Comments on: Tearing Down A Brick Wall: The Problem With Sellers http://matrix.millersamuel.com/?p=953 Interpreting the Real Estate Economy Mon, 06 Sep 2010 23:56:29 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Me http://matrix.millersamuel.com/?p=953&cpage=1#comment-35991 Me Mon, 13 Nov 2006 15:02:42 +0000 http://matrix.millersamuel.com/?p=953#comment-35991 <p>"And people who have owned for a long time I think don’t really understand what a massive financial commitment it is to buy for the first time today."</p> <p>Amen, skep-tic. My parents (thanks to equity withdrawal - I know, stupid of them) pay about 5K a month for their updated, 3500 sq. ft. 4 bed/2.5 bath home on one of the best blocks in their upscale town (purchased 30 yrs ago). For the same mortgage payment, I could buy a place about half that size in their town, in crappy shape, that I would quickly outgrow.</p> <p>Also, theresa, as for buyers' attitude, sure, we have it. It's a result of the attitude that sellers have developed over the past few years. We have been treated like a pretty young boy on his first day in prison. Why shouldn't we give some of the same?</p> “And people who have owned for a long time I think don’t really understand what a massive financial commitment it is to buy for the first time today.”

Amen, skep-tic. My parents (thanks to equity withdrawal – I know, stupid of them) pay about 5K a month for their updated, 3500 sq. ft. 4 bed/2.5 bath home on one of the best blocks in their upscale town (purchased 30 yrs ago). For the same mortgage payment, I could buy a place about half that size in their town, in crappy shape, that I would quickly outgrow.

Also, theresa, as for buyers’ attitude, sure, we have it. It’s a result of the attitude that sellers have developed over the past few years. We have been treated like a pretty young boy on his first day in prison. Why shouldn’t we give some of the same?

]]> By: skep-tic http://matrix.millersamuel.com/?p=953&cpage=1#comment-35568 skep-tic Fri, 10 Nov 2006 21:15:37 +0000 http://matrix.millersamuel.com/?p=953#comment-35568 <p>I just want to say upfront that I am trying to comment in good faith to give the audience of this board (which I assume is mostly brokers) the perspective of one potential buyer who has many friends who are also potential buyers (all late 20s high income professionals).</p> <p>Small price cuts are not enough. I know that prices were half what they are today 4-5 yrs ago. It is hard for me to feel good about buying with such a small cut given how much and how fast prices rose recently.</p> <p>I know that prices can fall just as quickly as they went up, and I see nothing in recent data to suggest that this won't happen. So the only way that buying could make sense right now to me is if there was a big discount (at least 20%) from peak price. That way I have something of a cushion if the market continues to drop.</p> <p>People who only know recent history are in denial in thinking that big declines can't happen. And people who have owned for a long time I think don't really understand what a massive financial commitment it is to buy for the first time today.</p> <p>I don't hold out much hope that people will begin to discount aggressively overnight. Either economic reality will force it upon them or maybe I am just wrong. But I prefer to wait and see if I am wrong rather than jumping in right now, unless someone presents a very big incentive to take on this risk</p> I just want to say upfront that I am trying to comment in good faith to give the audience of this board (which I assume is mostly brokers) the perspective of one potential buyer who has many friends who are also potential buyers (all late 20s high income professionals).

Small price cuts are not enough. I know that prices were half what they are today 4-5 yrs ago. It is hard for me to feel good about buying with such a small cut given how much and how fast prices rose recently.

I know that prices can fall just as quickly as they went up, and I see nothing in recent data to suggest that this won’t happen. So the only way that buying could make sense right now to me is if there was a big discount (at least 20%) from peak price. That way I have something of a cushion if the market continues to drop.

People who only know recent history are in denial in thinking that big declines can’t happen. And people who have owned for a long time I think don’t really understand what a massive financial commitment it is to buy for the first time today.

I don’t hold out much hope that people will begin to discount aggressively overnight. Either economic reality will force it upon them or maybe I am just wrong. But I prefer to wait and see if I am wrong rather than jumping in right now, unless someone presents a very big incentive to take on this risk

]]> By: teresa boardman http://matrix.millersamuel.com/?p=953&cpage=1#comment-35563 teresa boardman Fri, 10 Nov 2006 20:19:11 +0000 http://matrix.millersamuel.com/?p=953#comment-35563 <p>I think you are dead on with this post. I just want to add that buyers are developing a "tude", they get it alright. Here is what I mean, the seller reduces the price to where it sould be, after the home has been on the market for months. The buyer comes along with a super low ball offer, the seller says no way. This happened to me with two sets of buyers on two different houses in one week.</p> I think you are dead on with this post. I just want to add that buyers are developing a “tude”, they get it alright. Here is what I mean, the seller reduces the price to where it sould be, after the home has been on the market for months. The buyer comes along with a super low ball offer, the seller says no way. This happened to me with two sets of buyers on two different houses in one week.

