The Almanac Professionally Speaking Column 8/29/2007 - Expanded
Jesse from Muse asks: All I hear on the news is how bad the housing market is – why would anyone want to sell their house now?
Jesse, I get asked this question all the time. Fortunately, for the Pittsburgh and surrounding areas, the facts don’t support the news media claims. West Penn Multi-List, which tracks homes sold by area Realtors, show the average sale price for homes in Allegheny County in July at $169,383, up 6.3 percent from last July’s $159,364. In addition, 1432 Realtor assisted homes sold last month compared to 1416 in July of 2006. Pittsburgh does not experience the big “highs” in the real estate market; consequently we are not experiencing the very low “lows”. Thankfully, we have one of the more stable real estate markets in the nation.
To see the full Post Gazette Now Business Article, go to: http://www.post-gazette.com/pg/07236/811727-28.stm
Recently I worked with a couple looking to buy in Peters Township in a high price range. The husband kept asking "who is buying all of these houses" and "where do the people who buy these houses work?". He shared some of the information he is hearing on the news and reading in magazines about the housing bubble and how he believes the real estate market is going to get worse and not recover until 2009. He felt he should wait to buy and next year the price of houses would be much lower than the current prices, especially new construction. I did some research in the West Penn Multi-List data base. I used January through August 20th as my time period and $500,000 and up as my price range with Peters Township as my search area. In 2005, 32 houses sold. In 2006, 30 houses sold. In 2007, 31 have sold and another 6 are "under contract" with sales pending.
This is just one example - I'm sure I can go into lower price ranges and different areas and come up with similar results.
Our market is not as "easy" as it was in 2004/2005. Back then, there was less inventory and buyers were very motivated to make decisions and pay at or above list price to make sure they were the ones who became the new owners of a desirable just listed house. If they waited, they might lose out and the news media helped play a role in that by reporting on how great the housing market was and how, in certain areas of the country, sellers were getting unbelievable prices and buyers couldn't find a home to buy.
Now, we're on the other end of the spectrum with doom and gloom and all negative forecasts for the foreseeable future. We have the news reports about the subprime lending issue and the real estate decline in major cities around the country. Locally, there is more inventory and buyers are taking their time, exploring the market and looking for the "bargains" they think are a result of the terrible housing market. If sellers believe their houses are worth the asking price and buyers are looking for bargains with low motivation, it does make it more difficult for the real estate professional to bring them together to complete the sale.
Even with more inventory on the market, in certain price ranges and areas - there are still not enough quality homes available for sale. I have several buyers with strong motivation, willing and ready to buy and there isn't anything on the market that works for them.
The biggest adjustment for me is working with buyers who believe there are an abundance of desperate sellers unable to sell their homes - who think they should be able to pick up a great house at a truly great price. Even with foreclosure properties, there are few "bargains". Houses are selling at market value and in most areas, market value is higher in 2007 than it was in 2006. They may take a little longer to sell, but houses are selling and there are no deep discounts.
I do not agree with the chicken little economic forecasters and newscasters who seem to be adding to the hype. The sky isn't falling, the bottom hasn't dropped out of our local market, houses are still selling, buyers are still buying - things are just a little bit....different. As the market corrects and adjusts, so do our marketing strategies and sales plans.