‘Sellers Need To Rethink Pricing’ Amid ‘Abundant Supply’
The Washington Times reports on the DC housing bubble. “The Washington metropolitan area’s housing market cooled off during the latter half of 2005. For the first time since 1999, buyers began to be on equal footing with sellers. How much more will the market cool? Will home prices fall, or just stabilize?”
“Despite a growing job market, the supply of homes for sale has ballooned since August. Excessive supply can lead to a softening, or even decline, in home prices. ‘Prices have pretty much been flat for the last four months,’ (realtor) Michael Turk says. ‘Prices came down between June and November and have been stable since then. Some of the people who pulled out of the market last year have returned. Today they are getting the home they want, while last year they couldn’t.’”
“That has a lot to do with the supply of homes for sale. Buyers in February had 28,000 homes to choose from. Last February, there were only 9,800 homes for buyers to see.” “‘In March of last year, there were only 45 condos available in Alexandria,’ says Mr. Turk. ‘Now, there are 333 available. So buyers are finally getting what they want. The demand is still there, there’s just a lot more supply now.’”
“One tool used by competitive buyers is the escalation clause. When added to a purchase offer, the escalation clause automatically raises the buyer’s offer to beat other offers. In some cases last year, the winner of the home was the one with the highest cap in their escalation clause. However, as buyer competitiveness has softened, escalation clauses have become less common.”
“‘We are still seeing escalation clauses today. I’d say probably 1 in 10 offers contain one right now,’ says Dale Mattison, associate broker in the District. ‘Last year, we were seeing the clause in 5 out of 10 offers, and in 2004 I would say 9 in 10 buyers used an escalation clause.’”
“Buyers aren’t the only ones who change their strategy when a housing market slows. Sellers need to rethink their pricing plan. ‘The more sophisticated Realtors are telling sellers not to be aggressive like last year,’ Mr. Mattison says.”
“Many home buyers use pricing to decide which homes they want to see, but once they’re in your home, how it shows is what matters. ‘Sellers need to make sure the house shows well,’ says Mr. Mattison. ‘A year or two ago, you didn’t have to do anything to sell a property. You’d just open the door and it would sell regardless of how it looked. But we’ve spent the last six weeks getting my mother-in-law’s home ready so it will shine when it hits the market.’”
“And how do things look for buyers this year? Mr. Turk says, ‘Buyers should be able to negotiate most strongly in the condo market. This market will remain very, very flat and soft this year, so certain people should take advantage of the low interest rates and the abundant supply, and buy now.’”
“And how do things look for buyers this year? Mr. Turk says, ‘Buyers should be able to negotiate most strongly in the condo market. This market will remain very, very flat and soft this year, so certain people should take advantage of the low interest rates and the abundant supply, and buy now.’”
I love it “very, very flat and soft”. He almost said “decline” but not quite. I think I’ll stockpile some $$$ and wait until 2010 and get a place at a 30% discount thank you very much.
‘buy now’ Right; who do they think they’re fooling?
Ok, now we have “very, very flat and soft”….to go along with “souffles”, “froth”, “sizzling”, “cooling”, and other culinary metaphors.
Hilarious.
30%? Honestly I was thinking condos would go down 50-70%.
Tho I bet that depends on where you live.
Chart of the Day: Home Prices go Parabolic
But note that it looks like they’re starting to roll over and drop.
“And how do things look for buyers this year? Mr. Turk says, ‘Buyers should be able to negotiate most strongly in the condo market. This market will remain very, very flat and soft this year, so certain people should take advantage of the low interest rates and the abundant supply, and buy now.’” ‘
He forgot to add…
…. “Infact I have several condos i bought this summer that are for sale right now”
Negotiate?? Didn’t you hear the Dentist? Read his lips. My house is worth 1.6 million because I say so! And you could use a few fillings.
The problem people have with buying in a flat or soft market is they are faced with buying an expensive home that might take years to appreciate enough just to break even if you have to sell…
That and demand is soft because 30-40% of buyers were investors looking for quick short term profits & investors who made money of the rent, but now it would be financial suicide to buy and attempt to rent or flip.
