Sellers Getting Comfortable With Today's Housing Prices?

The wealthy may soon be feeling the pinch as the luxury housing market takes a hit. According to RealtyTrac, homes listed for over $1 million have dropped 20 percent in 2012. That means the average sales price for expensive real estate homes has gone from $2.5 million, last year, to just above $2 million. Some higher-priced luxury homes are even lopping off several millions of dollars in hopes of finding buyers. 
 
Interestingly, after many years of waiting and hoping, the more vast real estate market is experiencing some price stabilization and possibly even seeing prices rise a bit. Some say that's because sellers are getting comfortable with the lower sales price. 
 
However, other experts argue that the increase is more likely seasonal rather than a true sign that the market has completely bottomed out. Part of the reason for the skepticism, industry economic experts say, is because there is a large looming mass of homes either nearing a foreclosure or already in progress. As those foreclosed homes quickly and massively come into the marketplace, it's likely prices would drop. 
 
But in the last couple of months, the press has reported on housing inventory dropping in some markets and competitive pricing is most evident in the markets that suffered greatly from foreclosures such as Phoenix, Miami, and parts of Southern California. Markets like Phoenix and San Francisco are seeing some speculative purchasing and that is raising concerns about possible market bubbles. 
 
If you're selling your home now should you be concerned? Not if you're taking the right precautions and hiring the most experienced industry professionals to assist you. Understanding the pros and cons of a particular market is vital.
According to the National Association of Realtors, nationally, first-time buyers made up only 35 percent of existing single-family home sales during the month of April. That compares to 40 to 45 percent of the market in better times. 
 
Statistics like that matter because they point to economic barriers that could keep your home on the market longer than you desire. It's, of course, the tight credit lending restrictions, high unemployment rate, and overall unstable economy that are, in some cases, shutting out first-time buyers. 
 
But the flip side is that continuing low interest rates are still drawing wannabe homeowners out to search for their perfect house which has likely dropped a good 35 percent from what it was during the housing peak. 
 
Another factor contributing to the overall real estate market is that it's an election year. Due to uncertainty, some predict that buyers may be inclined to purchase before the end of the year. Others fear that, depending on the outcome of the election, some of the tax cuts currently in place will expire. 
 
Also, your pricing could be affected depending on the style of home you're selling. The number of buyers interested in the senior housing market is increasing. Lots of Boomers are aging and they have many ailments. Apartment living lacks the privacy they desire but often single family homes aren't suitable. So housing that features senior-friendly accommodations like a master suite on the first floor tend to be in demand. If you have a home that is designed to allow buyers to age in place, it's a good idea to market it that way. 
 
Remember when selling your home, follow a few simple rules. Study the market. Get expert advice. Know your target audience. Highlight the most desirable aspects of your home and, be realistic with your listing price. 

August 10, 2012 -- Realty Times Feature Article by Phoebe Chongchua 

Housing Cycle Reaches Low Point

Home sales volume last year was up modestly over 2010, but there was an important shift in their composition: Investors were stepping up to buy while households dropped back. There’s a positive side to this. Our surveys show that households getting into the market are doing so for all the right reasons. They’re seeking a different home or another neighborhood. They’re not buying just so they can flip the house at the first sign of market change.

These buyers are getting in at the low point of the housing cycle, so meaningful wealth gains over the next few years are inevitable even though financial considerations are not their principal motivation. From 1981 to 2011, despite the housing bust years, home values more than tripled. For that reason, households who bought 30 years ago are sitting pretty financially. Renters’ typical net worth, by contrast, barely changes, so renters today have about $4,000 in net worth, not much different than they had a few years ago. Compare that to home owners, whose net worth is typically around $160,000. That’s down from $230,000 at the height of the housing bubble, but it remains in stark contrast to renters.

Looking ahead, we could see a greater unequal distribution of net worth over time as home prices rise. Those who will benefit the most are those who, like many investors and some households, are buying during this low point.

Unfortunately, many would-be buyers are either hampered by today’s excessively tight credit requirements or earning too little to qualify. On the first problem, we will continue to urge lenders to return to reasonable, pre-bubble standards. On the second, those who lack the income to buy face challenges that go beyond our ability to help. At a minimum, we can encourage young people to stay in school, since high school dropouts are far more likely to struggle economically throughout their lives than graduates.

May 2012 | By Lawrence Yun
Learn what the latest economic indicators mean for the real estate industry.
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