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Today’s Talking Point 10/9/09

Pricing a Property Properly Part 3

Today is the third of a three day review of the components to pricing a property properly in today’s market. The three points covered:

Wednesday: The Competitive Market Analysis (CMA)
Yesterday: Absorption Rates
Today: Accumulation Rates

The accumulation rate is a look into the future to try to determine what housing inventory will look like in the next six months. As with absorption rates, if demand remains relatively constant put supply builds, there would be downward pressure on housing prices.

There are two major areas of concern:

1. In a survey by Zillow.com, 12% of homeowners said the were ‘very likely’ to put their house up for sale if they saw the market starting to improve. That would amount to about 7 million homes coming to the market!
2. Experts estimate that the banks are currently sitting on approximately 750,000 foreclosed homes that will be hitting the market over the next few months.

Even if both numbers turn out to be a fraction of current estimates, there will be a ‘rush’ of inventory comning to the market between now and the spring. That increase in ventory will prevent prices from rising.

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