‘People Are Aware Of What’s Happening’ In Michigan
The Michigan Live site reports on why inventory levels are so important. “Oakland County homebuyers are taking their new-found negotiating power to the bank, winning concessions, from furniture to money for roof repairs, as the inventory of homes on the selling block increases. Savvy buyers, knowing that more properties are on the market and sales generally are slow, are taking full advantage to get more bang for their home-buying buck.”
“But agents are stuck in the middle as sellers slowly accept the county’s changing market. ‘Sellers are not realistic about what they can sell their houses for,’ said Chris Shoemaker, president-elect of the North Oakland County Board of Realtors. ‘We have a lot more supply than demand and our supply is overpriced.’”
“Oakland County residential sales in 2005, including condominiums, dropped to 16,452, compared to 17,808 in 2004. Meanwhile, Oakland County listings grew to 54,855 for all of 2005, according to Realcomp. The year before, 51,504 houses and condos were listed.”
“‘If you look at the increase of properties on the market, it is a great time to buy,’ said Karen Kage. ‘The ones that are selling are the ones that are priced right.’ Coupled with a growing inventory of ‘For Sale’ signs in Oakland County, the year-over-year statistical changes create the perception that the market is declining faster than statistics show, Kage said.”
“‘There are more properties on the market,’ she said, ’so people are saying, ‘Look, they aren’t selling.’”
“But homes are selling, in large part thanks to concessions. Those allowances include financial concessions, such as money from the seller so the buyer can fix a home’s roof, for example. Concessions also have included throwing in personal property, such as furniture. If that’s what it takes to get a buyer for a listing, concessions will continue, agents said.”
“Realtors point to lenders as one of the driving forces behind the upswing in concessions. Tony Nuckolls said his company is not pushing concessions on buyers, but mortgage brokers are advising on a case-by-case basis. ‘Some buyers may need some extra help,’ Nuckolls said. ‘We let them know about the opportunities of seller concessions.’”
“The media spotlight on Michigan’s struggling economy and the housing market is a signal to buyers that they can call the shots on deals. Buyers also are making offers significantly lower than asking prices, Shoemaker said. With the large supply of homes, buyers know they can push because sellers want to sell, she said; they also know that some houses are overpriced for the current market.”
“One Shoemaker listing at $379,900 had a buyer offer $327,000. Sellers, too, are more willing to negotiate because they know there is a glut of homes on the market, Shoemaker said. ‘People are aware of what’s happening,’ she said. ‘You can’t help but feel the fear.’”
‘Sellers are not realistic about what they can sell their houses for,’ said Chris Shoemaker, president-elect of the North Oakland County Board of Realtors. ‘We have a lot more supply than demand and our supply is overpriced.’”
Yeaahhh… TRUE.
But just like BUYERS had to ADJUST their thinking in recent years (by having to OFFER MORE THAN THE ASKING PRICE, in many cases in the hot markets….)
Now it’s the SELLER’s TURN.
They NOW will have to ADJUST THEIR THINKING… once they see that the price their asking is not SELLING the house.
Believe me, the beauty of America is that you can ASK anything you want for a property. The other half of the equation is the smart buyer DOESNT have to pay it!
Stare Downs and the like will be common in this rapidly changing real estate landscape, but the bottom line is that a SALE requires two to dance (both a seller and a buyer).
SUPPLY and DEMAND baaaabby!
Don’t know if you posted this already:
Fewer families can afford a home
I don’t believe more people own their homes these days. In some sense, until a mortgage is paid off, somebody else “owns” the home. And one thing is for sure: If I’ve bought a house with no money down and used a phony loan package, I do not own my home, even though statistics say I do.
Many more people are “mortgage owners” rather than homeowners. I wonder if there are stats on the number of people who own their house outright, and what’s been happening to this over time?
Good point Viking…
Sort of like all those LUXURY autos on the road, too.
The driver “looks” wealthy, but truth be told… most probably just signed a LEASE on it.
No bitterness here- I make a great living, but my comment is that I believe most people have just leveraged themselves to look well-to-do.
lol. I have these neighbors that can’t be older than 30 driving a fairly new GMC Yukon (looks loaded) and the gal drives a late-model BMW. Their rent on this 1 bedroom must be like $1300 or so a month too. I’m like goddamn, I make decent cash and they drive nicer cars than me!
