Home : Blogs : Manhattan Beach CA/ e-PRO..... Kaye Thomas... : Kaye's Beach Cities Real Estate Info

It's a Buyer's Market...So Why Are Prices Still So High

Manhattan Confidential, our local consumer blog, posted an article today about the decline in sales in Manhattan Beach and the Beach Cities. The post points out two things... the number of sales began to decline in 2002- 2003 ( higher prices mean fewer sales) and 2006 was when buyers started saying no and the market started cooling. Fast forward to 2009 and we have a real estate market that is trying to recover from a lousy economy and a tough lending market. Yet with all the chaos of the last few years prices, with a few exceptions, are still on the high side.

The issue for many Beach Cities' buyers is that while prices have fallen a lot in Manhattan, Hermosa and Redondo; they don't seem to be down as much as many believe they should be. Every news source is telling potential buyers that California has the largest number of foreclosures in the nation and prices are dropping like crazy. The media posts a new statistic every day on how much real estate prices have dropped in California. There are a glut of articles about buying foreclosures and short sales. So why are prices still so high in the Beach Cities?

Last Sunday the LA Times had a terrific front page article that addressed the issue... why some markets are not acting in the way buyers expect. The main thrust of the article is that while prices are down overall, they may not be down as much in the more desirable areas.... i.e. The Beach Cities as say in Riverside. This scenario is very frustrating for buyers and for sellers. Buyers believe that sellers should accept lower prices for homes that have been on the market for long periods of time. Sellers/Banks, on the other hand, want to sell for as much as they can, especially when facing a loss.

While not everyone thinks this is the time to buy... there are a lot of folks who are willing to take a chance and buy now. Most of these buyers don't think we have reached bottom but believe lower prices along with some very good long term interest rates mean it might make sense to buy. The problem is that there is still a big disconnect between where buyers believe prices should be and the prices that many home owners or in some cases banks are willing to accept. Many of my clients are especially frustrated with the prices that banks are setting for short sales.

While we don't have a huge inventory of REO's... there are a number of short sales in all the Beach Cities. Many of these are new construction that didn't find buyers. A number of builders have received NOD's. Logic would seem to say that as these homes have been on the market for a year or more that Banks would be wise to be fairly aggressive about accepting offers from well qualified buyers...but that isn't what seems to be happening.

We have seen an uptick in sales in the last month. This may be a seasonal reaction... spring is historically our buying season. It could be low interest rates. It could be that buyers are seeing a little light at the end of the tunnel in the economy and the housing market. Personally, I think prices still have a way to go before we see the bottom... but the bottom might not be as low as was predicted a few months ago. The kicker for our market will be foreclosures. If we see a spike in the number of foreclosures over the next 6 months then you can expect to see prices drop quite a bit. If we continue to have relatively few foreclosures prices will continue to be soft but will more likely be flat.

Posted by Manhattan Beach CA/ e-PRO..... Kaye Thomas... on 05/06/2009 04:12 AM

Comments (55)

This post has been included in California Information Los Angeles County, CA Information Manhattan Beach, CA Information
Post is included in group: Southern California Real Estate Forum
Post is included in group: South Bay Realtors
Post is included in group: Posts to Localism
Post is included in group: CALIFORNIA REAL ESTATE

55 Comments on It's a Buyer's Market...So Why Are Prices Still So High

MAY

Hi Kaye, I think in many areas like Beach Cities, there is going to be a soft landing and it may be nearby or already here as will be determined over the next few months. It usually happens while we are sleeping and then we awaken one day and the turn had already taken place.

MAY

William- I would like to think you are right but the market has been very dicey so hard to tell

I suspect that a number of privately owned homes are listed for higher than "market" prices simply because of the negative equity the home owner/seller has. If the owner/sellers don't want to sell short but still wish to sell, they naturally price their home where it needs to be to give them the return that they expect or need. There is absolutely no logic involved. Logic is rarely a component of consumer decisions.

Builders may be unable to price to market because of the financing used for construction. If they financed the construction, their financing consortia or bank will have the final word on pricing unless the builder has the resources to pay a deficiency. Most builders have burned through their bank lines and are, not unlike the upside-down home owner, trapped by the financing on the new construction.

