Sellers And Agents ‘In Denial’: Fresno
The Fresno Bee has this update from California. “For-sale signs litter the landscape, but sellers are still reluctant to lower their prices to better compete, real estate agents say. Prices of existing houses are falling a minimum of 1% to 2% per month, much to the consternation of homeowners, and any would-be sellers are in a state of denial, agents say.”
“‘I have been through three cycles, and I have seen this kind of downturn before,’ said (realtor) Cliff Lloyd in Fresno. ‘The sellers chase the market for months and months instead of biting the bullet and reducing the price now.’”
“Lloyd said sellers would have more success if they lowered prices 5%. ‘Meanwhile, the market is depreciating..and they fall farther behind the competition,’ he said.”
“More than 3,700 existing houses are for sale in Fresno and Clovis, and that number does not include properties owners are trying to sell without an agent or the abundance of new homes offered by builders, some using enticing concessions.”
“With so much competition, sellers have to be aggressive when it comes to pricing. ‘If you list your property at what everyone else lists theirs, it won’t get shown,’ said (realtor) Ralph Strachan. Strachan said the missing 20% at the bottom of the market has the effect of artificially propping up the median price. ‘The statistics are skewed to the higher end of the market that doesn’t go away when interest rates go up,’ he said.”
“Agent Ken Neufeld said: ‘I’m telling clients that they have to be 10% less than what they thought prices should have been four months ago.’ He cited his daughter’s house as an example: It went on the market four months ago for $330,000, was lowered to $319,000 and then sold at $299,000.”
“‘We’re quickly becoming more of a buyers’ market than a sellers,’ said Michael Keller, an appraiser who estimates price reductions at a more gentle 1% per month. Real estate agents also say that many would-be buyers are waiting to see whether prices fall even more.”
“Declining values are something that new homeowners, and some agents, have not experienced. ‘We can’t say that just sellers have been in denial; a lot of agents have been in denial, too,’ said Joan Jolly, president of the Fresno Association of Realtors.”
Ah, a much long overdue correction in my hometown. Fresno/Clovis has an economy that is mostly service-based (ag no longer being quite the powerhouse it once was there). Having spent 20 years there I guarantee it does not have the kind of high-paying jobs to support half-million dollar homes. My brother is a manager of the local “Chili’s” restaurant. The knife is going to fall hard here–this spring I spent a weekend driving around new home developments in Clovis where entire streets were for sale by owner (specuvestors). They had bought from the developer hoping to flip for 100K profit in a few months. I am betting those poor streets still have the signs up. There will be a rich harvest of FBs here.
FLIP -> FLOP -> SPLAT!!
What are fb’s? (f@cked borrowers?)
yes.
The valley is SMOKED! I think Bakersfield will be the hardest hit. Our population is half of Fresno, however, our resale inventory is 20% higher!
I grew up in Fresno and I know the houses are way overpriced, by maybe 70%. Valley Boy is correct. There are no high tech companies to support the salaries for buying those houses. Jobs are mostly in the service and agriculture industry. UC Merced may attract upscale people and startup companies, but wait for 15 years. Cal State Fresno and Bakersfield are good schools but most industries in tech gravitate toward University of California, Stanford, Cal Tech, USC, and the like, due to name recognition and more universities per square mile. And I’m a graduate of CSU Fresno and Chico. I love Fresno (now morons can laugh all they want) but there are no good paying engineering jobs there, so I’m mostly in Phoenix and Los Angeles. If there was some way to shut out that air pollution blowing in from the Bay area, Fresno would be my home once again.
CSU Fresno has a better viticulture program than any UC, even Davis.
This seems like a pretty straight up article. I am not sure a 5 - 10 % potential discount over last years over-inflated prices makes this a buyers market yet, but it is a turn in the right direction.
I just moved back to California, and I had a conversation with a co-worker/friend. She tried to convince me that buying a house was better than renting. I told her that inflation-adjusted prices need to come down about 40% in our area to get the price to rent ratio back to historic levels, and that I wouldn’t be interested in buying unless someone would sell at 2002 prices.
