Happy 2008

New_years_toastI made some predictions on this blog for 2007.  They were off of course. 🙂

"If I  were to make a prediction for 2007 I would be inclined to predict fairly strong sales from March until June as some of the "wait and see" buyers get off the fence and buy something.  Unless something changes, I think 2006 and 2007 will look alike, except the foreclosure rate will be higher.

The real estate industry in the twin cities  will see some changes.  There simply is not enough business to support the number of REALTORS we currently have.  Our local associations have predicted that as many as 40% of our local REALTORS will leave the business.  I will be following the numbers closely to see if the prediction comes true." From:  Back to work – 2007

I was right about the foreclosures but that was a no brainer.   2007 did not look like 2006.  Local home prices went down and so did the number of homes sold. The number of Realtors has remained high.  I have been trying to get some numbers to see if some Realtors have quit.  It wasn’t me who predicted the 40% exodus and I know that it isn’t going to happen.

The "wait and see" buyers did not get off the fence in 2007.  They are still sitting there.  On the one hand housing is more affordable than it was a year ago and interest rates are still decent.  On the other hand they "wait and see" folks are waiting for prices to go down more but at the same time they are worried about buying real estate if the prices are going down.  Kind of a catch 22, and I will predict that they will stay in "wait and see" mode a bit longer, probably until the news media stops the gloom and doom stories.

I can’t wait to see how many of Erik Hares Predictions for 2008 come true.  he wrote the predictions post last Sunday. See "predictable"

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2 Replies to “Happy 2008”

  1. Patient Buyer says:

    I suppose that it was inevitable that I comment on this one, 🙂

    Hey- not too far off on the predictions. Even a housing bear like me didn’t think price declines would happen until after the subprime blowout changed my mind. I came within an inch of buying last January.

    I am, of course, a wait-and-see buyer, or am I? I would gt off the fence now even if I knew prices would continue to go down for a bit. It is the ever-expanding selection that has me in pause mode. Very few houses are selling immediately, giving a period of time to think.

    This is a luxury, of course, compared to previous years, but hey – I’ll take it.

    That said, a year of watching my target suburbs has given me a fairly good idea of pricing, and how likely a given house will sell at a certain ask.

    One big problem I have right now is the price difference between the creampuffs and the not-so-creampuff houses.

    The nicer houses sell, and the fixer-uppers list their house for 5-10k less.

    That might have worked when people were buying like mad, but I see the same houses
    languishing for months while a small percentage of houses are listed and sold.

    Bottom line – In a hot market, sellers will be able to move a less than premium house for a small discount from the creampuffs, due to scarcity and market ‘velocity’.

    In this market, the price spread need to be wider, since I have a smaller chance of losing out on the premium house.

    I’m thinking of one house in West Bloomington – no garage, on a busy street corner. Good luck selling that one in this market. You would have to knock $40k off before I would even entertain the notion. There is simply too many other options.

    Sellers need to realize something. Right now, each $10,000 of mortgage costs about $60 per month in debt service. Therefore, even a $10k discount only drops my payment $60. If your house is not as nice as the competition and you are priced only $10k below, ask yourself if a buyer can make it as nice as the competition for $60 per month. Probably not.

    The price needs to be reduced enough to motivate a buyer. For $60 per month more, I’ll take the nicer house. For $180 less per month, well, now I’m listening (that’s $30k, folks).

    I wish I was more motivated, because I’d really like to move into a place now, but there is no sense of urgency.

  2. Patient buyer – pardon the pun but you are right on the money when it comes to how homes are priced. the gap is not wide enough. I often encourage my sellers to make repairs and updates because I find that for every 2K in repairs needed buyers will want to pay 10K less. I also encourage buyers to make an offer when they find a house that they want even if the offer is 40K less than the asking price. The answer may be no but it will never be yes unless the buyer asks. Thanks for stopping by. Hope you have a wonderful 2008.

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