Buyer vs. Seller on Home Prices
Daily Real Estate News | Friday, December 30, 2011
Housing analysts are expecting home prices to stabilize in 2012, but that doesn’t mean that buyers and sellers won’t continue to be at odds over home prices in the new year.
While buyers are feeling good about the housing market and saying it’s a great time to buy, seller sentiment is falling to record low, a new report by the Mortgage Bankers Association shows. Sellers say they are unhappy because they’re unable to snag the prices for the home that they want.
According to the MBA report, a large gap is occurring between home buying and home selling that isn’t expected to narrow for at least the next five quarters.
From 1992 to 2005, seller sentiment remained high — between 40 percent and 60 percent, according to the report. However, since 2005, seller sentiment has decreased to 7.6 percent. Meanwhile, home buyer sentiment has remained high despite unemployment and economic conditions. Nearly 80 percent of American households say now is a good time to purchase a home.
As home values have dropped over the last few years, many sellers are refusing to budge on their prices to reflect current market traditions. One reason why: Some sellers are underwater on their homes. About 20 percent of home owners nationwide are considered “underwater,” owing more on their mortgage than their home is currently worth. Also, some sellers are realizing there may be a benefit in waiting to sell or to keep the home on the market holding out for a higher price, notes the author of the report, Gary Engelhardt, a Syracuse economics professor. “This could hold prices high enough to drive a substantial wedge between the existing buyer and seller. And a poor jobs market with limited mobility, a key driver of housing-market transactions, may exacerbate this,” an article at HousingWire notes about the report.
Source: “Buyers, Sellers Continue to Butt Heads on Home Prices,” HousingWire (Dec. 29, 2011)