They think Realtors are wh*res. But if we put our sign up, we want to add the Sold! rider in days or weeks at most, and have the post down in 60 days or less. This sells us far batter than taking a turkey and having the sign up for six months.
FWIW, the only market I can speak about with authority is Phoenix. Our inventory is about 1.75 times what would have been normal three years ago,. What’s normal now? I don’t know. We’ve built close to 200,000 houses since then. If one-third of the listings are for sellers who will only sell if they get their price, then we really could be in a semi-normal market. Buyers are gun-shy, but not inordinately so. Deep discounting on sold listings is rare. It all could get worse, but our in-migration is still huge. We’ll see…
I should write something on unmotivated sellers, because I see it on the ground all the time: Unavailable at all, can you come back later, dirty, pet odors, dirty dishes, clutter everywhere. They might be motivated but clueless, but after a while you’d think they’d shape up if they really want to move. The flip side is people who come on market in great shape and $8,000 under competitive listings. Those houses sell just like that. To me, that’s a motivated seller.
On poetry, I was thinking about that today. I’ll see what I can come up with.
Greg,
Maybe we can do an alternating or moving venue for poet’s corner. Bloodhound, sellsius and whoever wants to join the club. We can pick Saturday as the day. People can post their favorite poems, original works, themes, whatever. I’m sure there are a lot of poetry lovers out there. Since it’s not real estate related, are we bound by some blogging rule that says we can’t do it
?
I’ve been yapping about this calling it a bibble. Many market segments are doing fine. As has been stated here, homes have to be priced right. I dislike the emphasis on the bubble as it is easy to say, is catchy and makes a broad sweep. Larry Cragun
Here is my poem submission:
Some say we are in for a really big bubble.
Flippers are worried that for them its big trouble.
Is it the return of the S & L days, the crises we felt?
where real estate crashed and the prices did melt?
Nope -
The old grandfather says the pull back is little,
and instead of a bubble were in for a bibble.
Larry Cragun
It’s become a world of buzzwords, hasn’t it? You’ve got a good one in bibble.
The poem I love. Let me try a verse:
Bubble or bibble, the term we can quibble
Either shoot for the hoop
or stand there and dribble.
http://www.riverbendatcharlotte.com/welcome/side1.jpg
oops, i wanted a smile: http://www.cs.miami.edu/~tptp/Seminars/ModalLogic/Smile.GIF
I have to agree with both Sellsuis and Greg — to a point. As far as Greg’s posture that people are still trying to ride the wave, and are unlikely to sell below their asking price, I don’t disagree for now. Many are just testing the market. But what happens when $1.5 trillion in ARM’s are reset in the months to come. Many of those people may not be ABLE to sit and wait. Depending on how that goes, they may have to sell in a hurry. As they mark their homes down to get out of them, the rest of the market will have to follow. For those who don’t need to sell, no problem. They wait it out; just like the stock market. Eventually the price becomes the price and the problem is resolved. But for those who change jobs (or whatever) and NEED to move, it could be a difficult time. So my opinion is that if you take the inventory numbers and look at them as a snapshot, there doesn’t seem to be too great a problem. Taken in the context of everything else that’s going on, I’m not so sure.
Good points Allan. To those sellers who have the “luxury” of waiting, all is well. For the rest, a growing “days on the market” stat will bring price pressure to bear, depending on your local market. But like in any average (NAR’s report), some markets are lousy and some are cruising along. Agents in the field know the lay of their land—-and that’s for sure.
jf