Can you say LEASE? Or, HIGHLY LEVERAGED?
Nearly 70% of Americans own their homes, a record high, but the rate of homeownership for working families with children is lower than in 1978, according to a study being released Wednesday by the Center for Housing Policy.
The irony — the government creates two behemoths (Fannie and Freddie) to bolster home ownership for the working class, and not only do we wind up with a lower rate of home ownership for these folks (and a dangerously destabilized financial system), but those working-class couples who did manage to claw their way into a house with an “affordability product” will find themselves bankrupt or house poor for the rest of their lives. I guess no one told them you can’t feed your family with “pride of ownership”.
This brings up a good point — I’ll bet these “concessions” aren’t reflected in the selling price, so I wonder how much that may be inflating the median price figures we’re getting from the NAR.
That’s been mentioned here more than once. You would think that with all the reporting on concessions the press could make that leap as well.
Good point, but my concern/perspective is that the PRESS has routinely gotten their “numbers” from the Realty business.
In the past, I believe this was a fair way to collect data: but now that the realtor associations have become more commercialized- they have really leveraged the PRESS to basically get FREE ADVERTISING for their trade (i.e. “median price of a home has soared… blah blah blah”)
Now that the numbers are reversing and making real estate look like “not such a good investment”, I believe that the PRESS needs to seek out more INDEPENDENT tallies and median price numbers of sold properties.
A level playing field on the data would be great.
I sold a property last summer “as is”; I doubt I would be able to do the same thing now. But how do you put a monetary value on that?
you can not just look at the prices to determine the trend..many times the price will remain the same but the house you are getting for the same price will be much much more than during the peak.
By offering concessions rather than lowering the price, Realtors make more $$$$$
Why would anyone ever buy with these “concessions” rather than simply a lower price? Let’s see, would I rather take $20,000 off the price, or would I rather take someone’s old furniture and a “promise” to pay for a future roof repar? (yeah, try collecting on that one).
I think that these concessions are limited in value, because people would much rather have a reduction in the purchase price. Maybe a floor of $10-20K on the concessions? If that’s true, then they shouldn’t affect the median prices too much.
The roof repair is done between signing the contract and closing - that’s how you enforce it. No new roof, no sale.
It’s also a way of financing (like HELOCs). You’ve put ever spare penny into the mortgage and you don’t have the money for a roof, furniture or repairs.
… because there’s more inventory available. But I thought last year was a great time to buy, because inventory was tight. So I guess the rule is that when inventory is large, it’s a great time to buy, and when inventory is lean, it is also a great time to buy. Shucks, I guess it’s just darned always a good time to buy, isn’t it? Funny how that works!
What really makes me laugh is that everyone always forgets the logical corollary: If it’s always a great time to buy, then it must always be a lousy time to sell!
Ever hear that from your friendly neighborhood realtor? I didn’t think so.
If buying is so can’t-miss always-great, then who in their right mind would ever sell a house? So I’m guessing that maybe… just maybe… it’s not always a great time to buy. Just a hunch though.
oops sorry I think I left a “tag” switched on there. Trying to close it here.
trying to close the tag…
is there something wrong with the Money and metal blog?
sorry for being OT but check out this thread on IO loan …feel sorry for the ppl taking advice from the so called experts..at one point IO is mentioned as a “feature” of loan..lol!….quite an interesting thread to follow.
it was actually enough to turn my stomach. *Remember, wealth creation*, that’s right boys & girls, just keep borrowing your little heart out, and you can take all of that money that you could have frittered away paying down the principal and compound it! The bus leaves for the horse track at noon!.
I try to be an optimist, but some days ….DOH!
Good news is bad news for the real estate industry:
NEW YORK, March 23 (Reuters) - U.S. Treasury debt prices fell on Thursday on an unexpected rise in existing home sales last month which reinforced expectations that the Federal Reserve will raise interest rates at least two more times.
“Overall, it’s a strong number, so I’m not surprised to see the market trading off,” said Mary Ann Hurley, a bond trader with D.A. Davidson & Co. in Seattle. “As long as you still have strength in housing, the consumer is going to hang in there, and I would expect the Fed to continue to tighten.”
