Existing Homes: What’s Really Selling

This article below is once again spot on with regard to what is selling in our market at least. Look at that chart. Homes priced under 100k are moving swiftly and homes priced under 250k are also selling but not as briskly. It all boils down to price. I have a short sale home in Milwaukee I listed a few weeks ago for 127k. There was an accepted offer within a few days for full asking price. However, Just a few days ago the home next door, a bank owned foreclosure, was listed for 108k. I wonder if the bank will come to their senses and not let this buyer get away. Sellers, ie: banks are fighting to get rid of their inventory. They are beating each other up on price leaving regular home sellers in their dust and buyers laughing all the way back to the bank. There definitely needs to be some more price stability in the market before we really see a turn around. While more home sales continue to mop up the excess vacant home inventory, there is still a large number of these homes that will continue to come on-line. This essentially leaves the regular home owner on the side lines unless they want to play with the big boys and take the hit. What does a bank care if it looses 10-30k on a home, they can write it off. Not so easy of a pill for the regular home seller to swallow.

By: Diana Olick
CNBC Real Estate Reporter
Date: 21 August 2009
Link: http://www.cnbc.com/id/32508736

Existing home sales rose for the fourth straight month in a row, now to the highest pace in two years. Excellent news that buyers are getting off the fence, but they’re only getting off at a certain price point. Just like in retail, where the big bargain stores are showing gains, only the low end of the housing market is moving. As I did last month, I asked the Realtors to break down sales for me by price point. Take a look:

A full one third of all sales in July were of foreclosed properties, and as more foreclosures hit the market, you can only expect more downward pressure on prices. I spoke with Spencer Rascoff of Zillow.com today, who claims, “this is not a real recovery.” Higher sales on one end of the market do not a full recovery make. Until foreclosures peak and prices bottom, we can’t say housing is on its way back up. That’s not to say that increased sales aren’t good. Just think of where we’d be if sales were still falling on the low end, and nobody was eating up all those distressed properties?

This pricing scenario seems like a no-brainer argument for extending the first time homebuyer tax credit. Now anyone who reads my blog regularly knows I am not a big fan of government bailouts in the housing market. But if something’s working, which this credit clearly is (30 percent of buyers in July were first timers), then we should give it a little more time. Foreclosures are only increasing, as we saw from yesterday’s Mortgage Bankers Association report, and that will mean more inventory at the low end. Let’s keep it moving.