She then told me about how much her house had appreciated since she bought it in 2001, and that I was making a mistake by renting.
I then asked for her address and looked up value estimates on Zillow. It showed that her house value had declined 10 percent in less than a year.
And you know what her response was? “Well, I should be fine, because I bought a while ago.” My response was “But that has absolutely NOTHING to do with my decision of whether to purchase TODAY or not.”
It just shows that when people have a mortgage and something to lose, they don’t want to hear the bad news and they can’t think straight.
Misery loves company.
Exactly! It’s like an unwritten rule. Deny, deny, deny.. And maybe nobody will wise up and cause a panic.
i recently went to dinner with a friend and he basically told me that i had missed out on EVER being able to buy anything in the los angeles area. “it’s over…” he gave the usual reasons… no more land, undervalued before, people always want to live here, blah, blah, blah… i countered with - look what is happening in las vegas. his response - what? vegas is great - i just bought a condo (!) there and my broker says it has already gone up 50K. i just bit my tongue and let him pay for dinner…
Tell him to buy more! These braggers are the ones I want to see get really BURNED!
We’re quickly becoming more of a buyers’ market than a sellers,’ said Michael Keller, an appraiser who estimates price reductions at a more gentle 1% per month. Real estate agents also say that many would-be buyers are waiting to see whether prices fall even more.”
Looks like the appraisers are behind , if their only reducing prices 1% per month. The market is 5-10% lower and the comps haven’t caught up.
“Prices of existing houses are falling a minimum of 1% to 2% per month, much to the consternation of homeowners, and any would-be sellers are in a state of denial, agents say.”
I’m impressed at how much the rhetoric seems to have changed — ramped up — among the industry pros in just the past couple of weeks. It’s like August 1 was D Day for agent and msm coverage of the crash.
They need to get transactions moving. And the only way to do that now, is to get prices lower. Everyone that could afford or was dumb enough to overpay, have been tapped out.
5% of $220,000 beats 0% of $0. Inventory costs agents in advertising, showings, etc. This market from the realty business has got to be about as pleasant as a retroactive pay cut of 30%. Sure they were supposed to save for bad times but come on, they’ve been drinking their own kool-aid. If we don’t see a 50%, yes half, a drop in the number of active agents in 18 months I’ll be suprised.
Last I read there was 1 real estate agent in California for every 50 residents.
It seems agents want the market to work in their favor on the way up, with multiple offers over asking price, and on the way down, with sellers willing to lower their prices by double-digit percentages in order to move inventory. The truth is the market doesn’t work like that - prices are “sticky” on the way down but eventually do drop by double-digit percentages. Sounds like the real problem is too many agents chasing a greatly reduced number of sales. Maybe it is the agents that are in denial?
Being from Seattle I’ve seen my share of booms and busts. RE agents will usually try and sustain upward momentum in prices but after a few months without a sale they are usually the ones that drive prices lower, anything to get a sale and a paycheck.
Brokers are the grease in the system. They serve an important role, but they’re still slimy.
Good grease usually is.
Good Grease, Charlie Brown!
Ralph Strachan said the missing 20% at the bottom of the market has the effect of artificially propping up the median price. ‘The statistics are skewed to the higher end of the market that doesn’t go away when interest rates go up,’ he said.”
- Ahhh … the plot thickens! This is the reason that the median prices that are still reporting are so high. Soon, prices will report what is really happening and they will need to create a new spin for the public.
Good article, and some eye popping charts.
http://crapstocks.com/?p=55
The article is accurate on describing the Fresno market and probably most markets in California. The new home developments are ahead of the FB’s I’ve seen them drop prices by 30k just this year and offering tons of incentive like no payments for 6 months. Also free w/d, plasma, landscaping and low interest rates. The market is crazy but it hasn’t stopped them from starting new developments.
