"The fact is that Realtors do not set price and, in the end, the sellers do not set the price, either," Nielsen [a Marin Remax realtor] said. "Buyers do, and often it takes time for sellers to accept that reality."Like I've been repeatedly saying, you buyers are in the driver's seat now. You are driving this market and you always have been. Take this market to where you want it to be.
Another nice thing about this IJ article is that it makes it pretty clear that what is happening in Marin's real estate market is really the same thing as what is happening in all other CA bubble markets; if it weren't for all the "Marin is special/different" crap I wouldn't feel the need to say it.
Buyers are holding out to see if prices fall further.Stop "holding out". That just causes the market to languish and increases the time duration of the pain. You need to low-ball. Buyers set the prices, not the sellers. And IMO don't go in for the incentives nonsense (paying closing costs, a new car, one year subscription to some spa, etc.). All that matters is the sale price -- this market is going to be bad for years and so you have to count on owning that new house for years. So think about the longer term costs like property taxes. And disregard staging. Imagine that staged home as how it will look after you have actually lived in it for awhile.
"It is definitely a buyer's market, no two ways about it," said Jim Wilson, an analyst with JMP Securities in San Francisco. "This idea that prices don't go down is nonsense."Now they tell us. So what was all that "housing never goes down" stuff? Gibberish? Ok, rhetorical question I admit.
And a plea:
In Marin County, "the whole reason I think that we are seeing any kind of slowdown at all is because sellers are still pricing as if we are in an appreciating market, and we are not," Frank Howard Allen Realtor Kathleen Clifford said. "My message to sellers is be realistic, price your house appropriately and it will sell. If you have not priced it appropriately, for God's sake, take a price reduction."That's right, let's get the snowball rolling.
14 comments:
I was amazed when I saw the IJ this morning. Who in their right mind would be buying now in this market??
Yesterday in Monterey county I amused myself by examining prices for Salinas, Monterey, Seaside, Pacific Grove, Carmel and Pebble Beach and Big Sur.
Marin county is in a bubble to be sure, but imagine paying $550,000 or more for Salinas or Seaside! Then in Pacific Grove, I could not but laugh at the homes priced at over 1 million. Then in Carmel and Big Sur and Pebble Beach it seemed the froth was spilling over the top. Homes that even those in Marin would blush to list at 5 million seemed routine.
This caused me to mull over luxury home markets in the context of globalization. While rapid onset climate change will of course make things bad in California, surely there are many wealthy people living overseas who will see a buying opportunity at a certain point in these luxury markets and further be delighted to trade that home in Dubai for Big Sur.
surely there are many wealthy people living overseas who will see a buying opportunity at a certain point in these luxury markets
Certainly, places like 17 mile drive may attract that sort of wealth, but I'm curious as to precisely how much intl. wealth can prop up the larger local markets? With the exception of places like 17m and Pebble
Beach, much of the suburb properties of Monterey, Cambria, SLO, etc. would be of no interest to such people. Does anybody recall Japan's boom, which brought re estate investment to our coast? When their game ended, they were backing out of homes, land, and golf courses bought here.
In the spirit of low-balling...
I bid $175K on a house listed at $210K in 1989 - at the height of a bubble. The seller accepted the offer.
At the time my rationale was that the numbers were comfortable at $175K and if the Owner didn't like it I'd just keep looking. The Owner was an older immigrant gentleman who'd bought the house for about $8K and wanted to retire back to Europe - the sum I offered was probably beyond his wildest dreams.
The point is, who gives a damn about the vendors feelings (or more likely the RE agents). If you're going to yoke yourself to 25 years of debt, you better damn well like the price or be prepared to walk.
i had a coworker tell me that there is no way prices will drop more than 5% in sonoma county over the next year.he's a loan broker.i offered him a $1,000 even money bet.unfortunately,he turned me down.dang,i should have made it $50,he might have taken the bet,and i do like easy money.
Everybody lowball to HALF the asking price, Take It or Leave It.
Because where I am (according to my reading of Zillow history graphs), everything is about twice what it would be in a regular market.
"Everybody lowball to HALF the asking price, Take It or Leave It.
Yeah, I think that's about right. But sellers are not going to sell it for that simply because they can't afford that big a hit. That's like at least 300k going *poof* in the dirt cheapest of markets, more like 400k bye-bye in starter markets, and it only goes up from there. If ultimately they can't afford not to sell either, they have earned the distinction: "FB." Yes, Mr. Financial Moron, stand up and take a bow!
