Stabilizing home prices create buyer disbelief

Perhaps they don’t read the news. Or, like those who tried to sell their homes at high prices after 2003, they don’t wish to believe the new real estate realities.

The media reports are pointing to increased real estate sales just about everywhere. In the northeast, The New York Times reports that residential real estate sales in 9 states are up nearly 17% since June and 4% since last year. And, like Florida, sales have also been up for the last 4 months.

In North Carolina, StarNewsOnline reports that the small town of Wilmington has seen a continuing increase in building permits, as has the surrounding county of Brunswick.

Even in pricey Aspen Colorado, where million dollar homes are selling at large discounts, sales have started to pick up after a first half slump, according to the Glenwood Post Springs Independent. In short, the real estate market seems to have turned around.

The interest of first time home buyers has been fueled by the $8,000 tax credit, and some speculate that this real estate surge may be temporary. Perhaps more important in the home buying uptick is the fact that the median price of Florida homes fell almost 25% from a year ago, and has fallen up to 40% from the highs of 2006.

When the real estate bust began, most sellers were unwilling to believe their values had fallen so much. As the real estate sales declined and sellers started to offer less and less, sellers took the hint and began to drop their asking prices. Also, they expected to negotiate, because they were stuck in a buyer’s market.

So while there are still a few sellers left with unrealistic expectations, the majority of homes for sale are priced at market. In fact, according to the National Association of Realtors, the housing affordability index is at its highest rate since 1970; translated, that means houses are much cheaper and they are in the range that most people can afford.

Sellers have learned to live with these new, lower price ranges. But many potential real estate buyers are having trouble adjusting to the fact that housing prices are no longer on a downswing. People have become so used to reading and hearing about the gloomy forecasts for real estate, that they refuse to believe sellers are pricing at correct values.

For the last 3 years, buyers have been conditioned to believe that every house on the Florida market is at least 20% over valued, no matter how low it may be priced. They have not cottoned to the fact that a 40% discount has already been figured in. The house that today sells for $250,000 was formerly priced around $400,000 during the real estate frenzy.

So, while sellers will typically give up 5-7% of price on average, the days of the 20% discount are probably over in houses selling in the lower price ranges of $400,000 or under. For homes in the high six figures or in the millions, well, it’s still good news for buyers. Anything goes.

Written by Marc Jablon, Realty Associates
Email: marcjablon@yahoo.com - 561 / 213 – 6139
www.MarcJablonHomes.com