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Sellers Are Trying To Attract Buyers With Better Pricing, That’s A Good Start

A report from Mansion Global. “With a slowdown anticipated for luxury real estate markets in 2019, it’s possible that home flipping, too, could begin to taper off. ‘ Buyers and sellers are adjusting their expectations,’ said Javier Vivas, director of economic research at Move.com . ‘We’re already seeing a lot of that with price reductions, and increases in the amount and types of price cuts happening above the $1 million mark.'”

“Santiago Arana, a broker in Los Angeles, said he expects no big surprises in 2019. ‘People are talking about a big bubble, but I don’t think it will be like 2008—the fundamentals are too strong for that,’ he said. ‘We want an adjustment [from the faster pace of previous years.] That’s healthy.'”

“The trend of lower-price homes being more frequently flipped may ring true in the New York City area: an April 2018 report from the Center for NYC Neighborhoods found that house flipping was common in the city’s most affordable neighborhoods, and that 34% of homes flipped in 2017 were in foreclosure.”

From Bankrate. “Many large housing markets are feeling a chill as price growth slows dramatically and homes linger on the market longer, says Adam Smith, president of the Colorado Real Estate Finance Group in Greenwood Village, Colorado. Potential homebuyers who are crossing their fingers and waiting for home prices to fall further may miss the affordability boat if mortgage rates creep up again.”

“‘I don’t think we’re going to see a bottom like this where interest rates and home prices will be lower than they are today,’ Smith says. ‘Waiting a year (to buy a home) could be a six-figure financial decision in some major metro markets.'”

“A severe shortage in both new construction and existing housing stock means homebuyers won’t see softer home prices in the foreseeable future, Smith adds. ‘We’re not in a housing bubble, and we have a legit supply-and-demand problem on our hands for years,’ Smith says.”

The Marin Independent Journal in California. “The December 2018 median sales price in Santa Clara County was $1,150,000, down 8 percent from the November median of 1,250,000. The December median was 11.5 percent lower than the December 2017 median of $1,300,000.”

“Silicon Valley Association of Realtors president Alan Barbic said the drop in the median home price will bring more balance to the market and open the door to serious buyers. Noting market conditions vary depending upon location, Barbic stressed that arriving at the correct price is key to a successful sale.”

“‘A sales price can be compromised when there are price reductions. Sellers should seek the advice of a Realtor who is knowledgeable about local market conditions, and who can assist them in arriving at the right price for their home,’ advised Barbic.”

The Mountain Democrat in California. “Since the first of this year about half of El Dorado County’s 500 listings have had price reductions. Sellers were likely too optimistic as to the price a buyer would pay and decided to reduce their price in order to attract an offer. Last year during the same time, not a single listing had a price reduction.”

“There are other signs that the seller’s market is over. During January of 2018 there were 166 closed sales in El Dorado County with a median selling price of $498,000. This January there will be less than 130 closed sales with a median selling price of $462,000. With fewer sales and declining prices, sellers need a different strategy to sell their home at the highest price possible.”

“It didn’t require a marketing genius or a shrewd negotiator to get a home in escrow last year. Stick up a sign, input the listing information into the MLS and wait for the offers to roll in. Listing agents had it pretty easy when two-thirds of all listings sold within 45 days and most sellers receiving full price or better. County prices and the seller’s market peaked in May of last year. Since then, both sales and prices have been decreasing.”

“The median selling price in El Dorado County at the beginning of 2018 was $465,000. Five months later the median was $550,000. The sticker-shock scared off buyers. Real estate agents sensed market hesitation but most sellers kept looking in the rear-view mirror, refusing to recognize the change. Now they are acutely aware that buyers are not as plentiful as a year ago and are trying to attract buyers with better pricing. That’s a good start.”

“The listed price should be based upon where the market is going not where it has been. This applies whether home values are increasing or decreasing. Sellers need to get in front of a declining market by pricing their home slightly below, not above recent similar sales.”

