While this post was written with Washington County / St. George, Utah Real Estate in mind, I think the general concepts are true for 90% of the country. I work on a regular basis with a large volume of "expired listings." 25% of the Larkin Group's total sales volume is directly with this group. These people have been on the market a LONG time and they're NOT happy about it. 
However, can I share with you the absolute #1 thing I hear from that group, bar-none? "We are just going to wait for the market to come back...and besides nothing is selling anyway!"
Why do they think the market will magically bounce back say, next year? Two reasons:1. Because it would financially benefit them if there were a quick recovery and... 2. because the market has never done this in Washington County before, therefore most people are in denial about the reality of the situation.
But I digress.....Many Sellers are frustrated with the disparity between what they thought their home was going to be worth and what is actually is. They are concerned about a "paper" loss, if that makes sense. They want to ‘wait it out', yet they may be waiting a LONG time. Am I saying that it is a bad time to buy? Well not necessarily at all. I'm just pointing out that statistically, Sellers may be looking for a pot of gold in terms of a short turn-around to real estate values. Allow me to statistically prove my point.
If you look back over the past 10-20 years, US home appreciation has never been above around 6% on a year over year average.
Along comes the recent housing boom and we start seeing 30%, 50% or even higher appreciation! As a matter of fact, it was 73% in Washington County over the past 5 years to be exact. The problem is that at the same time, wages were NOT increasing at those rates, and many buyers were getting into loans they could not eventually afford.
Fast forward to 2007/2008. Those same buyers now have their loans "resetting" to much higher interest rates, the respective profession they work in is suffering due to the housing market so their personal income is down, and the their home is now worse significantly less than what they paid for it.
Add that to the fact that many of the very buyers they need can't purchase their home because they are waiting to sell their own homes, or can't qualify for a loan in the current mortgage climate.
So as Sellers consider their options and look forward to a future market recovery, they should consider the following:
- Home values will have to stop falling before they can rise.
- When they do stop falling they most likely will remain static for a period of time....could be months, could be years!
- Then they will start creeping back up at a conservative pace, say 3-6% annually.
That all summarized, you can clearly see that hoping for your home to be worth more, or even as much as today in the next 12 months is wishful thinking at best.
Prognosis:
At the end of the day Sellers may do as they see fit. But my advice to those who want to "wait" for a shorter-term, miraculous turn-around to a currently frigid real estate climate would be this: pack your long-johns, it's gonna be a cold winter.
FOR THE FULL ARTICLE, go HERE.
Comments(10)