I could have expanded this into a separate post. However, I'm sure folks are weary of my writings about the insidious effects of negative equity The losses to the individuals, companies and populace in general are far worse than many imagine. But, there it is.

Kaye, I recently wrote about this is my blog:

I too was very happy to read the National Association of Realtors statistic released yesterday: "Pending sales of existing U.S. homes increased by 3.2 percent in March, after a 2 percent increase in February." However, I am still holding my breath. Why? Because the real question is this: how much more distressed property is still in the pipeline? When the foreclosures and short sales begin declining, then we will know prices have leveled off and we have truly hit the bottom. The only way to go from there is UP.

Lenn, I agree with you. I have one former client that was not happy with my CM I did for her two years ago that she did not list with me. 6 Agents later the home is still listed and at a higher price then what I could have sold for two years ago..........

reason they gave me......."but I have paid XYZ amount for the house, I want at least the $30,000 out of it I put down as down payment."

I am glad I walked away.....

Bettina

I am seeing a bottom in some parts of our region in Maryland. The nicer properties (even from the bank) are getting multiple offers thus driving up the price.

In my area there are some great prices, but they are on short sales and foreclosures. Homes on the market that arent distressed have come down in price but cant compete with distressed properties.

Kaye, buyers on the Palos Verdes Peninsula wonder why prices are still so high too. Best explanation is the buyers market is not a blanket condition. Like the Beach Cities, we are a desirable coastal area with good schools and very few distressed sales--those factors prevent our prices from plunging to the level of many other areas in CA.

There are lies, damned lies, and statistics. Disraeli and Mark Twain were certainly pointing towards treating statistics as an art more than a science. In Oklahoma City, I can dig down deep into specifics and show you 3 months absorption rate in moderate price ranges. I can go into high price ranges and show you two years. Then I can do a historical comparison of five years back, and even in that crazy year of 2005, I can show you two years in those high price ranges. The meltdown is real, but how severe? Ask Mark Twain.

Good Morning, I think it's because of the negative equity people have in their property. I don't think that pending sales is a "true indicator" of the market and things to come. Lots of pending properties come BOM

Patricia Aulson/Portsmouth NH Real Estate

The media always generalizes about real estate values. My thoughts:

Areas with dramatically reduced pricing: High vacancy rates, many sellers are banks who need to unload the homes quickly and price accordingly;

Beach Cities: Lower vacancy rates, a higher number of homeowner are not desperate to sell so they hold out for their desired pricing longer. Also my understanding is that many at this level list their property only to get an idea what it's worth and aren't actually serious about selling. They may be toying with the idea (and their poor listing agent) but may not need to sell.

Prices are high because the Realtor network keeps them high. :)

Here is NAR's brag about keeping the prices up even in the thick of buyers' market in 2008. Price Fixing of a Different Kind?

If the sellers went FSBO, that is, the real free-market un-interfered by Realtors, the prices would come down. FSBO's Are Nuts...Craigslist is Their Enemy!!!

There are those sellers that just won't listen to reason. But luckily there are those that do. So that is the reason for the good news report.

Lenn- Negative equity is a major factor for Mr/Mrs Seller everywhere but especiallyin CA. I also think that in the upper end of the market a number of sellers "don't have to sell" but rather "want to sell" which impacts the market differently then when you have desperate seller.

As for builders most use bank financing so when they can no longer hold on the bank in essence becomes the seller. Banks are notorious for not pricing realistically.

Melissa- You are right pending sales are simply one sign of improvement... they have to close to be a true factor. Our market hasn't seen the number of foreclosures that have affected other markets but as a whole until the foreclosure/short sale market stabilizes we will continue to see problems.

Bettina- You describe a fairly common scenario.. the difference between the upscale markets and other markets is that these folks can and do hold on forever. There is no pressure to sell and therefore no pressure to lower prices.

Brian- I think that if the economy can stabilize a bit we will begin to see more markets stabilize..especially those who were caught in the beginning of the downturn.

Aaron- In markets where you have high numbers of foreclosures and short sales consumers often fail to realize that those sales are not the exceptions but rather set market value. Most Mr/Mrs Sellers don't understand that.. but then I actually had an agent try and tell me that because the most recent sales were short sales they were not comparable... YIKES!

