Why Are There so Many Homes on the Market for so Long!

By
Real Estate Agent with Rancon Real Estate

HomeEvery street you drive down, seems to have several "For Sale" signs in front yards. These are often the same signs day after day - week after week - and month after month. What is happening that has brought the selling frenzy to a stand still?

For the past few years, our area was one of the fastest appreciating areas in California. What happened? Okay the "funny" interest only loans started the slide, but the problem with inventory is something different. The prices of homes have not dropped enough to attract the buyers that remain. Homes are still selling but not a two year ago prices!

Homeowners still remember what their model match (exactly the same home) sold for . . . a year and a half ago . . . so they want at least that price and maybe just a little more. After all that was a while back! The market has changed and the "perceived" values have not. Many owners still believe that if they just wait a little longer, their home will eventually sell for what they are asking.

The fact is, today, time is not your friend. The longer a house is on the market , the less chance it will sell---particularly at the initial asking price. Prices are heading lower as home owners that have to sell because on job transfers, bad loans, or family issues, etc. make price adjustments to get their homes sold.

Different agents can't help, more advertising can't help a overpriced home (Buyers are going to chose the best "deals" for their family) Over the top, the most beautiful, most upgrades, all of that will still not make a buyer overpay in today's market. (Anyone heard, "If they fall in love with my home, they will pay cash for the difference if it doesn't appraise"?----Sorry, buyers care about their pocketbooks. It will cause a buyer to choose one home over the other but only if the price is right.)

Today it is about price and condition---

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Show All Comments
Rainer
45,449
Stephen Joos & Chris Brubaker- HouseFront
HouseFront - Denver, CO
Great insight, I totally agree with that you said.  Some sellers are just stubborn though and if they can afford to hold on I guess they will.
Oct 12, 2007 04:26 PM #30
Rainer
125,515
Dawn Lewis
New Dawn Realty - San Diego, CA
Realtor - San Diego

Sandra,

I think we got another 3 years like this ahead of us too. Great post.

Mike Lewis

Oct 12, 2007 04:31 PM #31
Rainer
40,953
Frank Jewett
tech4REpros - San Jose, CA

Fortune magazine has a good article on the real estate market that explains how the price-to-rent ratio needs to normalize (rents need to increase and prices need to decrease) before sales pick up again.

http://money.cnn.com/2007/11/06/real_estate/home_prices.fortune/index.htm?postversion=2007110711

The problem with applying the law of supply and demand to home sales is that the demand is for housing, not home ownership.  Home ownership is more valuable than renting, but right now the premium is very high.

 

Nov 11, 2007 04:09 AM #32
Rainer
6,601
Wes White
Lucky Star Realty - Crescent City, CA
Crescent City, CA
You are absolutely correct about pricing low enough initially.  We have learned at our office to take every offer, especially the first one, that comes in very seriously because it may be a while before another one, and by then we will probably have reduced the price further.  Very true Post!!!
Nov 24, 2007 02:55 PM #33
Rainer
2,368
Kevin Byrd
Fantastic Services - Stockton, CA

What if the seller could offer the buyer something that no other sellers in the area are offering, something that would make his listing stand out from the rest?

If all other things being similar (price, condition, location) what if the seller offered to give the buyer a financial software system that has been tested and working for thousands of homeowners across the country, that will coach that buyer on how to pay off his new 30 year home loan, that he negotiates with his own lender, in half the time or less (10-15 years in most cases) and paying no more than his 30 year payment that was set by his lender. Do you think you might have an advantage over the competition? I'm personally working with several agents that have had success with this concept.

Anyone interested in offering this to their clients to use as an incentive to sell their home faster contact me for complete details. There is no cost to you as the agent and I will handle all the necessary paperwork with your client, and the buyer to close the deal. It's a win win win for everyone. 

Nov 30, 2007 08:36 PM #34
Rainer
64,395
David Hood
Chino Valley Real Estate - Chino, CA
Supply and  demand the fact the lenders are not doing no doc loans and 100%. And your buyers have to have a real down payment...
Dec 09, 2007 05:47 PM #35
Rainer
3,468
Robert Cortez
Century 21 Jordan Link & Co. - Visalia, CA

Great post! It's tough trying to convince some people that their homes just won't sell for what their neighbors home sold for even a year ago. I'm at the point now where I just won't take anymore overpriced listings. Some sellers just have to learn the hard way. If they just priced their homes right to begin with, their homes would sell quicker. Instead they end up getting desperate to sell, and end up selling at a much lower price than they would have received if they just allowed me to price their home right to begin with.

Even when I go in to a listing presentation with printed articles & comps/statistics on the market today, some people are just too much in a state of denial, which is unfortunate. Very frustrating.

Dec 29, 2007 01:50 PM #36
Rainer
20,725
www.SeeAllListings. com
SeeAllListings.com - Camarillo, CA
buyers only care about one thing now. price
Dec 29, 2007 08:35 PM #37
Anonymous
Anonymous
Anonymous
Its all about education, educate, educate.  Then use patience.  Sellers are hard nose or they can be.
Jan 02, 2008 11:54 PM #38
Rainer
27,561
Marlo Newman
W.J. Bradley Mortgage Capital - Scottsdale, AZ
Marlo Newman Mortgage Banker 480-326-9858

The #1 Reason homes are on the market longer is the lack of Down Payment Funds available that buyers have!

Simply put, the mortgage crisis has almost eliminated all 100% loan programs and the new banking guidelines have become so tight that 40% of all potential home buyers have been elimimated. We actually have a new name for theses folks it's called renters.

There is a solution! If you are interested in what it is click on a link below:

For Buyers

For Sellers

For Realtors and Lo's to grow their business.

