The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CRSA, CSP, GRI, ePRO®,REALTOR ®, RealtySouth
The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.
Reality…
Reality TV is all the rage… but real reality is another thing!
It is certainly not new news that we are in a recession. Below are some bullet points from a report by the US Department of Commerce published July 30th confirming that the recession is indeed deeper than originally reported.
· Recalculation Discovers Deeper Recession – The Great Recession that started in late 2007 was even deeper than government economists said it was in early estimates.
· The Commerce Department released a revised report July 30th that said the U.S. economy shrank 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009. Previously, the government had said the drop was 3.7 percent.
· Household spending fell 1.2 percent in 2009, twice as much as the government estimated. This was the biggest decline since 1942.
· The recovery has been slower as well with the economy growing at an average 3.3 percent annually from July 2009 through December 2009. Previously, the government projected a 3.9 percent growth rate.
· Residential construction fell at a 22 percent annual pace from 2007 to 2009, one percentage point more than previously reported.
Now none of us really need a reminder that the economy has been less than stellar. Most of us are filled with hopes for better times ahead and the sooner the better. That wish acknowledged, almost all in depth analysis indicates that it is unreasonable to think that we would be in full recovery prior to 2013. No reasonable forecast predicts a recovery to the levels of 2000-2005 any time soon.
So there is a new realty for most of us… And the sooner we come to grips with that reality, the sooner we can act in ways that are beneficial.
As you have read here repeatedly: It is a Buyers’ Market! That means now may not be the best time to sell your home, especially if you don’t have to sell or at least have a really good reason to sell. Those reasons would include the following:
- Job Transfer
- Move up to a larger home
- Health issue(s) requiring a different living space configuration or location
- Better school system or location affecting overall/long-term quality of life
- Divorce or other change of family/relationship status
- Uncorrectable Safety Issues
- Substantial change in economic situation
- Avoidance of foreclosure
- 1031 Exchange (Investors)
Generally, the good reasons for moving (selling) in this market are dictated by a true need that cannot be deferred or is so urgent that the short-term loss of equity is not a driving factor in your decision making process. There are, as with all things, exceptions to the rule… but for most people who can’t afford the hit on equity and the prospects of bringing money to the closing table to sell their home this is a decision that will need to be looked at deeply before putting their homes on the market.
The reality is none of the following factors have any impact on the value of your home:
- How much you paid for it
- How much you have invested in it
- How much you owe on it
- How much you need for it
- How much you love it
The value of real estate is determined by the market… what the market is willing to pay!
At the risk of sounding repetitious: “It is a Buyers’ Market!”
It would be rare to find a buyer in today’s market that had not looked at enough homes to know what is over-priced and what isn’t. Basing your list price on anything other than the market will not get you more for your home. In fact, the strategy of pricing higher than the market price will generally result in lower offers (more on that in a future column).
In reality, those over-priced listings flooding the market contribute to a poor housing market (for sellers) by keeping inventory levels high, which translates to lower selling prices! It’s the old law of supply and demand! So when looking to sell you should always see your home through the eyes of the buyer! You want your home to be the home that is in demand, not just part of the supply!
May the Market be with you.
