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John and Jason discuss pending homes sales and what it means in today’s market…
ARED July 15 2010 Video Blog – Pending home sales.
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Isn’t this only bad news for sellers? It’s great news for buyers. Why the bias towards sellers?
not trying to be biased for seller or buyers, the truth is that the drop in pendings sales signals a slowing of the market…which is bad for people in the real estate industry. We predicted this drop months ago knowing that most buyers who were going to buy would buy during the tax credit thereby leaving a void this summer.
http://austinrealestatedaily.com/real-estate/real-estate-tips-real-estate/two-predictions-for-future-mortgage-rate-movement%e2%80%94is-it-time-to-%e2%80%9crip-the-band-aid%e2%80%9d-off/
Right, but your listeners are not in the real estate industry. So a market
decline is not good or bad. It depends on which party you are. What the
market needs is for you professionals to persuade your sellers to drop
prices so more transactions will happen. Then the market clears and
everybody wins, except those who bought in 2007…
Market will determine price points, sellers who are motived are dropping their prices and the ones who are not “truly” motived will stick their heads in the ground. I believe that the drop in pending sales is a reflection of the Tax credit going away. INfact I have looked into the data in the markets where the home price is below 250k and that is where pendings have dropped off. higher priced areas (250-400k) are actually doing very well and have not seen a drop in pendings. Real Estate is about “timing in specific locations” and those locations can be as small as a zip code or street. I am predicting that this fall will be a great time to find some values around town and next year I hope to see more job growth locally which will in turn make real estate values go up. Unfortunately there are alot of “IFS” between now and next spring so we will just have to sit back and keep an eye out for signals of market improvement or decline.
You are correct that 2007 was a horrible time to buy no matter what the location -but location has tempered the losses for some and increased them for others….
Oh, great idea to do video. Nice to see the faces behind the mic.
My concern is only with the 500k and up market. In my opinion, is has crashed 35% and more in some areas and is getting worse. I’m poking around in the market myself and I’m seeing sales at 2/3 the 2009 tax appraisal value. We’ll see this fall. I don’t really agree that it is driven by locations. I think it is driven by price per sq foot. There may be some minor variations but everything selling at 2-300 a foot is in trouble.
500k and higher….I completely agree with you. At this time there is just no incentive for those buyers. Values are dropping, financing is tougher, down-payments are larger and the spread between what you can rent for and what a mortgage costs is very high. The incentive for that pool of buyers is to sit back and watch the market….cheers!