Norma- The Hill and the Beach Cities have always been some of the most stable areas for real estate in So Cal. The classic paradox is that buyers love our neighborhoods because they do hold their values so well yet are often angry when prices don't drop to meet their expectations.

Joe- Well said... LOL. This is the issue we face in CA. LA County for example is larger then many states. The vast majority of the foreclosures in LA County are not in Malibu, BH or Manhattan Beach but rather Lancaster, Palmdale and most of the Inland Empire where vast tracts of homes were built without any employment centers to sustain them. These areas saw a 50%-60% decline in prices... while the upper end of the market is looking at 15%-25% depending on location.

Patricia-You are correct on all counts

Sky- Areas with dramatically reduced pricing... your definition is right on and of course is far different then the one you see in most of the more affluent areas.

While I agree there are some who list to test value I don't think you have a lot of sellers in the upscale areas listing to test the market. Having your home on the market is a pain and most sellers list to accomplish a future goal. Whether they can attain the goal in this market is another story.

Lee- I love this argument... However if I actually had this much power over the market do you seriously think it would be in the shape it is in? Sorry but the nasty truth is that Buyers make seller markets and Sellers create buyer markets.

Angela- I have been in business for 30 years and this has always been true for every market

It is not unusual to get a call from people looking to invest, and they look at very good prices, and start screaming that the sellers have to reduce the price by half or even more if they want to sell. There is not rationale other then "I want it so".

The Seller does not have to do anything. They do not base their opinion on the article in NY Times or an interview of a guru.

Builders do have a problem with new construction, as it is less expensive to buy a home, than build. We have tons of homes built on $75,000 lot, and you can buy them for $15,000 and still the construction cost would drive the price for this home higher than you can buy on short sale or foreclosure.

If people are selling, and not short selling, they have to cover what they owe to the bank, so they are not stupid when they say no and refuse to reduce beyond certain level.

Too many people who demand things. I have a client who is buying inexpensive (they were expensive just 3 years ago) condotel units. he is buying them for 25-27 cents on a dollar compared to what the previous owners paid. Now as REOs they pop up at so low prices, that this is a crime. REO agents are not in the area, and I suspect have never seen the property.

Now, my buyer turns to me and says that this unit is next to this, and he will not pay more for this than for another as they are identical. He demands even lower price, because he is comparing one crazy price to another. But they both so below any reasonable price that somebody should be jailed for it.

But I think the market is changing and soon it will be theoretical at best.

Hi Kaye, I think your response to Lee is excellent and quite true that it is the Buyers that make Seller markets and vice versa. While I don't believe that real estate professionals drive prices up or down, that could leave the door open on appraisers. The mere fact that they have an arbitrary factoring in of a 5% reduction for "declining market" or vice versa would seem to create it or in the least, assist in creating it. Aren't different perspectives on any question usually vested in a hoped for outcome?

Kaye and William:

If what you say is correct then NAR's study is incorrect, right? Then NAR should stop wasting money on such studies.

I am not arguing that Realtors individually influence the prices. It is the "Realtor Network" which does.

Prices go down when the seller is motivated.

Appriasers don't work for either buyers or sellers. They work for banks who interfere with transactions as well.

The Realtor Network allows the sellers to hide their motivation. Thus keeping the prices up.

Prices go further up when lenders start distributing free money, flood the market with psuedo-buyers, and manipulate with appraisals.

Hi Kaye -- I think that's the beauty of the market: A home is worth whatever a buyer is willing to pay for it, plain and simple.

I would add to the last comment...a home is worth whatever a buyer is willing to pay...and a seller is willing to sell for.

Folks,

There is more than meets the eye with "a home is worth whatever a buyer is willing to pay...and a seller is willing to sell for."

I am leaving Realtors' interference with the prices to the NAR study. I am sure that at least a few Realtors have used it to make a sales pitch to the nutty FSBOs.

Let's look at banks' interference with "free market" transactions. :)

It is 2003...

Banks issue pre-approval letters to everyone who can fog a mirror. A seller wants to sell for $150,000 and a buyer makes an offer to to buy for $150,000. Another buyer wants to buy the property for $160,000, and yet another wants it for $180,000.