BB is doing a fantastic job so far of letting the market force his ever-tightening hand…
That story has been driving me crazy all day. Strong homebuilder numbers mean that the Fed will raise interest rates. So that’s bad for stocks. Ok so far.
And then they completely ignore that the industry most directly, immediately, and monetary dependent on interest rates — the homebuilders — went up and stayed up all day long.
Oakland county is just north of Detroit and contains Michigan’s most prime real estate, both commercial and residential. The economy there has been particularly strong until recently and housing prices reflected that. 50-year-old 2200 sqft colonials in Bloomfield Hills for $800-900K that haven’t been remodeled in 30 years are commonplace. $500K-$1.5M McMansions are everywhere. We will see some big reductions in selling price here as many of the high paying jobs have left with more going every day. It looks just like Socal here(minus the nice weather)-huge houses, HELOC fueled consumer spending sprees consisting of the obligatory granite countertop and stainless steel appliances, luxury SUVs, and designer clothes.
a realtor sent out a flier of sold homes w a “subsidy” column
one time, never saw that again
to close the open tab.
The upcoming foreclosures are going the stand all these wishfull sellers on their ear and scare the hell out of many potential buyers. Once they become aware of FALLING prices they will run for the hills.
Buying a home that goes sideways (ie.”soft landing”) or only appreciating a little is a whole different ballgame than buying a home that is losing value. The banks and builders will kneecap the entire resale market ruthlessly. The banks and builders will realize that owning RE is a very bad proposition and sell no matter the price, getting it off their books will be paramount.
I remember in the mid 90’s that the banks were dumping their REO no matter the price just to get the insurance from FHA. The bottom didn’t firm up until the Government came out and declined all short sales on property insured by the FHA and VA. If the bank short sold they didn’t get the insurance, they had to fork over the property to the Gov in order to get reimbursed.
This was the hayday of the FHA/VA repo sales. I had clients routinely purchasing properties for 30-50k and selling them for 60-70k with little more than a quick paintjob and a few replaced window paines. I was so envious of them (I was broke) making 20-30k net 4-6 times a year. This time I have dry powder and look forward to the cold courthouse mornings with a hot cup of coffee while waiting for the next bank representative and his couthouse fire sales along with endless FHA/VA repos to look through.
Rich– re: FHA– any idea as to what % of the notes these days carry FHA coverage? Here in socal, the max they’ll cover will *just* buy you a 2br condo in a marginal area.
Lookin forward to the bottom fishing as well. Keep the powder dry!
“‘If you look at the increase of properties on the market, it is a great time to buy,’ said Karen Kage. ‘The ones that are selling are the ones that are priced right.’”
It is always a great time to buy. But prospective buyers beware:
History has not dealt kindly with the aftermath of protracted periods of record low housing affordability.
I wonder how the ratings are doing for Flip That House. I would be very nervous if I were a twentysomething who had entered a Property Development Partnership with 3 other twentysomethings to buy a fixer in a marginal neighborhood and stand around directing the hired help to do the fixin, all based on last years comps. In the time it takes to do the fixin, the market has turned ugly. Time to move back in with Mom and Dad and finish up Community College.
Good point Brad,
Interestingly enough, TV shows have always GLAMORIZED whatever they are producing.
The Flipper shows may still draw the interest of the uninformed…
but like real life- things in the REAL WORLD are different than the “MTV REAL WORLD”.
In other words, on TV there are still smiling faces (probably re-runs), but on the STREET- there are alot of smug expressions on the screwed Flippers that just DIDNT GET IT DONE in time to beat the market shift.
check your listings for “BUY ME”. Even though it’s Canadian, it is interesting. People trying to unload theirs. Price cuts, marketing, etc. Not real bloody yet.
There’s a new home development near here that was finished last fall. There’s currently 28 houses for sale (19 flippers/9 builder), some on the market for a year. Talk about a stalement, noone’s lowering the price, but obviously no buyers.
To Peterbob,
“Why would anyone ever buy with these “concessions” rather than simply a lower price? Let’s see, would I rather take $20,000 off the price, or would I rather take someone’s old furniture and a “promise” to pay for a future roof repar? (yeah, try collecting on that one).”
