Sellers are confused and frustrated by the amount of uncertainty in todays' housing market. Price adjustments reverting to the 2002-2003 pre boom levels are wide spreads as more bank owned properties emerge at discounted liquidation prices. Much to the chagrin of needy sellers in dire situations so desperately seeking to achieve sales. 
As quickly as prices rose during the Real Estate Boom to these sellers they seem to be dropping like rocks. However, the housing market overall has significantly changed since the boom. Namely in the high number of Bank Owned Properties.
"Your need doesn't change the market value of the house," said Rill of Century 21 America's Choice Realty in West Palm Beach. Too many sellers in Florida and elsewhere are asking for too much money and ignoring the list prices of nearby homes, not to mention their real estate agents' advice.
"The worst thing to be in this market is one of those homes that's been listed for six, eight, 10 months with no consummated deals," says Beverly Rothstein, a Realtor in Broward and Palm Beach counties. These sentiments are echoed by some Realtors® in Osceola County as well.
In the past two months homes the pace of homes coming onto the Market have drastically slowed down, allowing for some absorption in relation to sales. More homes are being sold compared to this time last year, but at lower prices than the preceding year. As ordinary income is stretched to its breaking point, buyers have less available income for down payment funds and are asking for help from sellers. The St. Cloud Florida housing market is price driven.When inventory levels recede, fewer new home start ups are reported, and building permits applications decline, the market for existing homes will slowly begin to gain strength. These elements are in place particularly in Osceola County and certainly within St. Cloud.
Investors and First Time Home Buyers are buying homes in St. Cloud, Kissimmee and surrounding area. Since May the number of sales pending or completed has steadily increased when compared to the previous year. Most area Realtors® are reporting an increase in buyer activity and showing requests.
Area lenders are offering reasonably priced mortgages and FHA has streamlined the mortgage application process and loosened restrictions to help stimulate the Osceola County housing market. If NAR Chief Economist Lawrence Yun, speaking to South Florida real estate professionals last week, is correct he called 2008 a "year of cleanup." Yun predicts that the second half of the year will be better than the first, due to improving mortgage markets, foreign investors and Baby Boomers according to the report from the National Association of Realtors. While I do not agree entirely with Yun (who is often hailed as being an optimist-I would have to say that in St. Cloud at least more than clean up is occuring. Buyers are getting great deals.
FHA MORTGAGES
According to the National Association of Realtors® "For one year, FHA will insure vacant foreclosed properties marketed and sold by property disposition firms on behalf of lenders. The properties, which must purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period." The report went on to say "The guidelines will address the complaints of homeowners and housing counselors that even as foreclosures climb, lenders remain difficult to work with and can take months to approve a request or even acknowledge that a homeowner has asked for help. In the meantime, borrowers fall further behind in their payments and grow more frustrated.
Under the guidelines, the lenders would acknowledge a borrower's request for help within five business days and approve or deny a request within 45 days of receiving the application, according to people familiar with the agreement. Lenders will also update borrowers about the status of their application after 30 days.
The voluntary guidelines are the result of months of discussions among lenders, loan servicers and government officials. They encourage lenders to have enough staff to respond to calls from homeowners and housing counselors. They also call for lenders to consider pausing the foreclosure process once a homeowner has contacted them. Many lenders had already agreed to a similar plan announced in February by Hope Now, an alliance of lenders and nonprofits. Lenders' efforts since last year to help distressed homeowners have received mixed reviews. Hope Now claims that its efforts have resulted in nearly 1.6 million loan workouts since July 2007 and that increasing numbers of homeowners have received a significant modification to their loan."- The National Association of Realtors recently reported.
While opinions are varied as to what will remedy the malaise in housing-all agree there are no quick fixes. Pricing will either attract buyers or repel them. If a buyer feels that value is not in the asking price, often they do not even view a home. A thousand dollars can effect the interest of a buyer who has set a predetermined cut off in their mind.
For example, a home listed in my market area of St. Cloud Florida at $159,000 may eliminate a potential buyer who has set a limit of $150,000 Sellers who can trim the fat off asking prices are wise to consider doing so, if possible, realizing the longer it takes to achieve a sale the higher the cost is of waiting.