I've been mulling over these forums for a few months. I used to be a rather avid poster on them, usually in the context of how and when the bubble would turn around. Now that the hoopla seems to have started to subside, perhaps a diffrent direction can be taken with these blogs. I get a sneaking suspicion that the enormous numbers of bubble blogs are one source of consumer opinion for those publishing the media.
With that said, it is obvious that we are all very aware of the bubble's demise. What is not known is what our target price is, and how far we are willing to go down before buying anything. I have a fear that as soon as homes become "cheap" enough for the very top of the earning population to barely squeak into a loan, then people will start buying again, which totally defeats the purpose of waiting for a correction. I totally agree that prices need to dip abou7 30-50% or more before they come close to reaching basic market fundementals. In reality, the average young family in the Bay Area shouldn't be buying anything over 250k, thus as unrealistic as that may sound, it isn't any more realistic to see homes priced from 700k to 500k as that much of a diffrence.
Therefore, the purpose of future bubble blogs might be more about locking down a common pricetag and adhering to it; in other words, learning restraint and control and recognizing that the consumer has supreme control over the prices and not the homeowners. Wait for 2 years if you must, but for god's sake DO NOT buy in the next year. please.
I have a fear that as soon as homes become "cheap" enough for the very top of the earning population to barely squeak into a loan, then people will start buying again, which totally defeats the purpose of waiting for a correction.
Perhaps that's a plausible scenario, but I started mulling over the future downturn, which I see characterized by:
1. Negative buyer psychology: just as the mania pushed people to buy, the downside won't fuel impulsive homebuying. Who will be eager to catch that falling knife?
2. Credit tightening will certainly not help future demand.
3. The economic impact of credit tightening and a downturn in RE and retail sectors. Not pretty at all.
4. Presold housing: how many potential buyers for the next 5 years have already bought (to avoid being priced out forever)?
5. Oh yeah--there won't be many flippers at the market's bottom. By then the myths of residential investment will be dashed.
6. Numerous other points I haven't considered.
Ross, Not that I am in disagreement with you, but for example, 2 homes sold very suddenly in my neighborhood in Alameda, which isn't exactly the most crowning jewel of the bay Area. These homes were 775k and 800k respectivly, so they were not bargains by any means. The fact that even with all the negative news in the media, homes sitting around for sometimes more than a year, and price reductions showing on every corner, people are STILL dumb enough to buy these things. Who's to say that if there are still quite a few people who think shelling out 700k for a just so-so home will stop buying once they drop from 700 to 650k? or 600K? or even 500K?
I kind of have the feeling that there are tons of young people who have been priced out for YEARS and once they have even the tinniest eekling of a chance to throw their money away, they will. I HOPE NOT, but this whole bubble has been about a lesson in human emotions getting in the way of common sense.
So if the overactive hype of a rising market is called froth, what do we call overactive hype in a dropping market? Sludge?
Yeah, it's dropping. I personally think a 50% drop is a pipe dream, but time will tell. I don't quite get the whole mob mentaility thing of "let's all not buy for a year". It's not a group purchase, it is a purchase that should be dictated by the realities of each individual/family. Otherwise it"ll work out just the same as when everyone was shouting buybuybuy when the market was rising.
Interesting. However I am also curious how the condo\townhouse market fits into this discussion. This area certainly attracts the first time buyer market - and there are plenty of them in the Marin area. I wonder about tracking those markets.
I see a lot of you talk about 700-800k single family homes, but most people don't start at that point. Nor do they 100% finance either. It's not about investment buying, it's about people living in these homes and adding to their equity over time.
Well, to prognosticate:
A Fed study (August 2005) concluded the average peak-to-trough was 19Q. So, if Summer 2005 was the peak then trough would be the start of 2010.
Per the IMF studies presented in Singapore - the average price reduction was 30%. I honestly don't know whether that was inflation adjusted or nominal.
So, if everything is average, prices should decline on average at 5.4% PA up to 2010.
I do think that this wee debacle is going to drag the averages upwards...
Cheers.
anonymous, in regards to condos, in my area (which is not even Marin), "starter" condos are still well into the $200K range. Using traditional methods, that's on the outside edge of what we can afford.
Why on *earth* would I want to stretch my income to the limit just to get an apartment that I have to maintain and pay taxes on? Seriously, starter condos are generally apartment conversions, with all of the negatives attached. Any equity we made would be wiped out in a downturn, and condos are the last to appreciate and the first to fall.
Basically, at this point it's a choice between the condo in a decent neighborhood and a SFH in a less decent neighborhood. I'd imagine it's the same in Marin; townhouses and condos as badly overpriced as the rest of the market.
Depressing as it is, I'm beginning to feel as though I'm going to be in my forties before I can even think of buying a house. With kids in high school.
At least they could help with the painting.
Post a Comment