 

Hope this helps :)

 

Marlo

 

Jan 03, 2008 12:34 AM #39
Rainer
67,568
Sandra Carlisle
First Team Estates - Corona del Mar, CA
Residential Sales & Property Management

If it makes any of you feel better, Corona del Mar, Dana Point, Coastal Huntington Beach, Laguna Beach, Newport Beach, Newport Coast & San Juan Capistrano all have had increases in the median price since 2006.  Many other areas in Orange County as well. It's true that sales volume is down in all of these areas except Corona del Mar and Dana Point but things are definitely changing for the better.  My area is usually the last to feel the pain and the first to recover.  Also, properties $3 million and up into the mega millions ($30) are moving.  If cycles repeat themselves, for us in Orange County and surrounding areas, we could possibly be at the bottom right now.  Temecula is probably only a year away.  Buyers are beginning to lose their opportunities.

 I have my buyers email me the articles they are reading.  Most of the time they don't realize that the "reporter" is using statistics from Michigan or somewhere else that least affects us.  It makes for good conversation and it's getting my buyers off the fence. 

Mutiple offers are even back on properly priced properties. 

I have also been taking the last 3 months worth of sales with me and I post it on my Open House Board.  People are surprised to see so many sales.  It works equally well with expireds who blame the market instead of their agent.  "It's not the market, it was your alignment within the market that cause your home not to sell."  It's all the truth. 

 

Jan 08, 2008 04:24 PM #40
Rainer
125
Don Fried
RSI, Inc - Los Angeles, CA

All good comments. As an investor in this market - the #1 thing to me in this market is pricing the property right out the gate.

If I am not priced right to sell within 30 days I will chase values downward and sit there longer. There is a lot of competition out there and more to come and knowing this I have to look at what other similar properties are listed for as well as the condition of these other listings and price myself accordingly to be the next 'best' sale/value in order to attract buyers.

 

Feb 18, 2008 12:12 AM #41
Anonymous
Anonymous
Anonymous
these are all great comments
Mar 17, 2008 01:45 AM #42
Anonymous
Anonymous
Irene Lai Chan - Modesto California

Even if the sellers are realistic about the prices and buyers are willing to make the offer, I heard deals fall through because loan is not available.  I wonder how the increase in mortgage/loan limit will change the scenario in the California real estate market.  People can now borrow more money at a higher(?) rate when loan is not available?

For more information on the loan limit increase:

http://www.fhaloanpros.com/2008/02/huge-increase-in-fha-loan-limit-passes-congress/

http://www.mortgagebankers.org/NewsandMedia/IndustryNews/60648.htm

 

 

Mar 22, 2008 07:52 PM #43
Rainer
18,209
Irene Lai-Chan
Rando Real Estate - Modesto, CA
M.S., REALTOR

Even if the sellers are realistic about the prices and buyers are willing to make the offer, I heard deals fall through because loan is not available.  I wonder how the increase in mortgage/loan limit will change the scenario in the California real estate market.  People can now borrow more money at a higher(?) rate when loan is not available?

For more information on the loan limit increase:

http://www.fhaloanpros.com/2008/02/huge-increase-in-fha-loan-limit-passes-congress/

http://www.mortgagebankers.org/NewsandMedia/IndustryNews/60648.htm

 

 reposting AFTER login to get credit for comment points

 

 

Mar 29, 2008 12:53 AM #44
Rainer
7,425
B. Jason Perry
B. Jason Perry Insurance Agency - San Juan Capistrano, CA
The Right Product For the Right Price

The current market is still over way over priced, and the marjority of homes that are being sold are most likely people that feel like they need a home now, and that it's the perfect time to buy, or those who are moving from one location to another.  

For the most part sellers are putting their homes on the market just to test it and see if they could get the "magic number" that would make it possible for them to sell for an overpriced amount then re-purchase a "deal". 

We see this all the time with people who try to sell there own cars.  Most private sellers always ask for much more than the car is worth. This is the major reason why larger homes are not being sold as they have seen the majority of the decline in value and the homeowners have lost more in equity.  

We almost never see new purchases over 3500 sq ft come through our office these days.  I have a client right now who has made 4 reasonable offers on homes that are overpriced and the sellers did not even entertain the offer. 

We do offer very competitive rates for homes built in 1990 and later. I have included our rates below for for these types of homes. 

 

 

 

 

 

Feb 20, 2011 09:17 PM #45
Rainer
12,306
Colette Gray
Helping seniors age in place everywhere in California, Arizona, NV, Washington, Oregon - Redondo Beach, CA
Senior Loan Officer, HomeSafe Reverse Mortgages

It's a matter of supply and demand.  Prices won't go up until the glut of homes on the market get sold and supply drives prices back up again. 

I think it's worthwhile for homeowners to understand that what their house was worth two years ago is not what it's worth today.

Jun 09, 2011 05:43 PM #46
Rainer
27,578
Billy Burke
The Auctionarium, Inc - Rancho Mirage, CA
CAI - AARE

It's nice to see a more realistic attitude about the market today than there was in 2007 when this was first posted.

 

 

Aug 04, 2011 08:02 PM #47
Rainer
226,148
Cliff Keith
Today Sotheby's International Realty - Redwood City, CA
Redwood City Real Estate

Good post and infomation that can give us all food for thought. I hope your market picks up because our market is HOT HOT HOT here on the San Francisco peninsula.

Mar 08, 2013 03:13 PM #48
Rainmaker
42,861
Teresa Tims
TDR Mortgage & Real Estate Group - Rancho Cucamonga, CA
Teresa Tims

Buyers valued their money that is why for them PRICE is a KING...

Sep 04, 2013 09:53 AM #49
Anonymous
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Rainer
22,780

Sandra Williams

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