Foreclosure sales typically drop the value of a home 5% in area where multiple foreclosures are occurring on the same street, the price can drop as much as 15%. Placing average homes for sale in non foreclosure status at a noticeable disadvantage. Once the inventory levels stabilize which has already begun, and the distressed properties rotate off the market, new price levels are established, which are still declining.
The anomaly which occurred in 2005 was a result of a combination of elements in motion. Primarily the lack of existing homes at that time. These dynamics are no longer in force. Like a tornado ripping across an open field, the forces combined spiraling prices to all time record highs. As the winds dyed down, the aftermath was a trail of destruction. Historic numbers of homes in default, and foreclosure, many simply abandoned, In the middle of it all we the sellers wondering what had happened.
Experts all agree mostly that the recovery will be slow and take time. There are still mixed opinions as to precisely when however. Every buyer sees value slightly differently. What is noticeable since this time last year, is that clearly more buyers have returned to the housing market and they are buying homes.
Allison Stewart Realtor, St. Cloud Florida, Area Expert, Realtor/ Real Estate Writer, superior people skills making Your Dream of Owning a Home a Reality. Real Deals, Real People, Real Estate call me
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The increase in buyer activity is a very encouraging sign that the market has begun to recover.
Allison,
The market will remain on its current course until the bank owned and short sales decrease. Sellers that won't price based on market will loose even more by waiting. I can't get some of my sellers to move and I feel for them, but it is what it is....Price is even more important in this market.
Steve
Well if St. Cloud Florida in Osceola County is an indicator...better days are coming! Some of the banks deals are at all time lows. Flashback to 1992 prices. I agree the sellers who have held property for less than 5 years are in a bad situation.
Your post is SPOT ON. What we're seeing here are appraisals that look at comps for the last 90 days and if there have been no sales, they are looking back at 2006 prices. And our market is still pretty stable compared to others. We do have inventory, some resistant sellers and low ball offers from lookylou buyers, and the investors have disappeared. It's still LOCATION, LOCATION, LOCATION but add to that now is PRICE, PRICE, PRICE. I was just working with a client who was going to sell in Santa Fe and move to Albuquerque to cut out her commuting. She refused a rock solid offer thinking she could get more and you know what, the market just slipped right past her. I explained to her as nicely as I could that waiting for home prices to rise for her as a seller would come back to bite her as a buyer. She just can't wrap her brain around it. What to do? What to do?
Allison,
Lower prices and higher rates. We all need to be able to handle customer's transition to the new market realities.
Thanks,
Richard
Sellers who do not need to sell might just as well dig in and wait a couple of years. Folks who have to sell wil just have to bite the bullet.
This is just awful for families. My worst fears have come home, it's worse than I thought it would be.
You know, we hear that all the time. I just had a seller tell me he "had to get" $x because he needed to pay off 2 mortgages + 5 credit card balances. I walked away from that listing. Buyers don't care about what sellers need. They care about comps and what the house is worth to them, period.
Boy Allison, are you ever right on this. Being a Property Manager, I constantly get new accounts where the owner of the property thinks they can get the full mortgage payment from the tenant without considering that tennants ain't dumb! These owners homes sit on the market forever. Ugghhh! Keep the thoughts coming. Kai
What do you do, just ride the wave for another year or so.......................
Allison,
Well written commentary on the market, against personal expectations.
Allison, this is a great post and very important for the sellers to grasp in today's market.
Allison, Great post. Glad it is featured. Hope sellers read it and take your advice.
This is the second fantastic entry I've seen in as many weeks posted by Allison. She's spot on with her assessment of the current climate. The best part for me is that she's in my market!
Allison, you get out there and convince your colleagues to make these sellers face reality. For those homeowners who don't have to sell, have them pull their over-priced listings off the market and get those MLS volumes in some semblance of balance. Lastly, keep posting these terrific entries!
Alison Swain
3rd Generation Appraisal Services
Orlando
Yes Allison...Excellent post...the buyers are back....we see them at every price level and some are happy to know that sellers have gotten their homes in better condition to sell than ever before...that is a benefit to this boondoggle....and one for which they should be grateful.