The seller is on cloud nine. So is the buyer because he knows that another pre-appoval for $200,000 is being printed for someone who can fog a cell phone somewhere in the banking-land.

The bank which issued the pre-approval to the $180,000 buyer tells the appraiser to appraise the property at $184,000 because it also knows that another $200,000 pre-approval is being printed somewhere in the banking-land.

It is 2009...

Seller wants to sell for $200,000 and buyer agrees to buy for $200,000. The bank appraises the house at $150,000. Thus interfering with the agreed-upon price. The seller gets a heart attack and, depending on the sophistication level of the buyer, he is either on cloud nine or concerned if he could have purchased it for $130,000.

Jon- Rea Estate ownership is very basic has always had an emotional side along with the investment side. Buyers often fall in love with a property, they rarely fall in love with a stock i.e.. Apple or Merck.

William- I don't think Lee agrees with us....

Lee- Realtor network?? is that like the Mafia.. Big Knuckles will kill you if you don't buy? Shifty will take you for the big swim if you don't sell for $XXX. Torpedo Al will burn down the house if you don't give him a piece of the action? You can't trust agents, appraisers or banks.. so what do you propose? I know all buyers/sellers should just trade property back and forth and rely on each others integrity?

As to the NAR study.. you know as well as I do that the point was that sellers got more money when using an agent because typically agents knew market value better then sellers... and were able to reach a wider market then sellers could on their own. Also Buyers who used an agent generally got a better deal for the same reason...their agent knew market value... or do you think it's fair for one side to take advantage of the other?

Sorry Lee.. I'm don't mean to be facetious... but if you seriously think sellers don't misrepresent or lie about their property or that buyers are always honest and never misrepresent their position you are not dealing in the real world. Most Real estate law is not based on agent issues but rather on buyer/seller issues.

I'm not saying all agents are good.. sadly a number of them should not have licenses and just plain stink. The same is true for appraisers and lenders. However the same is also true for any group from Doctors to teachers to Judges.

I think what NAR should be doing is coming up with more rigorous standards for licensing in all states. I think every state should make it tougher to get and keep a license.

Finally, I work very hard for my clients and give them the best representation possible...even when that means walking away. I'm tired of being blamed for prices rising and prices going down. During the up market I argued with clients about funny money loans and was usually told to MYOB by those who believed they were smarter then the market. As my Daddy used to say.. you can take a horse to water but you can't make him drink... consumers need to start taking some responsibility for their actions.

Chris- This is true of all commodities not just real estate

Team DiMuria- Don't think Lee agrees with you

Lee- Welcome to the world of real estate. The in thing is to blame the lenders for all the ills of the market However this is not the first market where values rose like crazy then dropped just as fast and it won't be the last. I saw the same thing in the 70's, 80's and 90's and there were no easy qual loans then.

Once again.. your reliance on the integrity of buyers and sellers on their own is commendable but a bit on the Pollyanna side.

Kaye,

I am not suggesting that buyers and sellers have integrity. I hope so. However, we would not have laws, lawyers and courts if everyone acted based on others' best intest in mind.

I don't think that it is Realtors' place to make their clients honest. We do have the choice to not work with people we find to be dishonest.

The argument I am making is:

1. A seller would like to get as high price as possible unless there are other factors involved which make her take a lower price.

2. A buyer would like to get as low price as possible, unless there are other factors involved which make him put up with a higher price.

3. Sellers are fully supported by the Realtor Network, primarily through MLSs. NAR has 1.3 million members working on sellers behalf. Ironically, it is the sellers who are rovolting against Realtors by complaining about the commission percentages. If sellers are left to Craigslist, they would not get what a Realtor Network will fetch for them. FSBO's Are Nuts...Craigslist is Their Enemy!!!

4. Buyers are NOT fully supported by the Realtor Network. The buyer is the game. NAEBA.org only has around 2,000 members.

5. Banks are providing disservice to their end-investors by periodically creating booms/busts through lax underwriting to make fees.

That said, please keep the discussion at the argument level and not at the personal level. I never called Realtors to be like the Mafia. It was Steven Levitt of Freakonomics who compared Realtors with Ku Klux Klan and wrongly argued that sellers didn't work hard enough for their sellers. My point is that the Realtor Network does a GREAT job for sellers.