]]> By: skep-tic http://matrix.millersamuel.com/?p=953&cpage=1#comment-35561 skep-tic Fri, 10 Nov 2006 20:08:34 +0000 http://matrix.millersamuel.com/?p=953#comment-35561 <p>for a further example of the RE industry giving sellers false hope, check out NAR Pres. David Liareah's comments today... predicts house prices will appreciate in 2007</p> <p>so just hold tight sellers. don't lower your prices. everything is gonna be alright</p> for a further example of the RE industry giving sellers false hope, check out NAR Pres. David Liareah’s comments today… predicts house prices will appreciate in 2007

so just hold tight sellers. don’t lower your prices. everything is gonna be alright

]]> By: Sandy Mattingly http://matrix.millersamuel.com/?p=953&cpage=1#comment-35526 Sandy Mattingly Fri, 10 Nov 2006 14:06:39 +0000 http://matrix.millersamuel.com/?p=953#comment-35526 <p>More on seller psychology from WSJ on-line:</p> <p>“Homeowners are either remarkably stable people with their financial houses in order or they've got their heads in the sand. Despite news of late that the housing market is slipping, just 6% of homeowners in a survey in August said they think their home's value will decline in the next 12 months.”</p> <p>Nationally, I think it fair to say that the sellers’ expectations do not match the “experts’” expectations. And 53% expect their homes to increase in value in twelve months “a little”, while 10% expect a larger increase. Is Dr. Pangloss in the house?</p> <p>THX to Brownstoner.com for pointing out the link.</p> More on seller psychology from WSJ on-line:

“Homeowners are either remarkably stable people with their financial houses in order or they’ve got their heads in the sand. Despite news of late that the housing market is slipping, just 6% of homeowners in a survey in August said they think their home’s value will decline in the next 12 months.”

Nationally, I think it fair to say that the sellers’ expectations do not match the “experts’” expectations. And 53% expect their homes to increase in value in twelve months “a little”, while 10% expect a larger increase. Is Dr. Pangloss in the house?

THX to Brownstoner.com for pointing out the link.

]]> By: Brad R http://matrix.millersamuel.com/?p=953&cpage=1#comment-35524 Brad R Fri, 10 Nov 2006 13:57:03 +0000 http://matrix.millersamuel.com/?p=953#comment-35524 <p>Jonathan this is a great article. I am going to add part of this to my website because it explains the reasoning behind the psychology of the mental market right now.</p> <p>Great job!</p> <p>brad</p> Jonathan this is a great article. I am going to add part of this to my website because it explains the reasoning behind the psychology of the mental market right now.

Great job!

brad

]]> By: Sandy Mattingly http://matrix.millersamuel.com/?p=953&cpage=1#comment-35522 Sandy Mattingly Fri, 10 Nov 2006 13:51:15 +0000 http://matrix.millersamuel.com/?p=953#comment-35522 <p>Hope this not too much 'inside baseball' here JM, but are you saying that in the past, the "late reporting" transactions in a quarter were invisible in the quarterly reports? (I use your data a lot, and I deal with a lot of people who are <em>very</em> detail-oriented, so I like to be able to explain what I rely upon.) If so, I would expect the year-end total in past years to be higher than the sum of the quarterly totals. Yes/no?</p> <p>Great that this is not going to be an issue in 2007.</p> Hope this not too much ‘inside baseball’ here JM, but are you saying that in the past, the “late reporting” transactions in a quarter were invisible in the quarterly reports? (I use your data a lot, and I deal with a lot of people who are very detail-oriented, so I like to be able to explain what I rely upon.) If so, I would expect the year-end total in past years to be higher than the sum of the quarterly totals. Yes/no?

Great that this is not going to be an issue in 2007.

]]> By: skep-tic http://matrix.millersamuel.com/?p=953&cpage=1#comment-35520 skep-tic Fri, 10 Nov 2006 13:48:46 +0000 http://matrix.millersamuel.com/?p=953#comment-35520 <p>you forgot to mention that people in the real estate industry have been insisting every step of the way down, and continuing to do so today, that this is just a "pause," that the market is just "returning to normal," that "we are at the bottom," that RE will be better in a few months, etc.</p> <p>Sellers are irrational and are emotionally attached to the wild appreciation they have built up in their minds. They are going to cling to any hope you give them, and people in the RE industry have not failed so far to give them this hope.</p> <p>I applaud those of you who are being honest, but so far you are in the minority</p> you forgot to mention that people in the real estate industry have been insisting every step of the way down, and continuing to do so today, that this is just a “pause,” that the market is just “returning to normal,” that “we are at the bottom,” that RE will be better in a few months, etc.

Sellers are irrational and are emotionally attached to the wild appreciation they have built up in their minds. They are going to cling to any hope you give them, and people in the RE industry have not failed so far to give them this hope.

I applaud those of you who are being honest, but so far you are in the minority

]]> By: Jonathan J. Miller http://matrix.millersamuel.com/?p=953&cpage=1#comment-35422 Jonathan J. Miller Thu, 09 Nov 2006 23:24:50 +0000 http://matrix.millersamuel.com/?p=953#comment-35422 <p>Sandy - next year apples and apples. Public record simply means that if the sale closed on 9/27 for the third quarter, we are not more likely to get it time for reporting so hence a bump up in the number of sales will artifically occur. Before coops were in public we would not have got that sale in time for the 3Q report. It wouldn't appear in the 4Q report because it still closed on 9/27 and wouldn't qualify.</p> Sandy – next year apples and apples. Public record simply means that if the sale closed on 9/27 for the third quarter, we are not more likely to get it time for reporting so hence a bump up in the number of sales will artifically occur. Before coops were in public we would not have got that sale in time for the 3Q report. It wouldn’t appear in the 4Q report because it still closed on 9/27 and wouldn’t qualify.

]]> By: Evan Gould http://matrix.millersamuel.com/?p=953&cpage=1#comment-35421 Evan Gould Thu, 09 Nov 2006 23:19:07 +0000 http://matrix.millersamuel.com/?p=953#comment-35421 <p>I've been advising buyers that the list prices we see are "asking prices". I encourage them to go ahead and write an offer at a 10% discount (or more, why not?). Basically, erase the year over year appreciation, and reset the price to 2005 prices. Alot of escrows are being opened with 5%-10% discounted from the original list price.</p> I’ve been advising buyers that the list prices we see are “asking prices”. I encourage them to go ahead and write an offer at a 10% discount (or more, why not?). Basically, erase the year over year appreciation, and reset the price to 2005 prices. Alot of escrows are being opened with 5%-10% discounted from the original list price.

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