Steve- I agree however bank owned properties are rotating off which is aiding in the increase of recents sales. Banks finally have gotten the message that sales are price driven. As such, when they do sell they establish a revised "market value" for competing resales on the market. They of course are taking significant losses to achieve the reduction in their inventories.
ALYCE- You are right- often there have been significant sales by which a benchmark can be established. As the prices decline, and new sales are completely the market will show improvement from the all time lows recorded in Nov/Dec/2007
RICHARD- Mortgages rates are still favorable. Although the future rise in rates is both anticipated and expected. However, as the prices decline, they should balance out. What is affecting buyers, is the lack of disposable income due to increases in fuel and food costs.
LENN- I agree. There is no point to market overpriced homes or represent sellers with unrealistic expectations. If they purchased prior to 2004 they will soon realize the home has not appreciated much beyond what they orginially paid. If they purchased aftewr 2005 they have little hope of recovering their initial investment for quite some time.
ERICA- Precisely. Good for you.
KAI- Thank you- unfortunately small time landlords are feeling the pinch as well- with property tax incentives greatly reduced for proprietors of property, they have to have a break even point-which forces them to look for sharply discounted properties that will allow them to make a small profit as rentals. There is an adequate supply of these in our market.
JAMES- Thank you.
Great Post! We are seeing some unrealistic pricing here since the announcement that we are sitting on more oil in North Dakota then Saudi Arabia. I think it brings a real dilemma to agents like myself who hate to turn down a listing but frankly I have no interest in listing a home that is grossly over priced. I prefer to represent honest buyers and sellers, not gold diggers.
Well Said, Allison and definitely spot on. I have seen very realistic prices lately and definitely more buyer activity. Some sellers are still not budging or maybe they aren't getting qualified advice on pricing and offers; unfortunately they will end up paying for it.
Allison this is one of the biggest blunders that far too many sellers make. They all think their home is unique and will somehow buck the trend of the Real Estate market.
Allison, I agree completely that today's market is all about price. If a home is still on the market, no matter how long it has been, it is overpriced. Seller's don't understand.....
One additional thought is that the recovery is by region and state. In NC there has been more of a platuea rather than a bottum.
Bonner
good post..homes need to be priced right..we have to compete with the bank repos and short sales...sellers need to be realistic.
Allison, goodness! this is so true. I read a post on here yesterday where someone had heard a speaker say that the active listings should be used rather than solds to figure a price. The problem with this is all because your neighbors want to sell at a certain point doesn't mean they really can. I really do wish, we could all get what we want for our homes unfortunatly if we could no one could afford to buy them.
Like any other sale of anything there is only so much that people will pay and if there is not the profit that the seller expects than "They are not ready to Sell" . I know that it is hard to tell the seller but if you take the listing then your only taking a problem.... Great points and your right.....
Not all markets in the US are depressed; it's like that national real estate market thingie in action.
However it is probably true all over that lots of sellers try to base the sales prices of their house on what they need money to do something else with.
Don't work; a house is worth what it's worth and what a buyer is willing to pay when you want to sell, this is not rocket science.
GITA- THANK YOU! It is always nice hearing from you-thanks for stopping by and leaving a comment.
ALISON- Thank you for your lovely response.
BOB- That is a sound business decision.
JoEllen- The ultimate goal we as professionals have is educate our customers-the market is changing daily. Old information or advice which is not backed up by current sales info for example, can be like sour milk. Good Luck and Sell well!
BILL- I think there are some homeowners out there desperate who bought high and are really between a rock and hard place. What usually happens is they cannot get an offer and ultimately will become a statistic. Thanks for the comment
BLAKE- I agree to a point- the average days on market is greater than it has been in the past. A sale can be achieved buy not in the same time frame it took in 2005 for example. Bill thanks for adding to the discussion!
BONNER- AGREED Completely. Our market stats are very encouraging. The bottom seems to have been hit and what I am seeing indicates a steady and slow progression upwards. Absolutely Real Estate is local! Thanks for your comment!
SOUTHERN CALIFORNIA REALTOR- Yes, Thank you for pointing that- great addition to the discussion. It does apply to buyers as equally as it aplplies to sellers.
While it may not be fair- it is unfortunately, real.
Condition is certainly a factor, but it is not the only factor. Amenties some owners think add tremendous value are not always recoverable improvements and price based on square footage is emotionally void.
