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A Window of Opportunity for House Sellers

There has been much confusion as to where housing prices are headed. We have actually blogged on the issue recently. Today, we want to give our opinion on this subject for the short term. We believe sellers have a window of opportunity for the next 90-120 days in which to sell their homes for maximum price. We believe there will be increased downward pressure on home prices later this year and the first half of 2012.

Why renewed downward pressure?

Any item’s price is determined by ‘supply and demand’. In many parts of the country existing housing inventory is already high and actually increasing. In addition, an inventory of distressed properties (foreclosures and short sales) will be coming to market later this year. This inventory has been delayed for the last several months because of faulty paperwork by the banks when they originally attempted foreclosure proceedings on these homes.

Celia Chen, of Moody’s Analytics explains:

“Foreclosures are weighing on the outlook for U.S. house prices, and the slow resolution of issues surrounding the so-called robo-signing scandal is keeping distressed homes off the market”.

The New York Times also recently reported on this issue. They looked at the delays in certain states. As an example, this is what they found in New York:

“Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure, according to LPS. The average over the last six months: 286. That is far lower than at any point since the recession began.”

Banks are now correcting these errors.

There is evidence that the banks are getting their documentation in order and about to again increase their foreclosure repossessions. Housing Wire reported:

“Since major lenders delayed foreclosures to fix a broken process late last year, the amount of filings declined, but in May signs emerged the effect might be wearing off.”

They went on to quote RealtyTrac CEO James Saccacio:

“…lenders are somewhat unevenly pushing batches of bad loans through foreclosure as they overhaul their paperwork and documentation procedures and as they determine that some local markets are able to absorb more foreclosure inventory… Foreclosure processing delays continue to mask the true face of the foreclosure situation, although there were some clues in the May numbers of what lies behind that mask.”

What will this mean to home prices?

As this inventory comes to market, it will impact prices in two ways:

  1. It will provide discounted competition for buyers
  2. It will impact the appraisal values of all homes in the area

Again, we quote Celia Chen:

“It is quite possible that house prices will pick up slightly in the second or third quarter of this year, as foreclosure sales remain depressed while nondistress sales pick up…By the fourth quarter of this year, however, the distress share will rise, sending the house price index back down…

House prices will founder until early next year and start rising in earnest at the end of 2012.”

Bottom Line

There is a window of opportunity currently which sellers should take advantage of. Waiting until later this year or until next year will not guarantee a higher sales price. If anything, it probably guarantees the exact opposite.


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18 replies
  1. Jeff
    Jeff says:

    This maybe true but what I have found it all depends on your area you live in. Some areas are harder hit with foreclosures than others. To make a blanket statement like this is just like the media saying the same thing. I can show you that in our area, there are areas where prices have actually increased from 2009 to 2010 ever so slightly. I do agree will we see more increases in prices in the short term no – I feel in our area most areas will bounce along the bottom.

    Reply
  2. Stephen Foster
    Stephen Foster says:

    Sales in the Birmingham Market have flattened out. Buyers see no sense of urgency to buy, and are going on vacation and in general just missing the boat. Telling them about the QRM is pointless. They don’t see it happening for years if it happens at all
    As for Sellers, I have my own home on the market to downsize over 1 Million which for here is the high end. I am under no pressure to sell and like some of clients and neighbors, if the house sells fine if not fine too. In my case, I remodeled in 2010 and it’ is like new..I just wanted to downsize, and if I did sell pay cash and move on..but 1) the quality of the homes I am looking at do not inspire me to drop my price 2) nor are those sellers dropping their prices. 3) In doing some number crunching I am seeing on the low end sellers getting 82% of the original list price but the average is between 82-86% of the original LP. Even after 400 days + on the market. That is just not in my area but spot checked every where. 4) The AG in this state is going after the banks which according to agents that DO REO has slowed or clogged up the pipeline. This is a state that you must go to court to foreclose and has the right of redemption.
    5) Quality home either REO or other wise are poorly lacking and homes say that are in the mid range that show well are in some cases getting multi offers.
    In closing you might be right, but Time Mag said it could take 10 yrs to clear up this housing mess. The banks want to move on because they are gearing up to go back to business as usual..or at least they think they are going back to the way they did business.
    FYI people are looking but cannot move on until their home sells either moving up or down..

    Reply
  3. Stephen Foster
    Stephen Foster says:

    Sales in the Birmingham Market have flattened out. Buyers see no sense of urgency to buy, and are going on vacation and in general just missing the boat. Telling them about the QRM is pointless. They don’t see it happening for years if it happens at all
    As for Sellers, I have my own home on the market to downsize over 1 Million which for here is the high end. I am under no pressure to sell and like some of clients and neighbors, if the house sells fine if not fine too. In my case, I remodeled in 2010 and it’ is like new..I just wanted to downsize, and if I did sell pay cash and move on..but 1) the quality of the homes I am looking at do not inspire me to drop my price 2) nor are those sellers dropping their prices. 3) In doing some number crunching I am seeing on the low end sellers getting 82% of the original list price but the average is between 82-86% of the original LP. Even after 400 days + on the market. That is just not in my area but spot checked every where. 4) The AG in this state is going after the banks which according to agents that DO REO has slowed or clogged up the pipeline. This is a state that you must go to court to foreclose and has the right of redemption.
    5) Quality home either REO or other wise are poorly lacking and homes say that are in the mid range that show well are in some cases getting multi offers.
    In closing you might be right, but Time Mag said it could take 10 yrs to clear up this housing mess. The banks want to move on because they are gearing up to go back to business as usual..or at least they think they are going back to the way they did business.

    Reply
  4. KIM VAVROSKY
    KIM VAVROSKY says:

    HERE IS GOOD INFORMATION FOR YOU. THIS GUY IS CONSIDERED ONE OF THE BEST IN THE REAL ESTATE BUSINESS. HE SAYS SELLERS HAVE A 90-120 DAY WINDOW TO SELL THEIR HOMES BEFORE ANOTHER PRICE DECREASE LOOMS. LET’S GET HER SOLD………

    Reply

Trackbacks & Pingbacks

  1. […] by The KCM Crew on June 21, 2011 · 7 comments […]

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  3. […] first is from KCM Blog which is one of my favorites.  The title of the article is: A Window of Opportunity for House Sellers.  It’s worth a read.  It mirrors my belief that home prices will continue to come under […]

  4. […] there were fewer discounted properties available for sale. Most now believe that the banks are within 60-90 days of releasing this inventory and that prices will again begin to […]

  5. […] there were fewer discounted properties available for sale. Most now believe that the banks are within 60-90 days of releasing this inventory and that prices will again begin to […]

  6. […] there were fewer discounted properties available for sale. Most now believe that the banks are within 60-90 days of releasing this inventory and that prices will again begin to […]

  7. […] there were fewer discounted properties available for sale. Most now believe that the banks are within 60-90 days of releasing this inventory and that prices will again begin to soften.Main Stream Media Begins to Announce “Now Is the Time […]

  8. […] to KCM Blog: http://kcmblog.com/2011/06/21/a-window-of-opportunity-for-house-sellers/ This entry was posted in Real Estate, Selling a Home and tagged buying, charlotte, Real Estate, […]

  9. […] have a current window of opportunity of 90-120 days to take advantage of selling their homes for maximum price. Waiting until later […]

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