“Six months ago a home with walls and a roof would attract an offer. Today, average is no longer acceptable. Home stagers are once again busy.”

“The first offer is usually the best offer. Six months ago, two-thirds of all listings sold at list price or better. This last month only 8 homes sold at list price and there were no sales above the listing price. In a declining market, sellers should not hold out for a better offer but instead work with the first reasonable deal on the table.”

“Lose the controlling attitude. Sellers and their listing agents will need a more conciliatory approach to negotiating with skittish buyers. Gone are the days of sellers-win, buyers-lose, negotiation tactics. Sellers must think win-win. Try to find common, reasonable solutions to price and terms.”

This Post Has 40 Comments
  1. ‘house flipping was common in the city’s most affordable neighborhoods, and that 34% of homes flipped in 2017 were in foreclosure’

    Oh dear…

    1. Is 34% a lot? Seems like over 1 in 3 specuvestors turning the keys into the bank is a bit bubbly…

      1. ‘house flipping was common in the city’s most affordable neighborhoods, and that 34% of homes flipped in 2017 were in foreclosure’

        I think what the article said was that 34% of the homes flipped were bought while in foreclosure, NOT that 34% of the flipped loans ended up in foreclosure.

    2. This whole house flipping stuff is nonsense. Shelter should never turn into a speculative orgy. I’m not a huge fan of big government, but we need laws which don’t allow for this crap. It’s time.

  2. ‘People are talking about a big bubble, but I don’t think it will be like 2008—the fundamentals are too strong for that,’ he said.

    The “fundamentals” are based on non-GAAP accounting, and the wide-open credit and QE spigot since 2009. In other words, this “strength” that Realtor Boy touts is an illusion. The speculative debt and credit bubbles blown by Bernanke and Yellen are a house of cards that is now collapsing under the weight of its own fraud and mark-to-fantasy valuations.

    1. We want an adjustment [from the faster pace of previous years.]

      Oh, you want continued increases. Funny.

  3. ‘It didn’t require a marketing genius or a shrewd negotiator to get a home in escrow last year. Stick up a sign, input the listing information into the MLS and wait for the offers to roll in..Six months ago a home with walls and a roof would attract an offer’

    From zany over-pricing to thud in six months.

  4. “There are other signs that the seller’s market is over. During January of 2018 there were 166 closed sales in El Dorado County with a median selling price of $498,000. This January there will be less than 130 closed sales with a median selling price of $462,000. With fewer sales and declining prices, sellers need a different strategy to sell their home at the highest price possible.”

    I track this area along with Folsom and granite bay. Although I have noticed the lower priced homes are actually selling, the ones with dream prices are sitting with reduction after reduction. The previous peak 2004-2006 purchase prices on some of these are pretty close to what they are asking now. Different story here in the Bay Area, we have a long way down to go.

  5. “The listed price should be based upon where the market is going not where it has been. This applies whether home values are increasing or decreasing. Sellers need to get in front of a declining market by pricing their home slightly below, not above recent similar sales.”

    Do tell… so where are they going mr expert?

      1. Odd history… stubbornness to a dreamprice is likely reason for the lengthy years on market. Chase that market down greedbag!

      2. Those aren’t real sellers – they’re pretenders engaging in a mental fantasy. They never had any intention of actually selling their house.

  6. ‘People are talking about a big bubble, but I don’t think it will be like 2008—the fundamentals are too strong for that,’

    Is he describing the Fed’s massive balance sheet that backstops housing a fundamental? Or did he miss the memo that the Chinese investors took their ball and went home?

    1. “Or did he miss the memo that the Chinese investors took their ball and went home?”

      You notice how we hear little about this? If all the potential FBs out there knew that the foreign investors that played a major role in driving prices up, have vanished, the only recourse would be for the market to “correct” and more realistically, crater. If, and when, this “shocking” news becomes available, we are sure to have some major panic selling along with the prices falling off a cliff.