Again if we cannot keep the discussion at the argument level, then I will just delete all my comments from here and post them into my own blog. No hard feelings. :)

Lee- Nothing personal... but if you are going to be deliberately provacative then you must expect a response in the same vein... ; )

I understand your gripe about lenders and appraisers. I've never figured out why it is easier to qualify for a payment that may get larger each year then it is for one that's fixed for 30 years. But once again I'm going to say that at some point buyers must take responsibility for their own actions. You just can't tell me everyone who got a loan since 2000 was a foreign language speaker with ADHD and a bad case of Dyslexia.

I don't now how things work in Connecticut but in CA buyers get full representation no matter who pays the compensation.. It's part of the listing contract.

Sales of any type is by its nature adversarial.. it doesn't matter whether you are talking about a house, a car, stock, jewelry, art, gas or a hammer... the party that has the item wants $XXX while the person who is buying the item only wants to pay $X. I believe harking back to Econ 101 this is part of the Capitalist system and is often know as supply and demand.

I don't make demand and neither do you. The owner of the item doesn't create demand they name the price it will take to pass on the ownership of the item. Demand is created by the person who wants to own that particular item. If they meet in the middle the item is exchanged... if not there is literally no sale.

In May of 2006 California home buyers just said NO and stopped buying. They decided that home prices had reached a level that was too high. In the South Bay home sales in all areas came to a screeching halt. When buyers called a halt to buying, things were frozen for a bit but ultimately prices started to come down. More in some areas then in others but overall there was a dramatic shift in the market.

Ultimately this shut down in buying affected the market nationwide not just CA. Fewer buyers meant fewer home sales which led to short sales and foreclosures everywhere. The lack of confidence was reflected in all markets not just real estate. Ultimately this lack of confidence along with the exposure of some rather devious moves by the credit markets led to a full blown meltdown and recession....

Welcome to 2009. All sectors of the market are in freefall. Autos, clothing, health, insurance... there is not a sector of the market that is not affected. Housing was the first to fall and it maybe the first to come back but no one knows when.

Your business is based on bashing agents, lenders and others related to the housing market. That's fine... but Lee, my friend, if you are going to throw mud don't be surprised if you get splashed now and then.. and don't take it personally when some of us get a little tired of having mud thrown at us... especially when we work very hard to protect our clients...whether they are buyers or sellers.

Truly.. nothing personal and no hard feelings...

Kaye,

There are a lot of inconsistencies in your arguments.

1. First you agree with Chris that "A home is worth whatever a buyer is willing to pay for it, plain and simple."

Then you tell me that "sellers got more money when using an agent because typically agents knew market value better then sellers... and were able to reach a wider market then sellers could on their own. Also Buyers who used an agent generally got a better deal for the same reason...their agent knew market value... or do you think it's fair for one side to take advantage of the other?"

So between the two agents the "price was fixed" instead of the dynamics of ECON 101 where demand says hola to supply and vice versa.

2. You say, "You just can't tell me everyone who got a loan since 2000 was a foreign language speaker with ADHD and a bad case of Dyslexia."

If I were to apply ECON 101 then the articifical supply created by banks using other people's $27 trillion was artificially met by the demand created by the buyers.

Uninterfered "supply and demand" only exists in books. Our applied economy is based on real or manufactured scarcity. "Location, location, location" is how scarcity plays out in real estate.

My business model is not based on bashing anyone. It is based on analyzing various aspects of real estate, and then synthesizing solutions to what I see as problems.

We have a huge problem of booms and busts. They don't just happen like hurricanes or tornadoes just happen. Booms and busts have specific and control-able reasons. In real estate, they can be controlled by shifting the focus from serving the sellers to serving the buyers and those who actually fund transactions.

Zillow, Craigslist and other services will take care of educating the buyers. Fannie Mea and Freddie Mac are trying to protect themselves, but their "solutions" will fail because they are still relying on their corresponding banks too much.

Buyers and financiers get married with specific real estate for a long periods of time, and are most affected during the busts. We cannot just say, ho hum, boom happens and bust happens get used to them. I don't want to get used to it. That's why I wrote my book on real estate booms and busts.

