Sacramento Reduced (Even More)
Once again, the Sacramento metro area had the highest percentage of reduced listings among housing markets monitored by the Bubble Markets Inventory Tracking blog. Here are the Sacramento numbers since the beginning of 2006:
8/13: 44.4%
7/13: 42.9%
6/13: 39.7%
5/17: 35.0%
4/11: 32.1%
3/18: 32.6%
2/18: 30.3%
1/30: 30.5%
Trend? How high will it go?
Real estate agent Julie had this to say to Sacramento sellers:
One of the most interesting things that happened over the weekend was a counter offer one of my clients received on a home they made an offer on. Now remember that we live in "Glutville" when it comes to homes on the market. Even the recent HousingTracker numbers for Sacramento continue to show inventory growing each week and asking prices dropping. My buyer's offer was 5.7 percent lower than the asking price. The seller and his astute agent who I think doubles as a lender, countered our offer at full price. They sent a note with the counter saying since they listed the home the seller has lowered his price $30,000 and feels my buyer should understand why he wants his current asking price.According to HousingTracker, Sacramento asking prices have declined to their lowest point since the site started tracking data one year ago today. (Happy Birthday!) By the way, the creator of HousingTracker just launched version 2.0. The new site features some nice graphs.
Attention sellers - please understand your price reductions to get buyers attentions is not their issue. In today's market buyers have negotiating power and because we can't count on double digit appreciation the purchase price has become very important.
14 comments:
"They sent a note with the counter saying since they listed the home the seller has lowered his price $30,000 and feels my buyer should understand why he wants his current asking price."
What's there to understand? value of home = what someone is willing to pay for it. It's just as it was the last 5 years, the last decade, etc. etc. Maybe the seller's agent needs to educate the seller on this simple fact.
"Attention sellers - please understand your price reductions to get buyers attentions is not their issue. In today’s market buyers have negotiating power and because we can’t count on double digit appreciation the purchase price has become very important."
How about a rephrasing that to: Attention sellers - please understand that in today's market, if you don't accept the buyer's offer, they will wait a year until your home is worth 10% less. You may start counting on double digit depreciation over the next 3 years, so get real now, or get less later.
Obviously the buyer saw value at a price that was just a little over 5% lower than the current asking price. When prices are falling no buyer wants to pay today's price when tomorrow's will ratchet down again in another month. No one wants to get a bad deal. It shows that capitualation in this market is still aways off. Seller's still think they can squeeze that last dollar out of their sales price and hestitate to move to a price that will sell the home. The closer they get to a listing that expires the greater the chance the price will be adjusted. It takes awhile for the sentitment and reality of a bust real estate market to set in. We see it in the reduced numbers above as price reductions continue to rise each month. When that trend stops, and reduction percentages begin to fall dramatically, the market will settle out to a point where buyers and sellers are in agreement with regard to price. Unfortunately, that day could be years out as we're just beginning to see the inventory increases for those that cannot afford their new ARM mortgage payments. These sellers, who face losing their home to the bank, will set pricing at levels we've yet to see. There will be no need for price reduction stats as prices will reflect a desperate seller trying to get out with a little financial damage as possible. Those that got in two or three years ago will have the most equity to dump and will probably be the driver that sets the new pricing levels for the rest of the market. This is definitely a wait, wait, wait, market that will shake out the weak hands and reward those that patiently sit on the sidelines.
"This is definitely a wait, wait, wait, market that will shake out the weak hands and reward those that patiently sit on the sidelines."
I sure hope you're right!! My american dream coming true is dependent on this very suggestion!
Now, if only I could convince my father-in-law to stop pressuring us to buy too soon!!! How can anyone still be a bubble nay-sayer with all this evidence piling up??
P.S. I heart Lander.
"Now, if only I could convince my father-in-law to stop pressuring us to buy too soon!!! How can anyone still be a bubble nay-sayer with all this evidence piling up??"
Very simple, it's not his money or future at stake.
Yeah, I checked last night and Marin is "only" up to 41.5%
Sellers need to grasp that there's no pressing reason to pay double rent for the "psychological benefits" of home ownership. The typical 3/2 seems to rent for $1300-ish. That makes it "worth" about $270k with a conventional loan. These houses are being listed for $360k-$420k.
Adjust the numbers more finely, and you'll get different results, but nothing that justifies prices in the Sacramento area being sustainable at over $300k.
Bakersfield,
True dat, true dat. I think it also doesn't help that he has been working all summer to get his 3/1.5 rental unit ready to list, and thinks it's worth $395k. He has no idea that I get listings daily for 3/2's and 4/2's for less than what he's going to ask. AND, he thinks he can sell it without the aid of a realtor. HAHAHAHAHA!!!! He's in serious denial... Just one more to add to the piling inventory.
The market is going in the toilet.
There are very few agents that can see what is going on. They just listen to David Lereah and parrot back the BS.
What is happening here is the selling realtor is not doing a good job of conditioning the seller as to what the home is worth in the market. It's about time the realtors earn their money instead of just showing open houses and getting multiple offers above asking. Not that I'm sarcastic, but all the used car salespeople masquerading as professionals are about to learn the hard truth about having to work to earn money and provide value. I bet if you look, a higher percentage of sellers are opting for the "help-u-sell" model as a means of recapturing their proceeds at the hands of the beloved realtor.
Here are is a graphical summary of a few cities in Sacramento and their corresponding price reductions:
http://ziprealty.typepad.com/marketconditions/2006/08/sacramento_ca_z.html
Thanks! I was going to do a post today about this, until I was rudely interrupted by a 5% price decline.
Smile dial and drive. Typical realtor?
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