I can’t wait to see the news shows and magazine articles featuring all those “investors”, a where are they now special, just like all the dot.commers whose luxury homes and cars were repoed.
Alot of the realtors own spec. properties . I think the rah rah is self-serving so they can unload in alot of cases .
The NAR did a survey and found a high number of members owned more than one home.
I’d like to put a BIG emphasis on that! LOTS of realtors have LOTS of property…in fact, when the market started to turn this past summer, I saw LOTS of “agent/owner” listings coming on market. And, the smarter ones were some of the first to do price reductions. I just wonder if they were advising their clients to do the same! Ok, I know that answer already…NO.
Do RE agents need to disclose whether they own or are selling properties? Are they legally required to answer if a buyer asks? Seems to me that there should be a disclosure requirement, because the RE agents have a financial interest in keeping prices up, which may conflict with their buyer’s interest in keeping prices low (after all, the realtor is an AGENT for the buyer).
Any comments on disclosure requirements would be welcomed.
If your trying to buy a property they own here in the State of California they have to disclose any interest in the property. They also have to disclose if they are related to anyone who has interest in a property that is listed with them. Whether or not they have property on the market that they have interest in that your not trying to buy they don’t have to disclose that but most will tell you if you ask. I personally don’t see a reason why they shouldn’t.
Secondly unless you have a seperate buyers agent agreement where you are paying the agent. The agents fiduciary duty is always to the seller.
But haven’t you seen the latest stories on how they haven’t been doing this?
No, I haven’t do you have any links. I do not know why anyone would jeopardize their livlihood like that if they are doing it full time trying to feed their family. I haven’t seen that to be a reason for someone not to buy a property. And in California you’d have to be a complete idiot to do that. That is a big no no here
Buyers on equal footing with sellers, I think not! Which brings me to yesterday’s housing radio guru in Santa Cruz. Never a better time to buy. It’s still a seller’s market.He even talked about having the head of the CAR on his show in the future. When it turns into a buyers market I’ll bet his show folds and they bring in someone else.
The people who post at the Washington Post real estate board say “it’s different here” because of jobs and immigration.
But I think one thing missing is the stickiness of both of those things, and that the census data is lagging and apt to change on a dime. A lot of folks here from India, for example, are talking about taking the booty and moving back home. I know so many who see dollar signs and are hoping to cash out and move.
I think the D.C area MRIS just crashed. I can’t get to it.
“A lot of folks here from India, for example, are talking about taking the booty and moving back home.”
Wouldn’t surprise me. I don’t think they trust the dollar, and with good reason. I’ve seen people from India buying a lot of gold lately.
Immigration is a major factor and illegals have been buying houses in the DC area on toxic mortges. The day laborers will get creamed when the construction and remodling slows down. When work dries up and they owe more than their house is worth I think most of the illegals will just up and move.
The NoVa area also has a much greater exposure than most to ARMs and speculators. And we are second only to Vegas and Florida in terms of our condo glut. For those that think inventory is high now, I predict it will double again by this November.
Demand is currently high by historical standards, but 20% off last years pace and still slowing. The combination of higher inventory and slowing sales will make the days on market stat really something by next year.
is immigration as a bubble driver relatively new? i just heard it for the first time around the water cooler this week. those C++ guys from India are just one of many sub-groups of the bigger culprits: risky lending, speculators.
OT- they should teach personal finance instead of shop/home ec in 7th grade and offer a refresher in high school. i’m not saying mandatory but at least offer an elective.
I’m mid 30s and would kill to have taken that class, along with typing (which I did take).
Credit seems to be easily available over the past few years where it has not been in the past. I think that’s the biggest factor.
Owning your own home has always been the “American Dream” to many. It’s just been easier to do lately.
Hell, I know a lot of Americans who are thinking of cashing out and moving to a much cheaper, much less congested, and safer city in the midwest or south (especially NC).