I’m right in the middle of Clovis/Fresno area. I am actively looking for a rental home in Clovis or NE Fresno right now and have been for several weeks. Last weekend a flood of 30+ rentals hit the Fresno Bee in those two quadrants alone. I plotted a course on a map to visit every single house and many of them are in newer neighborhoods; I’ve found a few with out of town buyers. What was really apalling was the number of for sale signs out on front lawns. During my trip I must have noted at least as many for sale as for rent, probably more. You can rent a nice 3/2 home in a new area for as little as 1300-1400 per month and yet these a$$hats are trying to tell me their houses are worth 275-350k? I can also verify a comment posted above that the pay scales for white collar workers (like myself) is no where NEAR high enough to justify these prices. I bought a brand new house for 160k in 1997 when I was making 2/3 what I am right now (and lost it due to injury), but these days I’m completely screwed. I really hope the comps in this area sail into the crapper over the next few years while I’m renting, and I have difficulty thinking they won’t considering how out of whack things are.
90 days or so to 1 million on T Day 11/23/06
mid may was 799,000
6/10/06 was 836,471
6/14/06 was 840,935
6/17/06 was 846,120
6/20/06 was 850,317
6/22/06 was 855,892
6/24/06 was 860,647
6/29/06 was 866,037
7/01/06 was 858,675
7/09/06 was 870,854
7/11/06 was 882,239
7/13/06 was 886,055
7/14/06 was 890,896
7/18/06 was 895,022
7/21/06 was 900,000
7/25/06 was 905,170
7/28/06 was 910,001
8/01/06 was 903,718
8/12/06 was 915,336
8/19/06 today 920,755
http://www.ziprealty.com/maps/index.jsp?usage=search&cKey=74rbwvlk
must already be well over 1 million homes for sale as ziprealty doesn’t include listings in several states (i.e. ny)…
1-2% per month for 48-54 months and we are pretty much there as far as the median prediction of the bust.
We are well on our way.
“‘I have been through three cycles, and I have seen this kind of downturn before,’ said (realtor) Cliff Lloyd in Fresno.”
I think we can safely say “No Cliff, you haven’t seen this type of downturn before”.
The Aptly Named “Cliff”…
A friend just north of Sacramento - a realtor- has to sell. Area houses had gone for $750K but she knew what was going on so she priced initially at $650K in March. Still couldn’t sell, eventually found a buyer at $630K but that buyer couldn’t qualify. Recently found a buyer at $600K bt the sale is contingent on that buyer selling… m That’s a 20% drop, still hard to sell.
Here’s a real-life example of the Fresno market. The house here:
http://tinyurl.com/lm6oa
got publicity in the Fresno Bee, back on December 18 2005, by “tossing in” a Harley Davidson with the home. Original listing price was $349K. It was reduced to $340,000 (plus the motorcycle).
The article gushed that the motorocyle offer “got people’s attention.” There were supposedly “three serious buyers” but no sale has been recorded to date.
April 2006, open house, listing price now $332,500 (new roof installed).
June 2006 reduced to $320,000; then reduced to $315,000 in July.
August 2006: reduced to $299,500. Listing description: “Seller’s are motivated. Please bring all offers!”
No mention of Harley!
Piss on Harley!
Before you do make certain you know who own’s it :).
“‘I have been through three cycles, and I have seen this kind of downturn before,’ said (realtor) Cliff Lloyd in Fresno. ‘The sellers chase the market for months and months instead of biting the bullet and reducing the price now.:
Down 15% in 1981
Down 35% in 1991
Down 50% in 200?
go figure…
Just found this article (scroll down a little).
Great buyers market for homes in Visalia but not so hot for sellers. Inventory has reached over 1900 single family homes on the MLS – up from 1801 July 1. There were just 437 homes for sale in the Visalia/Tulare MLS in July 2005. “It’s getting worse,” says long time realtor Sherry Tietjens with sellers having to lower their expectations significantly from just the first part of this year. “A home that might have sold for $315,000 last year in on the market for $250,000 today with no offers,” says realtor Brad Maaske. “We’ve got nine and a half months of inventory” in existing homes in Visalia, he says. Sales here were off about 30% in July compared to last year, something that is happening all over California.
Well let me try that again.
http://www.valleyvoicenewspaper.com/secondfrontpage.htm