‘Wait and see’ sellers

Many homeowners are waiting for home prices to go up more before putting their properties on the market, according to Inman News. As a result, inventory levels of available homes remain tight.

The primary reason is that many homeowners who purchased during the peak of the real estate market still have negative equity, meaning they have paid more than current values and will realize a loss upon sale.

 

Approximately 10.8 million homeowners are underwater (which means they owe more than what their home is worth) at the end of the second half of this year, according to Corelogic. As we reported earlier, home prices have risen in many areas, but are still 30% below the peak of the market. Some homeowners need the down payment on their current home to purchase even a more affordable home.

Another development is that many would-be-sellers are turning their homes into investment properties by renting them and buying another home, according to Inman News. In a recent survey by Redfin, 80% of homeowners believe they can get a higher price in two years.

Another challenge Realtors face is that sellers want to sell high or close to the former peak prices and buy a home at a price of six months ago, although the real estate market is “trending up,” which makes that an awfully tall order.

The real estate market is strengthening in many areas. In Greenwich, we are still seeing multiple bids by buyers for appropriately priced homes in preferred areas. This doesn’t mean that buyers are willing to overpay for a property. It typically means that the sellers can pick and choose terms and condition of sale.

CoreLogic reports that national home prices in August increased by 4.6% year over year. This is the largest increase since July of 2006. This August’s Home Price Index includes distressed sales, like foreclosures and short sales. If distressed sales were subtracted, home prices in August increased by 5%. CoreLogic is projecting that home prices will increase 6.3% compared to year-ago levels.

The states with highest home price increases were Arizona, Idaho, Nevada, Utah, and Hawaii. The states with the largest home price declines, including distressed sales, were Connecticut, Rhode Island, New Jersey, Alabama, and Illinois. Greenwich lags the country when it comes to reacting to economic downturns and it also lags economic recoveries.

More economists, says CNN Money, believe the housing market has turned around. They are encouraged by three consecutive months of an increasing S&P Shiller price index, an increase in the sales of existing homes and home construction along with a spike in home sales. The rebound of the real estate market benefits the overall economy.

The housing market has been contributing to the nation’s economic growth since the fourth quarter of 2011. In fact, the housing market is one of the few sectors bolstering the overall economy of our nation.

Buyers who have been on the sidelines for some time with jobs and acceptable credit scores are buying homes and helping the economy move in the right direction. Homeowners who can and wish to sell should list and benefit from this demand, especially in the under-one-million market in Greenwich.

 

Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected] or she may be reached directly at 203-249-2244.

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