Do you suppose that it might be like the owner of a car who was in a wreck, got paid by the insurance company to make the repairs, spent the monies elsewhere and later sold the car ‘as is’?
Any thoughts on the impact of the GM buyout to the UAW on Michigan housing prices? Summary: between 35K and 140K buyout for up to 115,000 UAW members to retire or leave.
http://www.freep.com/apps/pbcs.dll/article?AID=/20060323/BUSINESS06/603230499
That is a large group of individuals who will create a drag on housing prices wherever there numbers are concentrated, as early retirement focuses the mind on the risk of falling asset prices…
Had to go to the store this am and heard a commercial on the radio saying “The reason that you can trust your realtor is because he has to take an ethics course before getting his license.” Sounds like a new reality program in the making “Survivor Realtor”….
So now they will not only know they’re being unethical, but they probably were given a whole bunch of other unethical scenarios they would never have thought of on their own.
TOO FUNNY! LMAO!!!!!
Test
Test
Test
Test never mind
Hey Stuttering Mort…
Your “test” worked
Sorry…
storm, homeowner’s insurance rates increase:
http://articles.news.aol.com/business/article.adp?id=20060323085609990001&cid=1712
Does anyone have an opinion on how accurate zillow.com valuations are?
I have an opinion FWIW. I say not at all. I did my house. It showed a tax valuation only. Even if you knew the local tax rate that number would only give you the tax assessment value - which is way off IMO.
I checked out the house I just sold in October 2005. The Zillow values were a mess, nothing was accurate. Not just for my house but the houses around it — houses where I know exactly how they compare to others because I lived in the neighborhood for years and have been in most of them. I have no idea why the zillow data would be so wrong (off by hundreds of thousands of dollars).
Zillow had my house transaction off by a factor of 10. They thought I paid almost 2 million for it when it was really under 200k.
I find zillow to be terrible as well…nothing was right in Ann Arbor, off by a good bit. And off in the direction of *high* bigtime, so of course it sets me to wondering…
the ‘fear’ is definitely smell-able in MI. And this article makes it seem like there are some in the ‘know’ who have a secret handshake or something. There is an air here I feel of people being worried about the economy so much that they don’t even want to properly address how overpriced the real estate is…so, obvious things like a *3 YEAR SUPPLY* of houses doesn’t make the headlines. It’s as though there is a giant hush, while people pray that there is something to be salvaged in the economy. It’s really kinda eerie I think. In SoCal and elsewhere it is at least waaay easier to cling to the idea that land is scarce, the desirability of the area is strong, and people will always have jobs doing *something* or other.
I wondered about the effect of those buyout programs…I wondered whether people will just leave for fairer employment waters and weather, or stay and use the money to pay mortgages while trying to get ‘retrained’…one offer for a lot of younger employees has been to pay for a college degree.
It is cool though because you can look at the satellite picture of the place and compare tax assessments with the neighbor’s house. Problem is two identical houses can vary widely on assessment values due to homestead and other laws.
Hmmm…I get more than just tax assessments in my area. And I get recent sales data. Doesn’t anyone else?
Not in upstate..just previous assessment, not current
That 50,000+ inventory is over 3 years worth of homes if they continue to sell them at last years pace… You’d think sellers would start to get the message…
Plus the forclosures in Detroit are skyrocketing and seems to be spreading to adjacent areas (like Oakland County)
http://www.detnews.com/apps/pbcs.dll/article?AID=/20060320/BIZ03/603200360
’seller concessions’ is so clearly the next level ruse in the realtor’s arsenal…keep the buyers convinced that the sellers still have power to stick to their price and that low offers are still “unreasonable” despite the obvious, keep the sellers willing to wait til the right buyer comes along willing to accept the offer of a ‘carpet allowance’ or some other crap idea, keep the valuations high, the appraisals high, the commissions high, the loans high…
that’s where the realtor comes in to rescue the buyer, don’t you know…when the seller won’t come down in price and so realtor uses their skills and knowledge to ‘negotiate’ that the drapery stay. Then everybody’s happy, what we all want, right?!