The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.
Waiting until Spring to list?
Thinking about selling your home… But waiting until spring to list?
Many sellers want to wait until the spring before putting their home on the market. This might be for any of several reasons:
- They don’t want to be inconvenienced during the holiday season.
- They believe that they will see more potential buyers and as a result will get a higher price.
In a normal real estate market, this may make sense. However, this market is anything but normal. This spring will also see some abnormalities. The biggest difference will be the direction prices will take.
In years past, the spring market would favor the seller because increased demand would outpace any increase in supply: the number of houses coming onto the market would not be as great as the number of buyers newly entering the market. In most situations, when demand is greater than supply, prices increase.
Late last year, banks were warned that they needed to guarantee that the paperwork necessary to start a foreclosure process on a family was both accurate and complete. Since then, the banks have slowed down the foreclosure process while they re-examined their procedures. They are now confident that all the required documentation is in order. We are currently waiting on a settlement between the banks and the state attorneys general that will establish what penalties will be assessed.
Once this settlement is reached, the banks will again move forward on many homes that are currently stalled at some stage in the foreclosure process.
In it’s September report, RealtyTrac explained:
“U.S. foreclosure activity has been mired down since October of last year, when the robo-signing controversy sparked a flurry of investigations into lender foreclosure procedures and paperwork. While foreclosure activity in September and the third quarter continued to register well below levels from a year ago, there is evidence that this temporary downward trend is about to change direction, with foreclosure activity slowly beginning to ramp back up.
In November, RealtyTrac’s U.S. Foreclosure Market Report™ for October 2011, reported:
…foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 230,678 U.S. properties in October, a 7 percent increase from the previous month, but still down nearly 31 percent from October 2010… “The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” said James Saccacio, chief executive officer of RealtyTrac.
How many homes are we talking about?
There are millions of homes in this category. In August the Calculated Risk Blog (http://CalculatedRiskBlog.com) quantified the situation:
“There are a large number of seriously delinquent mortgage loans in limbo waiting for this settlement. According to LPS, at the end of August there were about 1.87 million loans seriously delinquent and another 2.15 million loans in the foreclosure process. This is only down slightly from a year ago when 4.4 million loans were seriously delinquent or in-foreclosure. Once the settlement is reached, the pace of foreclosures will pick up sharply.
As more foreclosures come to the market at discounted prices, there will be greater downward pressure on all housing values… translated: PRICES Will Fall further!
What Do Experts Believe the Impact Will Be?
Here are the pricing projections by several major entities:
▪ Zillow believes we will not see a bottom in prices until the first quarter of 2012.
▪ Standard & Poors thinks prices will drop 5% in the next few months.
▪ JP Morgan Chase believes prices will depreciate 6 to 7% over the next six months.
▪ Barclays says prices will fall 7% by the end of the first quarter of 2012.
▪ Fannie Mae has published a recent report indicating that it will take the market another 5 years to rebound. “We are five years through a 10-year adjustment process,” said Fannie Mae chief economist Doug Duncan
Bottom Line
Waiting for the spring selling season to put your house on the market may not make sense this year. The increase in demand may be overshadowed by an increased supply of distressed properties. Most agree this increase in inventory will far outweigh buyer demand. In situations where supply is greater than demand, prices decrease.
You may pay a hefty price for the convenience of not having your property on the market right now.
May the market be with you.