Lee

Lee- We may have reached the point of agreeing to disagree. You may call your business model analyzing but when you hold up a group( Realtors) and put forth the premise that they are unethical I call that bashing... but let's not split hairs.

I don't find anything I said to be inconsistent. Property is worth whatever a willing buyer will pay and a willing seller accept. If they don't reach that compromise then there is no sale and without a sale no established value.

The premise of the NAR survey was that if you have representation .. whether a buyer or seller you usually wind up better... Seems to me that is consistent with my adversarial theory about any item that is for sale. On the whole there is no fix between agents as I suspect you well know... rather perhaps one agent is just better at negotiating and has more market knowledge then another. It works the same way in the law.. while each side usually has an attorney representing them.. the best attorney is the one who wins, while those without an attorney usually lose.

We have always had booms and busts and will continue to have them unless you subscribe to price regulation. There are a number of services that offer information to consumers but the information isn't always accurate... and often can be rather misleading...not by intention but still an online service isn't as good as hands on experience.. Rudy from Trulia and David from Zillow will agree with me. I suspect you wrote your book as much for profit as to make a point. Again I really don't know how you control the cycle other then with government regulation and few consumers want that.

F&F are political creatures masquerading as quasi governmental agencies. They function at the whim of whomever is in power and whatever social program they want to explore. The basis of much of the current fiasco is because the government tried legislating homeownership and failed miserably.

While I do agree that location, location , location is the main guiding rule of real estate you would be wise not to disparage supply and demand especially in highly desirable locations. It may play a far larger role then you wish to acknowledge.

Finally , unless you have a large amount of ready cash banks are a necessary evil.. or as my Daddy always said about the Golden rule.. them that has the gold... rules.

Goodnight.. it's been fun chatting

As the saying goes.. real estate is local.... Interesting post...

MAY

Hey Jon, where are those criminally priced condotels at?

Are you listing any of them yourself?

I was in Florida in April, looking. Please send me a private email.

Thanks
Lee

Roland-Thanks.. glad you stopped by

Lee- There is one in Hermosa Beach.. units sell arround $600K depending on location : )

Kaye - As you know, it takes a willing buyer and a willing seller to make value. If sellers have reached their bottom, as many have, then they will hold rather than accept a lower price. Buyers are often confused these days and know only that they must get a good buy. Unfortunately, this usually translates to making an offer a certain percentage or amount below list price - regardless of whether the home is well priced, or not. It takes a knowledgeable and strong agent to help them navigate this market ... that is your entrance cue!

Jim- Many Buyers are still looking at property as an investment that must have an immediate return rather than as shelter that hopefully appreciates over the long term. Until buyers stop looking at a home in the same way they do a 401 K account they will continue to be disappointed

Kate, real estate is the best investment asset class. Don't let your clients be disappointed. My specialty is to mentor my clients recoup their 401K losses through real estate.

When I returned my private investors' money in 2007 and 2008 because the market was confusing, they lost a lot of it in the stock market. Now they have come back to me for help. So if you have clients who want to invest their 401Ks and IRAs in real estate, then let me know. I will give you referral fees. :)

We may actually be shifting to a sellers market. However, the banks have a shadow inventory, how that hits the market will be interesting.

Gene, unless you have cash buyers banks will have the last word on what the valuation is. Anyone who tries to time the market will lose out. It would be prudent for Realtors to use buy-side tools to convince the buyers. Zillow is one such buy-side tool.

http://www.zillow.com/reports/RealEstateMarketChartsAndMaps.htm?msa=United%20States&graphic=Graph-Real-Estate-Market-Home-Value-Appreciation-Actual-and-Typical

I am finding that 2000 is pretty widely accepted baseline for investors. They may use different terminologies to describe what they are doing but they are using 2000 as the baseline. Note: That was the time when bankers started smoking something they should not have been smoking at workplace. :)

NOW, based on what kind of apprecaition (2%-8%) you can convince your client to allow, that's what the current price they should be buying at, KNOWING FULLY WELL that the prices could still go down for a while.

I advise my clients to buy at 1998-2002 valuations. I don't account for the annual appreciation. There is way too much inventory out there in the markets my clients are looking, and the suspicion of the shadow inventory you hinted at.

Hi Kaye, As you know we might have been the last market to decline. It wasn't until Lehman brothers going out of business and the financial sector being hit hard that finally caused our market to really turn negative.