      1. “Next comes anger.”

        You want anger? Wait until I reset the teaser rates on adustable rate mortages.

        😁

        After this much anticipated event (at least on my part 😁) the FB will, probably FOR THE FIRST TIME EVER, actually read his copy of the loan agreement that he eagarly signed some time ago and for the first time ever the FB will FULLY UNDERSTAND the meaning of those clever (and amusing) terms I most throughly enjoyed including in the text.

        What’s that saying? Act in haste, repent at leisure?

        Or is it “What the bold print giveth the fine print taketh away?”.

  7. “A sales price can be compromised when there are price reductions.”
    This is strategy to talk sellers out of shooting for the starts and cutting prices until they hit the market price. I don’t think it actually damagest the market price but it sure wastes a lot of Realtors’ time.

    Also, when prices start falling YoY I think the banks are going to start to tighten up hard. 3% down loans means that the bank will effectively have underwater assets on their books without much decline in price. All cash investors are gone, entry level buyers won’t be able to get loans, which kills move up buyers, plus tax changes are going to hit the high end market hard at the same time. Even good jobs reports are showing little wage growth, which doesn’t justify these prices.

    1. If these prices aren’t justified at near-historic low interest and unemployment rates, how will they look after mean reversion to more historically normal unemployment and interest rates?

      1. That’s not going to do much to support demand for housing priced north of $500K, which anything decent around San Diego has been for over a decade, except for the brief period between the end of the Great Recession and the onset of the Fed’s Housing Bubble Reflation stimulus package.

  8. ‘We’re not in a housing bubble, and we have a legit supply-and-demand problem on our hands for years,’

    Widespread bubble denial amongst REIC spokesmen is a primary symptom that a bubble is at hand and possibly already bursting.

      1. “Is Adam Smith Sean Penn in Fast Times as Ridgemont High?”

        No, MC Hammer. The supply is too legit to quit.

  9. Well, it’s Super Bowl Sunday – the unofficial day the UHS folks said was the true beginning of the spring market. Best of luck folks, you’ll need it this year!

  10. As usual, the crackdown on bankster recklessness and greed comes after the damage has already been done. Also as usual, none of these gold-collar criminals need ever fear facing actual prison time regardless of the number or magnitude of the felonies they’ve committed. Ditto for the complicit regulators, enforcers, and policymakers who enabled such systemic fraud and malfeasance.

    https://www.scmp.com/news/asia/australasia/article/2184881/australias-landmark-banking-inquiry-tighter-regulations

    1. “There are rats in City Hall and City Hall East,” Greenwood added. “There are enormous rats and their tails are as long as their bodies.”

      Rats are the de-facto mascot of the slums.

        1. Particularly amusing for me. One of Meredith’s daughters was a friend of mine in junior high.

          1. I also had my own encounters with rats while walking my Jack Russell Terrier in NYC. Some of those suckers were big!

  11. “Furthermore, all of the other spec-vestor cohorts – like small two to ten house independent speculators – out purchased institutions by ten-fold from 2011 to 2016. In fact, there have been over six million single family homes taken out of the end-user owner category and turned into rentals, thus the “lack of supply” screed, artificial as it may be, everybody repeated for years.

    In the “all-cash”, “spec-vestor” segment, it was very easy to overpay for a house by 20% or 30% in the heat of the deal and when competing against a dozen other all-cash buyers. This is impossible if end-users, mortgage loans and appraisals are required because when end-users overpay, or bid higher than the appraised value, they must come up with the difference in cash, which few have.”

    https://mhanson.com/12-14-18-hanson-house-prices-are-more-vulnerable-than-most-think/

  12. I dont think vacation cities like, Santa Fe, NM or Boulder, CO will ever crash. There have never been high paying jobs there. They might see a 10% drop from the peak, but not enough to panic.

    1. 10% drop

      Prices in Boulder nearly doubled in the last five years. They are no more immune to their bubble bursting than any place on the planet.

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