August home sales in the Baltimore area
Here's August in a nutshell for the Baltimore-area housing market: Home sales up, prices down.
In a slightly larger nutshell, sales rose 6 percent in the Baltimore region vs. a year ago, while the average price slipped 5 percent.
The number of sales remains very low compared with the norm since the late 1990s, when Metropolitan Regional Information Systems began tracking the market. The number of homes listed for sale is dropping, though, so the time it would take to sell everything at the current pace is just under eight months -- close to what it was in August 2009, when the federal first-time home buyer tax credit was giving activity a bit of a boost.
Six months is generally thought of as a balancing point between demand and supply.
Wayne Yamano, director of research with John Burns Real Estate Consulting in California, emailed me some interesting thoughts about the buyer pool -- too late to make it into my housing-market story, but plenty of time for this blog post. Here's what he wrote:
A lot of people complain about not being able to get a mortgage, but the truth is that underwriting standards have not changed much since the beginning of the year. In fact, in the Fed’s latest survey of loan officers, standards had loosened slightly.
The real problem is that no one wants to buy a house right now, so they aren't even trying to get a mortgage. Mortgage applications have been down for a while now. A home is the biggest purchase that most people will ever make and there's just too much uncertainty out there right now. Economists can't even agree on whether there will be a double dip. We also don’t think there's a quality pool of buyers that’s just waiting to buy. Our builder clients tell us that most people that don't qualify for a loan don't have enough money for a down payment or have FICO scores that are too low. Both those issues don't improve overnight.
For today's story, I chatted with an Owings Mills retiree who would like to sell his home and an investment property, but not for the prices buyers are offering these days. That perspective -- and the flip side, buyers unwilling to buy at the prices sellers are asking -- gets discussed here a lot. I thought you all would appreciate his quote about would-be buyers and sellers waiting in hopes of better opportunities later:
"The question, of course, is who can hold out the longest," Bernardino Angel Gonzalez said.
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Comments
and sales will contunue to rise as prices reach late 1990's levels.
If you can sell at early 2000 prices then do it! Remember,
Sell now, or be priced in forever!
Posted by: Darwin Rules | September 13, 2011 10:11 AM
Quote: But when he was about to list it for $450,000 last year, the "almost comparable" home next door went on the market for $390,000 ...The question, of course, is who can hold out the longest," Bernardino Angel Gonzalez said."
The answer Mr Gonzalez... is the party who is willing to see the (13%!) difference between those two numbers as business and not as some sort of personal affront will actually sell his home and move on with whatever else he wants to do in his life.
hth
Posted by: MrRational | September 13, 2011 11:20 AM
And the house that went on the market for $390,000 still hasn't sold.
Posted by: Jamie Smith Hopkins | September 13, 2011 11:22 AM
Let's face the facts here. MILLIONS of homeowners are in foreclosure and they are not on the market. Inventory is STILL being manipulated. Housing is already in double dip. Banks are being sued for $197 BILLION by the government. The banks have BILLIONS more in pending litigation. You think they want to lend out money they don't have? BofA has 1 trillion in "assets" (are they really worth that much) and 41 TRILLION in worthless derivatives. NOTHING will change until the foreclosures are cleared out of the system. The longer they keep these homes off the market, the longer the market will suffer. Mortgage rates are already near record lows. Interest rates are not the problem.
Posted by: Frank Rizzo | September 13, 2011 9:29 PM
I'll save clueless people the suspense and tell you who will win the "waiting game" between buyers and sellers: buyers.
With baby boomers retiring, tons of foreclosures still around, and many sellers who keep delaying selling, mortgaages hard to get, and falling wages/high unemployment, buyers just will NOT be in a rush to buy property unless the price really is right.
Posted by: AFGHANI | September 14, 2011 12:39 AM
I know this is my 2nd comment, but I wanted to reply to @Darwinrules.
I think he's almost totally right about the "be priced in forever" thing. And it reminds me of the sad, misinformed "discouraged seller" from a blog entry a few weeks ago. Apparently the couple was approaching retirement age and wanted to sell their single family house and move to a new condo close to downtown. But they just couldn't find anyone to offer them what their house was "worth" (in their opinion). Therefore, instead of moving to where they *really* wanted to retire, they decided to take their house off the market and stay there with the higher bills, the yard work, the home maintenance, and so forth. This is crazy, it's people refusing to face reality.
In the best case scenario, the housing market recovers in 2015 or so and the couple has lost 4 yrs. In a more realistic scenario, the market never really recovers to bubble type prices (2006ish) and, even when it does recover, inflation has eaten away the purchasing power linked to the higher prices. In other words, say they sell their house for 400k instead of 350k, so they get an extra 15%. Well, if inflation is 3% over the next 5 yrs, then they're not really getting more money. (This assumes they're smart enough to realize this.)
But... here's the kicker. Even if prices do go up and their house sells for more... it is VERY likely that prices will also go up on anything they'd want to buy. So if they get an extra 50k for their house, whatever condo they buy will probably be 50k more anyway... to say nothing of the condo fees. It's not very likely that their house will magically be worth 50k more but other prices hold steady.
It just doesn't make sense to buy age 50+ and be hanging on illogically. Let's say you are 55 and could reasonably expect to live another 15-20 yrs. Do you really want to be chained to your house until some magical buyer overpays? Are you willing to sacrifice your life so get an extra 10-20k? Even if inflation eats it away and your next home goes up in price too? Think people! Use your heads!
Posted by: chappy10 | September 14, 2011 2:23 AM
Jamie... indeed.
For any one (or five?) of the various reasons that may apply in RE sales... that $390,000 number is apparently ALSO too high.
The point was about the difference between the sellers desire and what the competition is doing.
Posted by: MrRational | September 14, 2011 9:50 AM
Interesting article. It is a good point that many credit worthy borrowers just aren't buyers today. You hear a lot abut the banks 'not willing to loan'. And we need to 'get the banks to loan', The truth is there are not many credit worthy folks willing to borrow. So I don't see it as a bank not willing to lend problem, rather consumers are still digging out from excessive use of credit through the first part of the decade.
Posted by: Consumer Advocate | September 24, 2011 6:37 PM