Demand may be down, but so is supply (for now)
Just as the number of newly inked pending deals for home sales in the Baltimore metro area slumped in April, so did the number of homes newly listed for sale.
Both dropped just over 20 percent compared with a year ago, when both buyers and sellers were trying to take advantage of the federal tax credit -- buyers so they could get $8,000 from Uncle Sam and sellers so they could, you know, sell.
Metrostudy, which does market research for homebuilders, noted that new listings are down across the Baltimore-Washington region.
"There are two ways to correct an oversupplied market," Kenneth Wenhold, Mid-Atlantic regional director for Metrostudy, wrote in a market analysis. "The first is to increase demand to sell the supply faster. The second is to reduce the supply itself, and we are effectively doing exactly that by adding fewer units to the market. This should go a very long way to reducing inventories in Maryland and stabilizing the market in 2011, even in Baltimore."
(By "Baltimore," he means the suburban Baltimore area, which is what builders tend to focus on.)
Spring is the selling season for homes, but sellers don't always rush to list the same month. So out of curiosity, I tallied up new listings for January through April since 1998, when Metropolitan Regional Information Systems began tracking the area.
Newly listed homes for sale are down 13 percent overall this year vs. last year. That's not the largest-ever drop, but the 15,600 new listings do add up to one of the smaller starts to a year.
I'd sure like to know how much this drop reflects a lasting reduction (fewer people who want to sell) as opposed to a temporary reduction (with people who actually do want to sell holding off because they don't like their odds or the prices). The foreclosure robo-signing scandal might also be playing a role in the statistics this year -- lenders could have been leery of listing new bank-owned property for sale if they were battling documentation problems.
Whatever the reason, a colleague looking for a house mentioned to me that she's stopped seeing much come on the market that's in her price range and areas of interest.
What are you all noticing out there?
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Comments
What? Reduce supply??
What kind of BS economics is this? The REAL market will NEVER be realized if we manipulate the supply of homes.
Everyone, and I mean everyone knows there are a huge amount of homes out there for sale. NO one is buying them until the market corrects. Stop propping it up articificially becuase you are a greedy POS.
For chrissakes this greed and abuse by real estate has to end, No wonder nobody trusts these fools.
Posted by: Jason | May 24, 2011 8:26 AM
How does reducing supply "stabilize the market"? I want to hear that logic.
It does nothing but artficially prop up the prices of homes...the whole reason for the housing bubble to begin with,
WTF is going on here?
Posted by: Anonymous | May 24, 2011 8:32 AM
I think people realize that they are not going to get what they want for their homes and have decided not to put them on the market. All the media reports state that this is going to be a 2-5 year process. So why bother unless you really need to move?
Posted by: Jeff | May 24, 2011 10:22 AM
It's really awful when the dynamics and reasoning of the two principle aspects of the market get shuffled together as though it was all one. It isn't.
But if it is ever to be one market again... this practice of allowing the not quite officially REO's to be artificially withheld... to prevent them being returned to the margins and out of the spotlight... has to stop.
Let the WHOLE market find it's own level without hindrance.
Posted by: MrRational | May 24, 2011 12:34 PM
I agree with your colleague 100%. There is nothing good on the market now. From what I've seen, the more desirable the neighborhood, the less houses are on the market. While this stinks for buyers, it's a great situation for sellers. If your house is in move-in condition (few are) and reasonably priced (ditto), I wouldn't be surprised if you start a bidding war. I'm pre-approved, have a decent down payment and already sold my house last year. I check the listings every day and will pounce on anything that meets my criteria but I'm not holding my breath. I'm more than willing to wait until next year if the selection stays like this all summer. There is zero chance I'll lower my standards.
Posted by: Brian | May 25, 2011 2:01 PM
@Brian - Rightfully so! I tell my buyers that they are in control. If they are not in a hurry to move for whatever reason, then wait to find the place that meets their needs! I just helped one person into a home after 18 months of looking pretty actively, and have another couple about to offer on a home after 14 months of looking. No reason to settle - the right place will come along!
I have spoken to many potential sellers who just can't afford to sell right now, either because they bought in 2007-2008 at the height of the market and are underwater (or won't make enough to put a down payment on the new place), or bought earlier than that but did what SO many people did and use their house as an ATM and refinanced to pay off bills, buy a car, whatever, putting them in basically the same position as people who bought in 2006-2008. I just spoke to a friend yesterday who owes $215k on her home but the comps in the area are right around $200k. It's not fun news to get (or give).
Posted by: John K. | May 26, 2011 10:18 AM