At our recent year-end office meeting, we again gave our little State of the Real Estate Market address to our agents. We basically copied and pasted last year's summary — and the summary from the year before. As much as I am a fan of manufacturing drama, I feel a little like Sean Kingston with my iPod stuck on replay-ay-ay.
It's a question we get every single time we meet with a prospective seller. "If we wait — maybe we rent for awhile — how long will it be before prices are better?" they ask anxiously. The only difference is the homeowner's definition of "better." Sometimes, they want to hold out for only slightly better, while other times they are ready to hunker down until we return to the 2005 pricing glory days.
The latter is the easy one. If you are waiting for a return to peak values, go ahead and rent but with the expectation that your children will inherit a nice investment property. "Slightly better" is a little more complicated. If you believe the smart economists in dark suits (and I generally do), we are seeing signs of pricing stability, at least in San Diego. We are seeing the more affordable homes enjoy a bit of price creep, yet we are continuing to see some downward pressure in the higher priced segments. Until we clear out the troubled inventory, we will be bouncing around the valley floor. Think three to five years.
We have been noticing signs of more realistic expectations by both buyers and sellers; the value perception disconnect is slowly closing. But we aren't there yet.
I originally posted this insanely helpful infographic in late 2008 illustrating the buyer pool for any given listing using Dabbleboard. It is eerily as relevant today as it was over three years ago, except that the bubble on the right is relatively larger. And there will be a few more folks in the middle now — folks interested in your home but who still can't get financing. So, in the spirit of regifting, let's revisit what buyers are looking for.
Without further ado, I bring you my Venn Diagram illustrating why homes are taking a wee bit longer to sell. It's a little complicated, as evidenced by the 5 minutes it took me to design it, so do hang in there.
Dislcaimer: Your results may vary. Margin of error = 100%. Patent pending. Use only as directed.