Honey, The Market Has Shrunk

Honey, The Market Has Shrunk You remember the big, hit movie, “Honey, I Shrunk The Kids” featuring an inventor father who created a contraption and shrunk his kids. The movie was filled with adventures, some scary, some funny that the kids experienced while being very small, microscopic if I recall. Much like the adventures we are experiencing, some more enjoyable than others, in the real estate market which by the way has “shrunk” in a number of ways.

Sales are down September 2010 over September 2009 by 30%...back to 1994 levels…shrink.

Showings have slowed…shrink.

Pendings have slowed…shrink.

But wait…active inventory is up over last September by 8%...that’s not shrinking…but that’s not good.

And, the average sales price is up by 3%...that should be good (Sellers, don’t get your hopes up, now is not the time to raise your price)…but wait a minute, it’s down by 13% from the height of the market in 2005…shrink.

And don’t forget the housing supply…up over September 2009 by 4.1 months…wrong direction…we want this to shrink.

What percentage of the market are distressed sales? The answer for the month of September, 29% which includes lender-owned, government-owned and short sales as voluntarily reported by REALTORS®. No doubt there are other transactions where sellers are bringing money to the table that are not classified as “short” but they are. This percentage has run the same since the beginning of the year, neither growing nor shrinking.

And where are those interest rates? At historic lows, just recently there were 30-year fixed rate mortgage loans available at 4.125 and 4.25…unbelievable. Last year at this time interest rates were hovering around 5%. Which begs the question, “how low can they go”? Can you say “shrink, shrank, shrunk”?

The market has shrunk in so many ways which means Sellers must be realistic in their pricing and condition of their property when they put it on the market, in fact, the pricing and condition must be so compelling that one of the few buyers who comes along writes an offer and Sellers appreciate the opportunity, it may not come again for a very long time.

Buyers, have at it, take advantage of this overall shrinkage, housing prices are extremely favorable, interest rates (I don’t think) can go much lower and an increase in inventory to choose from, what more do you want?

Oh, and by the way, Sellers who are selling to buy something else, you are also part of the Buyer market and will have all the advantages of a Buyer. Yes, you may take a “hit” on your house, but you are going to buy your next home with favorable pricing and historic low interest rates.

What does all this mean to you? Unlike the end of the movie, there is no machine that is going to instantly resize the market to where you want it to be, it will take time, patience and thoughtful participation by all those involved. ©Copyright Karen Schlosser October 21, 2010