I just read an article in Inman News about a report put out by Altos Research. Altos Research is a real estate data company and their prediction is that we should hit bottom in real estate pricing in 2011.
They feel we'll see our normal surge in the upcoming Spring selling season, but it won't mean prices will necessarily escalate. In most areas in the southwest suburbs, prices have been declining since 2005. The spike in sales that usually occurs during our best months do not necessarily bring about price increases, just a clearing of inventory.
We will still have a glut of foreclosures and short sales
In my opinion, until the amount of distressed properties slows down there is going to be more inventory than available buyers. Distressed properties hamper regular sales and bring down prices.
Interest rates are already going up, and when interest rates are higher prices might need to come down, since that will limit buyer qualifications. When less buyers can get qualified in certain price ranges, then there are even less ready, willing and able buyers compared to the amount of homes available.
Pricing is the most important factor to selling a home in today's market
No amount of marketing can sell an overpriced home in this kind of market. Even in the seller's boom, there were some homes that didn't sell. Hard to believe, but buyers will only pay what a home is worth. When there is financing involved, there will also be an appraisal.
There are certainly other factors involved such as property condition and location, but that's where price needs to be set. What I see happening with many sellers is that on paper their property looks like it should be a certain value, but the homes used to create that value were much more updated and/or upgraded. Your current competition is very important now, too. If you don't price correctly, you'll simply help to sell the other similar properties that show better at the same price point.
When will we recover?
Altos Research feels that recovery could begin in another year (although it is stated somewhere from 2012-2014). However, you shouldn't expect the word recovery to mean higher prices. They feel prices will stagnate instead of continually dropping, and it will stabilize for quite some time before prices will appreciate.
When unemployment improves, the market will improve. This will not happen quickly and it will be a slow ride to improvement in the real estate sector.
For sellers waiting for the market to improve (and their bottom line), the wait will probably be years from now. If you must sell you have to face the reality of the market we're in today.