As fewer buy homes, more are trying to sell
Falling home sales aren't good news for would-be sellers. When the number of would-be sellers is rising at the same time, that's even worse.
This is the story in the Baltimore area, points out Kenneth Wenhold, Mid-Atlantic regional director for Metrostudy, a homebuilding market researcher. As sales fell 16 percent in August, homes listed for sale rose about 8 percent.
In raw numbers: About 330 fewer homes changed hands compared with a year earlier in the metro area, but 1,550 more homes were for sale. (Grand total on the market in August: 20,200.)
"Baltimore ... is sliding backwards," Wenhold wrote in an analysis of the resale market. "Listings grew throughout the summer, a time when they typically decline. ... All of the positive gains and trends which were established in 2009 are now gone, replaced with negative trend lines which continue to deepen."
It would take 10.5 months to find buyers for all the homes on the market if sales continue at the average pace of the past year. That average includes a lot of homebuyer-tax-credit months, and most of those credit-fueled deals have already closed.
The D.C. area is -- probably not surprisingly -- better off.
Northern Virginia has 5.6 months of supply, around the number that economists say represents a "balanced" market where neither buyers nor sellers have the upper hand. Home sales didn't fall as far in August as they did in the Baltimore metro area, and new listings didn't rise as fast.
D.C. and the Maryland counties around D.C. have a 7.4-month supply, so the balance of power isn't tipped as far toward buyers there as it is here. (It ranges a lot -- D.C. has less supply than Northern Virginia, for instance.) Sales fell about 9 percent -- less than the Baltimore area -- and the number of homes for sale didn't budge.
In the D.C. area, "contracts have already showed improvements and have begun to stabilize," Wenhold wrote in his analysis.
The Baltimore metro area's housing market has been worse for sellers at earlier points. The last time we saw listings increase at least 8 percent -- as they did in August -- was back in 2008, when sales were falling much faster than they are now. And we had a higher months' supply figure in part of 2009, before the homebuyer tax credit induced folks to snap up some of those homes for sale.
But the market's been heading the wrong direction for those in favor of buyer-seller balance.
"Ultimately we need the number of new listings to go down, as it has every fall with the exceptions of 2005 and 2006, not up," Wenhold wrote. "As long as listings increase, resale inventories in the Baltimore region will never recede to allow the market to recover."
Categories: For sale, Housing stats
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Comments
So if more people are trying to sell their homes and less are buying that means home prices should be going up (or asking prices at least). This sounds like good news to me. I need to take out a home equity loan for a bigger car!
Posted by: Marty Weddington | September 14, 2010 9:44 AM
Yes Marty you are correct.
In our society, excess inventory should cause a knee-jerk reaction by a seller to dramatically increase prices. Once buyers see the prices rising, they will rush out to buy a home as quickly as possible - in fact so quickly that they will gladfully cover the difference between appraised and selling prices with cash!! It is a no brainer.
As always, buy now, or be priced out forever!
Posted by: Darwin Rules | September 14, 2010 11:07 AM
I think MLS listings should require that sellers disclose how much they owe on the house including all liens. I dont want to waste my time looking at your home when you are maxed out on home equity and no ability to accept a reduced offer from asking price. It would be great to filter out listings that are over 80% ltv as I think 80% of asking would be the MOST I would pay.
Posted by: elweedz | September 14, 2010 11:33 AM
The greater the supply and the lower the demand means that the supply value goes down. If there are more homes on the market and fewer buyers, that means that the few buyers that are out there have their pick of property and price. The only way to increase real estate value is to diminish the supply. 10.5 months of inventory is very bad, particularly when you consider that most of the big banks are carrying another inventory of foreclosed properties which they have yet to release to the open market.
Posted by: Nick | September 14, 2010 11:58 AM
DRs sarcasm is always amazing.
TIMMMBERRR
Posted by: ironhide196 | September 14, 2010 2:13 PM
Its truly a great time to be a buyer in the BAL market, and I'm curious if buyers will get off the sidelines or not.
The question I think you should ask is, where are the buyers?
Posted by: smithbaltimore | September 14, 2010 11:39 PM
smithbaltimore: we are here, and we have financing ready for appropriately priced (i.e 1999 nominal) homes.
The problem during the bubble run-up was the buyer, who paid too much
The problem during this bubble burst is the seller, who wants to much.
economics=easy
Posted by: Darwin Rules | September 15, 2010 7:49 AM
"The question I think you should ask is, where are the buyers? "
I would have thought they either don't qualify for credit or they can't sell their own home or they're just scared of buying somewhere that will drop substantially in value.
I wonder what the average offer is on houses in the Baltimore region - maybe at least 10% below asking price?
Posted by: Matt | September 15, 2010 7:57 AM
@Matt
Sellers are already trying to price in a low offer so they are starting their homes WAY too high.
Posted by: Ironhide196 | September 15, 2010 9:29 AM
"Sellers are already trying to price in a low offer so they are starting their homes WAY too high"
OK in that case, start buying at 20-25% below asking price :)
Posted by: Matt | September 15, 2010 12:00 PM
"or they can't sell their own home"
Without question if existing homes sold, the supply of buyers would increase.
Posted by: smithbaltimore | September 15, 2010 3:00 PM
elweedz, you can easily get a rough estimate as to how much a seller owes on the property. First, you go to the MD SDAT and search for the name of the current homeowner at the address. Then, you can go to mdlandrec to get the loan information.
Posted by: Frank Rizzo | September 15, 2010 4:25 PM
@ Frank Rizzo-
Yes i am aware of those resources but, was hoping to have it be apart of the MLS so, i dont have to do all the digging on each property i want to sniff. Also, the land records wont always show 2nd liens which are the bigger issue. They will show the original loan at time of purchase or refi. But it doesnt always show 2nds and 3rds that can inhibit a borrowers ability to sell. Sometimes the borrower doesnt even know they are attached.
Posted by: elweedz | September 16, 2010 11:25 AM
Thats why you check the owners name in the MD case search to see any potential judgments and liens. You can't access the actual land records where you can search for the 2nd liens unless you pay for the service.
As for where the buyers are, some are probably holding out for another few months in hopes the prices drop even further.
Have you even looked at what is out there for the different price ranges? I couldn't afford AA County, so I went to the city, but most of what is out there needs some kind of work, and what doesn't need work is a short sale where the bank isn't going to take what you are offering.
Been there, done that. So either you hire the attorney to assist with the move in ready short sale and hope after 5 months of waiting the bank will take the offer or you go for the not move in ready needs some work bank owned dirty property. Either way you will spend the same amount of money.
Posted by: pigtown | September 16, 2010 12:39 PM