Reading Between the (Property) Lines

A recent statement by NAR (National Association of Realtors) Chief Economist Lawrence Yun is revealing: "Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers." The "unnecessarily tight credit" is not news, real estate professionals have been complaining about that for over two years now. It's the second remark that I find interesting - contracts being cancelled due to homes not appraising for the agreed upon sales price. It hints to me that there are buyers out there willing to step up and come closer to a seller's asking price. I've been blogging and preaching to any client or prospective client that will listen that indications in the market place are such that home values are expecting to decline further through mid-year 2011, and that perhaps towards the end of the year we may find some stabilization, maybe even a return to more historical property valuation in the 3% range. So, the interesting part is not so much that the properties don't appraise, but that it suggests there is price support among buyers right now. To me, it's evidence of that so-called pent-up demand that every real estate professional in the country is hoping is real and will soon be released from the forces that are keeping it plugged.