What A Real Estate Slowdown Really Means
On November 12, 2005, the St. Petersburg Times ran a front page story headlined "Frenzied housing market slows" by Helen Huntley, the Times' personal finance editor. Good story. She reported that figures obtained from the Pinellas Realtor Organization (PRO) showed that from June through October, 2005, residential sales in Pinellas County had dropped from 2,172 properties sold in June to only 1,737 in October. During that same time, listed properties rose from 3,795 in June to 6,679 in October.
PRO reported that in November, listings rose to 7,726 but sales dropped to 1,433. By the end of December, listings had risen to 8,199 while sales remained sluggish with only 1,555 properties sold.
This slowdown in the market is continuing. In February, 2006, sales of single family homes were down to 801, down from 1,081 in February of the previous year. Listings have skyrocketed! In February of 2006, there were 11,399 properties listed on the local Multiple Listing Service (MLS) as compared to only 4,733 in February 2005.
So, what does this mean to buyers and sellers?
If you are a seller, it means the days of fast sales and multiple offers may be over. Increasing listings means you have a lot more competition. High prices, rising mortgage rates, outrageous property taxes, and expensive flood and homeowner's insurance premiums are forcing many buyers out of the market or making them buy less expensive property. This means sellers need to be ready for longer periods on the market and much tougher negotiating positions from buyers. To get top dollar for a property, sellers need to have a very thorough marketing plan at their disposal designed to find that one buyer who is willing to pay the highest price for the property. This kind of marketing is only available from full service real estate firms. Discount brokers and dot-com services simply don't offer much marketing because once they cut their commissions, neither the broker nor the agent has enough profit left to invest in advertising your property.
If you are a buyer, you can now be more selective because there's more inventory from which to select your "dream house". You can demand more concessions from sellers and probably get them. It does not mean prices are coming down. Most real estate gurus predict prices to increase at from 4 to 7 percent in 2006 -- so don't wait to buy or you may pay more. Hire an experienced real estate agent to function as your exclusive representative, negotiate hard and be realistic about your offer.
So, does all this mean the real estate bubble is bursting? No, probably not. But it does appear to be leaking a little air.
PRO reported that in November, listings rose to 7,726 but sales dropped to 1,433. By the end of December, listings had risen to 8,199 while sales remained sluggish with only 1,555 properties sold.
This slowdown in the market is continuing. In February, 2006, sales of single family homes were down to 801, down from 1,081 in February of the previous year. Listings have skyrocketed! In February of 2006, there were 11,399 properties listed on the local Multiple Listing Service (MLS) as compared to only 4,733 in February 2005.
So, what does this mean to buyers and sellers?
If you are a seller, it means the days of fast sales and multiple offers may be over. Increasing listings means you have a lot more competition. High prices, rising mortgage rates, outrageous property taxes, and expensive flood and homeowner's insurance premiums are forcing many buyers out of the market or making them buy less expensive property. This means sellers need to be ready for longer periods on the market and much tougher negotiating positions from buyers. To get top dollar for a property, sellers need to have a very thorough marketing plan at their disposal designed to find that one buyer who is willing to pay the highest price for the property. This kind of marketing is only available from full service real estate firms. Discount brokers and dot-com services simply don't offer much marketing because once they cut their commissions, neither the broker nor the agent has enough profit left to invest in advertising your property.
If you are a buyer, you can now be more selective because there's more inventory from which to select your "dream house". You can demand more concessions from sellers and probably get them. It does not mean prices are coming down. Most real estate gurus predict prices to increase at from 4 to 7 percent in 2006 -- so don't wait to buy or you may pay more. Hire an experienced real estate agent to function as your exclusive representative, negotiate hard and be realistic about your offer.
So, does all this mean the real estate bubble is bursting? No, probably not. But it does appear to be leaking a little air.
posted by Terry Ward at 6:46 AM
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