Sellers Still Don't Get It
I realize that we've seen some more positive stats in housing over the past month, but what exactly makes home sellers think that we're all back to business as usual? A new report from Trulia.com today finds that a full one quarter of all properties on the market in August experienced at least one price cut while still on the market. What this tells me is that a huge number of sellers still don't have a handle on what their homes are really worth. Realtors continue to say that the only way to sell in today's market is to price aggressively. Unfortunately, many tell me their clients are still not listening.
According to Trulia, "the total value slashed off active listings now totals $27.8 billion." That's nearly $28 billion worth of overblown expectations. The report adds, "while home sellers in several cities are beginning to price more aggressively, and forgo the need for price reductions, many continue to ignore market conditions and over-price their homes."
The cities with the most price reductions include Boston, Milwaukee and Minneapolis, which are of course not usual suspect cities in California and Florida, i.e. the price crash capitals. I have a theory (of course I do). Sellers in the hardest hit states know that desperate times deserve desperate price reductions.
Is it just possible that the sellers in the other states - those that are reluctant to price aggressively - aren't as naive as they seem? Is it perhaps instead a hidden indicator that prices in these states are about to fall off a cliff, due to the fact that, as we saw in the RealtyTrac data yesterday, foreclosures in non-boom cities are starting to rise. We all know foreclosures bring down prices of neighboring homes. Sellers in these states may not be factoring in the bargain-priced distressed properties with which they are now suddenly competing.