Michael- I agree. For the ones who can compete, they should succeed. For the sellers wh9o bought in the last 3-4 years...they are not likely to recover what they paid. These people are the ones most deeply affected. Thanks for addition to the discussion!
Amen...well said as always my friend
Allison,
As everybody else has already said, your article is right on target. If the homeowners will not believe their agents they need to get an appraisal so that they can base their selling decisions on hard market data. It will just cost them more and take longer to sell their home, especially if they have already bought another home and have two mortgages, etc. and/or have had to relocate and leave their home emty. In the past a foreclosure here and their would be excluded as a comparable in the appraisal because it was not the norm, however now there is such an abundance of them that they are making the market, which is unfortunate.
I've been thinking a lot about the buyers market in which I started real estate. At that time, no matter how much a seller might lower their price, there was still an imbalance of buyers to sellers in the marketplace. For every 10 sellers, there were only 3 buyers. Consequently there was NO strategy that could be employed that would provide full relief to sellers, or provide an answer that that ALL sellers could sell.
I love the blog title and quote - to that I would also add that as a Home Stager, I can assure sellers that potential buyers don't care what the house USED to look like, they care about what it looks like NOW. So many times sellers tell me how hideous the house used to look when they bought it and they fail to realize that buyers don't care about any of that history, just what the product looks like today.
This is an excellent review, Allison. So often sellers are focused on what they need to have to move or to buy, yet the market, as we all know, determines what buyers will and can pay. Sellers should pay attention to the costs of keeping their home on market - not just the perception of a stale listing, but also th financial side (mortgage payments, utilities, etc). There is also the lost opportunity cost. Unfortunately for many they NEED to get a certain amount given what they owe, adn the market just won't cooperate.
Jeff
Allison...
I am subscribed to waaaaaaaaaay too many Bloggers. I keep missing you when you post. It's probably time for me to come up with a better way to keep track :)
I'm going to go backwards on your Blog again. Lord...I hate Dislike backwards :)
TLW...ROAR!
The first " RED FLAG " is when a seller wants you to list at a price well above the market and explains that he needs a certain amount or he can't sell. In too many cases he used his home as an " ATM " machine and now wants you to make it all better.
You are so right you have to price your home according to your local market or it is not going to sell
In this market, you can't afford to work with any seller that's not TRULY motivated. If they aren't willing to price it right, price it AHEAD of the market, they're just going to drag you down with them!
GEORGE! How nice to hear from you! Thanks for stopping by and parking.
TOM- Thanks- I appreciate your comment.
Ardell- You are so right! But the imbalance is correcting at least in our neck of the woods. Now almost as many homes are pending sold as are coming onto the marketplace. However,. having said that there is still a 19 month supply in Orlando. It is just about 12 month in Osceola County. So even in a 25 mile range there is a difference in the market stats.
The good news is...buyers are not alone. There is quiet sompetition out there depending on price range. Right now the hot spot seems to be int he 150K range-which for Florida is great for buyers.
Allison,
Almost everyday I still hear the "I need" words. It's downright painful to have to give them the reality check but I'm sure getting good at deliverying the news.
I just had this conversation with one of my clients. They really want to move and get situated in the new city before school starts but....
I told her either plan to bring a little money to closing or you just need to wait it out.
Allison.. All sellers feel there home is the best in the world.. and all buyers are looking for a bargain.. This hasn't changed in years.. and never will.. Good post.
I think what I have seen with Builder close outs is extremely interesting. Buyers attempting to set market price and offers not being countered just rejected outright. As the units are in this case the lowest priced already.
We did careful market research before setting the liquidation price- to a few low ball offer makers they were shocked to discover not only was the offer rejected, they were beat out by a better offer from a new buyer within 1-2 days.
This is a really good post Allison. And a well deserved featured post!!! All I know is that most sellers in my market are just not able to compete with the REOs. Even if they bought right, 5 or 6 years ago, they are still upside down with their financing. I listed a house yesterday and the lady is going to lose ALL of the 100k she put down in late 2006. She paid $179,000 in October of 2006, owes $69,000 and I just listed it at $99,000!!! I feel for her. But what can she do? She has health problems and has to move. So she has to bite the bullet and take the loss. The sad thing is that she has no more money. Everything she had was put into her house. Now it's gone. Or will be IF we get lucky and find a buyer.
