The Twin Cities housing market continues to adjust to a world without a fancy tax credit. Pending sales leveled off following the slight gains seen the prior week, squatting at 645 signed contracts for the week ending June 19.
While that's steady compared to last week, it's anemic compared to last year at this time when the market posted 1,156 signed contracts. If you're keeping track of percentages, that means we're down 44.2 percent from a year ago—the sixth consecutive week of year-over-year declines exceeding 30 percent.
New listings are also down from a year ago, posting a drop of 8.4 percent from a year ago to 1,712 for the most recent reporting week. Any sort of "return to normalcy" is going to take some time.
Hi. Signed contracts are anemic, inventory is stale, buyer's are becoming more informed, and not as many are accepting current listings at these stupidly high prices as valid. It's pretty clear to most right now that listing prices are still an easy 25 - 30 percent high accross the board (easy!!). But, hey! All the real estate agents still tell their clients it's a great time to buy, and to pay "close" to what the seller's are asking. Remember, you don't want to insult that seller!!! And, geez.. who doesn't get paid if the sale falls through? Hint: Everyone including the buyer's agent! Maybe that's why it's ALWAYS a good time to buy (sic). What side are the buyers agents on these days anyway? And, who cares if seller's bought homes all the way up the bubble at admittedly outrageous and unbelievably stupid high prices - many now underwater - and would really love to get free from not only the debt but also the ongoing risk. More interestingly though, they have them listed on the MLS for almost as high as they paid, and seem to really expect buyers to race right over with cash in hand to bail em out! Yes, it's true! Yes, no one can blame a seller for wanting to get out of a bad home mortgage as best as possible. But, do you want to be the one that does it? Consider, if you buy an overly priced home at super low interest rates that have nowhere to go but up (please understand the implications regarding home prices and interest rates, and do not believe - as they're advertising today - that super low interest rates are a safe way of buying a home (that carries a way too high of price tag that can only stay flat or come down) over the long term with fluctuating/increasing rates) you'll be lucky not to watch your home's value decline right in front of your eyes - as interest rates truly will eventually increase. Compile that with a market place that acknowledges home prices won't even begin to show appreciation for 5 to 7 years (that's the years 2015 - 2017 folks) and it's easy to see there's not going to be any cushion there at all in case YOU need to sell. And, since most people move within 7 years of purchasing a home (for all the regular reasons) where are the selling fees and expenses going to come from? Yes, your pocket (savings, etc.)! And, that could be close to 10% of the selling price too. (e.g. $300,000 * .10 = $30,000) OUCH :(
Posted by: Dan | June 28, 2010 at 07:38 PM
To clarify a bit...
It is far better to pay a low price with a high interest rate than a high price with a low interest rate, even if the mortgage payment is the same either way.
* Your property taxes will be lower with a low purchase price.
* A low price gives you the ability to pay it all off instead of being a debt-slave for the rest of your life.
* As interest rates fall from high to low, house prices increase.
* Paying a high price now may trap you “under water”, meaning you’ll have a mortgage larger than the value of the house. Then you will not be able to refinance because there you’ll have no equity, and will not be able to sell without a loss. Even if you get a long-term fixed rate mortgage, when rates inevitably go up the value of your property will go down. Paying a low price minimizes your damage.
Posted by: Dan | June 30, 2010 at 07:35 PM
And, instead of saying this in my first post: "But, do you want to be the one that does it?"
I meant to say this: But, do you want to be the one that buys them out of it at a stupid high price with a scary extremely low interest rate that "masks" the HUGE RISK you'ld be taking on?
Posted by: Dan | June 30, 2010 at 07:53 PM