While I only have anecdotal evidence from being out in the field and not hard data it seems the last week or so the market started turning positive. Crowded open houses and many offers.

All markets go in booms and busts, tops and bottoms, bulls and bears...call it what ever you want but real estate is cyclical like all markets. Buyers determine the price and everything in real estate is negotiable.

I agree a home is not a portfolio or an ATM machine. Investing in real estate is quite different than purchasing a home. Apples and oranges. Investors have no emotional attachment while a home buyer does and should. In either case it should be a long term investment.

I have also found that with many new developments here, they don't or won't lower their prices on paper for several reasons but they are very negotiable. They have a price they will accept they just don't advertise it.

I've had buyers turn down really great deals. They think prices will go even lower so they are waiting. No one can time the market and unfortunately I think they will miss the boat.

I'm in a resort market too in the mountains and we're seeing the same thing. Buyers/investors want to get in while the market is still a little soft and are surprised to find how high the prices still are. Who knows when and if they'll come down much more, it will definitely be interesting to see. Thanks for the post.

Our prices in this area are down quite a bit and homes are selling because of it, but the sellers are still resisting the pricing when we first talk to them. However after showing them the stats, they seem to get it here, of course there are the hold outs who think their home is made of gold.

Lee- Does this mean we are friends? LOL

Gene-Hmmm buyers market.. very interesting.. My market has gone down but not crashed and I sure don't see us even close to a seller market for a long long time

Lee- The differences in markets is fascinating... Gene is seeing a potential seller market and you are looking at prices based on 2002-1998 as a benchmark. My area is hanging on at 2003-2004 levels but I do expect that to change slightly over the next 6 months.

Mitchell- I do try to follow yur market. I believe that most upscale markets in NY and CA share a few things in common... mainly they are last to go down ans usually the first to recover. I just read a post on Inman that discusses the fact that many upscale buyers are placing so much emphasis on the deal that they are losing the property they really desire. I an definitely seeing this in my market.

Meris- As I noted in my comment to Mitchell above.. desirable markets are usually the last to fall and first to recover which is really difficult for folks to understand who are trying to get into those markets at the bottom.

Barbara- I don't know your market but in our area ther is no doubt that folks in the mid-range markets seem to have had a better grasp of relity then your upper end markets. Prices dropped quicker , fell slightly more and are seeing a majority of sales.

Kaye, we were always friends. ;)

Lee:

If it's anything like Maui - there are sellers who simply don't need to sell, but are still testing the market to see if they can get the high price they want. Lucky for you and me, the desirable parts of the country tend to hold their value better.

Georgina-My Mom is on The Big Island and needs to sell but not much traffic there.. so close and yet so different

MAY

Kaye, please read comments 53 and 54 here in relation to the "REALTOR Network." :)

http://activerain.com/blogsview/1065941/homes-on-realtor-com-without-being-on-local-mls-

You said that CA has the highest # of foreclosures in the nation. I remember when it was CO they were talking about! Colorado had the highest number for quite awhile, then it was Aurora that had the highest number of any city, but Colorado wasn't highest anymore. It would be nice to say our foreclosures started to drop and that was the reason, but no - it was because everyone else's foreclosures shot up. But now - tah dah! - in many areas, we have a one or two month inventory for sale, and foreclosures and short sales are drying up. I just wanted to encourage you, it feels good to be talking about this from the perspective of seeing things turn around.

(I know - certain of you are thinking, 'just wait - the worst is yet to come'! I don't have time to hear it, I'm busy trying to explain to buyers why, when they looked in a certain complex a year ago there were 12 homes for sale, and now there are only 2!)

BTW - if buyers use a local agent who know our local market, they'll know that we never had a 'bubble' in prices, so advice to make an offer based on some national trend is a BAD idea! And keep in mind, Lee's goal is to get properties for his investors at 'deep discounts', 40 to 60% less than market value, according to his profile. So if seller's agents are keeping him from doing that, they're doing a good job for their clients.

Lee - I'm very interested in your system, and will be reading your posts. Wow - it would be a dream come true to be set free from banks when buying real estate!