This is good news that your area is starting to recover. Hopefully, this will all be over soon.
Can you believe their are agents who accept listings in our market for $100,000 over market value??? These agents are doing no one a favor!
Price it right and it is a win-win for all!
It is rough to tell a seller that their need for a specific price has nothing to do with the market value. The market sets its own level.
I would love it if the sellers that aren't really serious would step back a bit and let the market roll.
The market here in my section of Cat seems to be stabilizing. You can’t tell that to the Buyers that are still offering low ball numbers due to a "declining market"
Some Sellers think that market conditions apply to everyone but them. When the housing inventory goes down, they can start expecting more.
It's time for all sellers to wake up and smell the coffee!!!! With the market depreciating, you cost yourself money by not pricing it right to start with! By the time a seller get real with the price, the market has gone down even more!
Good post. You are right. No buyer cares what the seller needs to pay off. Buyers care about what the home is worth in "this market".
Thank you everyone-for making this comment chain so interesting-and thank you to Active Rain for featuring this post.
As Broker Bryant pointed out-his market is over saturated with REO properties, and sellers really cannot compete. For them if possible, waiting it out is the best option. Educating buyers is also very important. While it is a "Buyers Market"-that is an inventory term.
REO properties have a bottom line price, as do foreclosures, and builder inventory homes. Investors buy low and wait it out. There are plenty of them shopping now. First time homebuyers are entering the market in larger numbers as are returning Veterans with young families.
When talking with sellers- if the price they NEED to achieve is greater than current market value we must make solid business decisions as professionals. That may mean walking away from it. Fret not, if you see another REALTORS® sign on the lawn....it will ripen with age or die on the vine.
When working with buyers- if a property has been recently reduced, make them aware that the bottom line is likely to have been reached. As the market improves the comps on recent sales may not support their offering. Brace them for rejection-as it is becoming more common. So is competition amoung buyers in certain price ranges.
The recovery is going to be a soft one- like a soft opening of a business which happens before the general public is made aware of it. As such, low ball offers are likely to lose out to better ones. The best we can do is make both buyers and sellers aware of the possibilities that could occur on each side of the transaction. If it is priced right...they will come. If it is priced great-they will buy.
Good luck and Sell Well!
Wow, a lot of information, and prices all over are going to correct. I am still a beleiver that in the short term it is going to get worse before it gets better. The incerase of sales at lower prices due to foreclosures has placed blood in the water which will accelerate the downward push on prices from the buyers side. The sellers are slow to accept the facts, and they will lose more in the short term.
I tend to agree more with Jim, although I tend to think we are at least getting close to the bottom - I hope that is not more than wishful thinking, as I am still reluctant to breath a sigh of relief that it is about over. But at least my business is picking up a little bit as well, so hopefully this trend continues!
Allison, thank you! I so need to use that quote from Rill in my current deal situation. However, in this case, I am using it for a buyer.
At last years CRS ProAct session in Las Vegas I heard a great line that I have used selectively with some "challenging" clients. Basically it goes like this, "You only get to spend your equity once". The first time I used it on a seller that needed a certain number because he had over-improved his condo and taken money out via a home equity line to buy a new construction SFH. I was a tad nervous once it left my mouth, but he actually got it where everything else had failed.
VERY INFORMATIVE INFO. KEEP ON PATROL FOR US HOME BUYERS AND INVESTERS...
YOU DESERVE PRAISE,ETC. D.
AJ- I like that! Thanks for sharing.
Elaine- You are right-it does work for both buyers and sellers.
Ron- One sign that the market is stabilizing is that an almost equal number of properties are pending/sold as to the number of just listed. At one point it was 5:1 favoring listed now it is 1:1 on average.
Jim- I agree that the push from foreclosures will impact sellers. It is however necessary to encourage buyers. As the inventory revolves, old properties selling off and new coming to market, the buyer stream will follow. By the time the media says it is OK to get back in the market, the mainstreamers will pay more than their investor counterparts.
Will it spike- heavens NO- it likely will be a slow steady increase. Much as it did in 1929-1930