One thing people seem to forget is that the DC area has a high-turnover. People come here, work for 3-5 years, then leave.
believing in simple supply and demand was real easy when you had to explain why prices were rising. why have realtors suddenly forgotten supply and demand? how come more supply means slow appreciation?
I’m planning a trip to Charleston, SC area this summer would any of you know which Burger King Richard Davis and Ginger are working?
Let’s see Mr. Turk…In 2004 you had 9 greater fools to hook, in 2005 you were reduced to 5 greater fools, and in 2006 you are reduced to 1 greater fool…..game over by 2007.
To John Law,
“believing in simple supply and demand was real easy when you had to explain why prices were rising. why have realtors suddenly forgotten supply and demand? how come more supply means slow appreciation?”
For the same reason that gold and silver are rising when bond prices are accelerating to the up side……something is rotten somewhere!
Think of the simultaneous rise of gold and silver prices alongside treasury bond yields as the unraveling of the conundrum.
BTW, bond prices fall as their yields rise.
not only will we have free condos for everyone, we’ll have newly fixed up condos for everyone!
… with granite counter tops!
“The demand is still there, there’s just a lot more supply now.”
Sure the demand is the same as years past, but keep in mind that madonna is also still a virgin, and today Baghdad Bob was appointed as prime minister of Iraq, …..Just shut your hole and take it like a man, at least then you have your pride to fall on.
At some point very soon the sheeple are gonna turn on these Realtor(tm) scum. Those glamor shots that you see of Realtors(tm) on the billboards and in the newspapers will turn into Wanted posters.
Very soon, at the bottom of this mess, I expect to see the Realtor(tm) go the way of the travel agent in 1999. When the internet enabled people to buy their own plane tickets online the travel agents became a thing of the past.
When the $hit hits the fan I look for all the fluff middlemen such as Realtors(tm) and mortgage brokers to get kicked to the curb.
I never could quite rationalize the need for a Realtor(tm) to be skimming money from a transaction in which they personally have no cash investment.
People will soon realize they don’t need to hand over their hard-earned cash to a pretty face and a line of bu11$hit.
With sites like ziprealty, the only thing agents are good for is opening the lock box on the door.
How do they do it in the UK at lower commissions?
And by “certain people” he means idiots.
“And how do things look for buyers this year? Mr. Turk says, ‘Buyers should be able to negotiate most strongly in the condo market. This market will remain very, very flat and soft this year, so certain people should take advantage of the low interest rates and the abundant supply, and buy now.’”
Buyers need to rethink whether they would be better off sitting out this correction and renting.
500 properties for sale in Reston, VA, 163 reduced.
463 are condos or townhomes.
Hey DC,
DoD and the rest of the fed welfare system are in for big cuts in employment both in the uniform civil service and beltway bandit rolls.
They will not make all the cuts ourt in the hinterlands.
http://washingtontimes.com/fhg/20060329-083648-9681r.htm shows that Loudoun and other outer counties are firmly defined as buyer’s markets. (Actually you need the hardcopy to see the charts.) This guy Chris Sicks defines a buyer’s market as up to 20% of sales/inventory.
Hey peeps,
I’m on a project in Arlington VA and I was talking to a finish carpenter at lunch. He said that his employer cut out all overtime 3 weeks ago and now he’s gonna be getting his 40 hours cut. He stated he called an advertisement in the papers help wanted section. The ad was seeking 5 finish carpenters. When he talked to the secretary, she told him that she got at least 200 calls for these jobs and it wasn’t even noon yet. He then told me that all the houses he’s been trimming are big ugly shitboxes and that none of the ones he’s trimmed in the last 6 months have sold. They’re sitting empty.
I wonder what in the world will happen to our local southern immigrants who are pretty much the only ones I see building houses. Will they be able to move on? Perhaps there will still be work for them in Virginia. Culpeper County isn’t stopping. Things are crazy down there. They’re just shoving developments in the worst places with not many neighborhood amenities. They are too close to the highways and busy roads. The government had some “by-right” laws on the books and say their hands are tied legally when it comes to allowing building.