I rarely cite other blog posts even though I read quite a few and many of them are good. But I usually have enough to write about so don't need to talk about other people's blog posts. However, once in a while I find a gem that moves me. I recently read a post about Real Estate Speculators Establishing Bottom-dollar Price for Lender-Owned Homes in Phoenix written by Greg Swann of Bloodhound Realty. That's not even the whole post title.
Of all the good blog posts I read, why would I share one talking about the Phoneix market? Aren't they worse off then we are? Maybe, but I'm seeing our prices in the southwest suburbs continue to decline. The inventory of available properties far outweighs the amount of available buyers. And sellers here also have to start worrying about market values being established by sold and closed short sale and foreclosed properties. We have them here, too, in amounts I've never seen in the 25 years I've been selling real estate.
In my opinion, it isn't just bank-owned properties that are setting low prices. It is also sellers that need to move and fortunately for them they have built up enough equity that they're not feeling the crunch. Those sellers can afford to price their properties in line with today's buyer's market and still go on with their future plans because they have enough equity. Sellers that have owned their property for quite some time and not touched their equity don't really feel that they're "losing" money because in my opinion, the past seller's market caused unusual price increases. Sellers that purchased many years ago, prior to the seller's market, are still seeing appreciation.
The combination of high inventory, too few buyers to catch up with the amount of properties available and all of the properties being sold at ever lower prices because of short sales, foreclosures and sellers that are pricing their homes correctly causes prices to continue to fall. Yes, it's happening here in the Chicago area and the suburbs.
I keep saying over and over, "Why would a seller want to keep their property on the market for months or even years?" A property that remains on the market for such a long time becomes stagnant and buyers think something is wrong with it, not realizing that maybe the sellers have reduced $50,000 or more during the long listing time. They don't understand that the property is sitting because it was priced too high to begin with.
A seller is much more likely to get top dollar when they first list (if priced right) than letting it languish on the market. In most cases they end up taking even less than they would have if it was priced at market value in the beginning.
But why was it priced incorrectly? Was it the agent's fault, the seller's fault or a little of both? I'll write my feelings in my next post.