I had intended to devote todayâ€™s blog to the 3 most important words in real estate.Â However in light of the sales numbers that appeared in the Los Angeles Times today, Iâ€™m going to comment on them instead (a bloggerâ€™s perogative)â€¦
The headlineÂ of Alejandro Lazoâ€™s article today is that sales fell 16%, median price up slightly.Â To read that, youâ€™d have to assume the sky is falling again in real estate. This kind of headline sells papers I guess, but given the decline in newspaper sales these days, perhaps a different approach might be warranted.Â How about this headline: â€œBuyers and sellers at a standoffâ€™â€.Â This is the real story.Â
First the numbers:
Sales were off 16% from a year ago, but only down 2.4% from last month.Â Â Notable yes, disasterous? No.Â Â More numbers: Median prices rises 2.6% from August and 7.5% year over year.Â Not bad.Â Â So why this apparent contradiction?Â Maybe slower sales are the result of the end of the housing credit, maybe tighter lending standards or maybe a simple matter of a difference of opinion.Â But why then higher median prices?Â The Times suggests a decline in REO property is the cause since foreclosures currently represent only 33.4% of the market today vs. 56.7% a year ago.Â While this may be true, I tend to believe more higher end property sales are the root.Â Â So a higher pricedÂ home then, isÂ â€pulling upâ€ the market rather than fewer lower end homes a selling and â€œpushing downâ€ the market.
The conclusion?Â Â There isÂ a stand offÂ between sellers and buyers.Â Just yesteredayÂ I had a convesationÂ with a client who insisted a listing of mine was over priced.Â She pointed to a model match sale last springÂ on a superior location, that sold for a lower price as being eveidenceÂ to her point.Â I countered with half a dozen more recent sales that suggested it was priced correctly.Â The result?Â No offer.Â My buyer client doesnâ€™t agree and thus wonâ€™t open her wallet.Â Conversely, my seller client, whoÂ has also just listed her property for lease by the way,Â doesnâ€™t have to agree with the buyer either.Â The result?Â No sale.Â So we are left with a chasm.Â For some sellers, selling is the only option so they will lower their priceÂ until they findÂ a willing buyer.Â Others however, are opting to wait until the spring selling season when demand is stronger and prices firmer.Â For buyers like mine, they risk missing historically low rates in the hopes of saving a mythical $10-20,000 from some other seller, yet since no two homes are the same, perhaps missing out on a home she really likes.Â Â When I suggested she pass on this one and look for another,Â I only annoyed her.Â She wants the seller to be realistic and reach the same conclusion she has and reduce the price so she can buy it.Â But the seller wonâ€™t.Â Alas in this scenario, both parties likely lose out.Â On that note, I better end now â€“ clearly Iâ€™ve got a couple of clients I need to try to talk off the cliff and bring togetherâ€¦ wish me luck!