Joetta, thanks for your interest. I must say that yours are the first words of encouragement from a REALTOR. Kaye had suggested that my ideas were "a bit on the Pollyanna side." I must say that, at this time, she is right. :)

That said, to get a peak at how my proposed system will look like, check what is going on in the private money lending space here:

Prosper.com
LendingClub.com
Loanio.com
http://www.virginmoneyus.com/RealEstateLoans/tabid/55/Default.aspx

The first three above are in the unsecured space. The last one is merely a facilitator.

If there are tens of thousands of people currently lending $50-$500 towards $3,000-15,000 UNSECURED loans based on "sob stories", then there can be thousands of people who could lend $500-$5,000 each for a SECURED loan against real estate. Note: Some of the "sob stories" are related to real estate.

Once the model is proven in the retail space, then bigger institutions, such as, insurance companies, institutional retirement accounts and other lenders can be engaged to eliminate banks from the equation.

Well, regulartors will definitely get involved, and they MUST, but the system would hopefully be more robust and transparent to keep booms and busts in check.

Lee

Lee- Wow... I was right.. Oh My! LOL

I believe the Real Estate market holds a variety of options for consumers. The problem is that, as with business offerings in any field, a number of them are not quite legit. In today's economy you will see more of these marginal companies and opportunities spring to life. I've been around long enough to have had to field far too many of the opportunities offered by these clowns.

That's not to say there are not alternatives out there for consumers that can generate the returns they seek on a legitimate basis. They are many paths consumers can use to reach their goals. Certainly yours may well be one of those options that based on the right business model, product and wise choice of those who participate has a good chance to succeed.

Unfortunately our business also attracts far too many who are more huckster then agent.. re your comment #46 on JoAnna's post. After reading what she posted I'm not sure the consumer she called even knew he was on R.com and would count the company among those who are simply lead aggregators with no intention of being providers of good service to owners or agents.

Anyone remember Service Magic or the other countless numbers of companies who have come and gone that are set up to grab a quick buck then disappear in the night. More often then not the ones they want to grab the buck from are agents. Today the name of the game is SEO tomorrow it will be something else.

The CEO and co-founder of Prosper.com, Chris Larsen was also the co-founder of E-Loan which moved $27 billion in real estate loans. It is partly funded by eBay's founder Pierre Omidyar and bunch of other heavy hitters.

As far as huckstering to real estate agents, our lot is ripe for that. I have been burnt by HouseValues and I am glad that they went under. For the most part, lead purchase does not work unless you are able to engage in a conversation with the potential client right away. "Markets are conversations," say Chris Locke, Doc Searls, David Weinberger, et.al.

My main message to REALTORS at this time is: BECOME BROKERS. You will need that designation in the uncertain times ahead. States' real estate commissions must encourage online broker training and testing. That's all.

Lee- Entrepreneurship is a strong tradition. I have nothing against making money...providing you are not trying to make it at my expense. However a lot of agents just don't seem to understand that they would be way ahead of the game if they spent money on their websites and promoting themselves rather then pay aggregators for leads that rarely materialize.

Kaye: I am in total agreement with you here (how did that happen??? LOL). Our business is a relationship business. REALTORS work VERY VERY hard for their money. It does not make any sense whatsoever to purchase inorganic traffic when we are already in "conversations" with real human beings.

"Markets are conversations," say Chris Locke, Doc Searls, David Weinberger, et.al., authors of The Cluetrain Manifesto. http://cluetrain.com/

If that is true, then not only we should save our hard-earned dollars from aggregators, but also eliminate the broker unless the brokers works for us for a song. :)

Once again, sellers are crazy to complain about broker commission for the full service. They are thankless and they will find out what happens to the valuations at Craigslist.

Lee- I could not have expressed it better. Thank you

MAY

Luckily, some people still have money and certain homes are 100% Location, Location, Location

I hope we can all make money together,

Andrew Rosenblatt

www.RosenblattFinancial.com

We may have a lot of inventory in our area but sellers are not necessarily giving their homes away. It's a fight between buyers with unrealistic expectations and sellers who are sticking to their guns. Good post.

MAY

Andrew- Hold that thought. I like it!

Kelsey-Seems to be going on in almost every area that didn't get deluged by foreclosures. Had a long talk with a client tonight and he just doesn't understand

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?