I noticed that the number of homes listed for sale in Scripps Ranch this morning (single family detached) has risen to 133. This is the highest number of homes for sale in more than five years, including post 9/11. What’s going on? For one, we (those of us who are not in denial) know we are in a “transition” market after approximately 8 years of consistent home price appreciation. Don’t get me wrong. THERE ARE BUYERS OUT THERE! I see them almost every day (and EVERY Sunday at my open houses). They are just having problems justifying “value” in many homes. Why?
Answer: The challenge here is that although everyone reads about or hears about the shifting market, when it comes to selling their own home some sellers are still in a bit of denial (not our clients, thankfully). They, understandably, have the old “My home is special” syndrome. It’s a very common, but emotional response. In fact, their home is special! But now there may be anywhere from 5-10 other “special” homes that they are directly competing against in virtually all product/size/price segments. This is the raison d’tere for real estate agents. We are supposed to bring objectivity to the process.
According to this morning’s San Diego Union Tribune (4/23/06, Homes Section), the median price for all detached homes sold in Scripps Ranch in March, 2006, was down 8% from from March of last year.
Okay, now here comes my RANT for the morning, so if you don’t want to read it, stop right HERE 🙁
Listings are up; Sales are down; interest rates are climbing. More inventory of homes for sale and fewer qualified buyers. So what does this tell us?? Economics 101, right? Basic Supply and Demand…
So, why do I see so many examples of homes currently on the market that are listed at prices that are 10%-25% HIGHER than the last comparable sale? What are these agents/sellers thinking?? Denial, that’s what. The eventual result?? These homes will have to price reduce (probably several times) before selling and, according to our own statistics (previously published in our Simply Scripps newsletter), will likely sell (months from now) for a price that is substantially less than what they could have achieved had they been priced properly from the beginning. Either that or they will ultimately be withdrawn from the market. We are already seeing many examples of this scenario. Either way, they lose. We have had several opportunities to list homes recently and either were not selected as the listing agent (because we told them a truth they did not want to hear) or we decided to not waste our time and marketing dollars with unrealistic sellers. In two of these cases the sellers expected a sales price that was 25% higher than what the hard data supported, even after considering the differences between homes. Now, we have never had to PASS on a listing before this current market. Very weird. What’s most disturbing is that there are agents out there that actually may have agreed with and/or supported the pricing, just to get the listing, without truthfully representing the market reality. This is likely an ethics violation (not to mention a breach of fiduciary responsibility), but one that is virtually impossible to prove.
Okay, RANT IS OVER! I hope everyone has a great Sunday. I’m working an Open House this afternoon. 🙂