Oct 2, 2007 8:39 pm US/Central
Real Estate Woes: To Buy Or Not To Buy?
by Heather Brown
(WCCO)
An index that forecasts home sales fell in August to a record low. The National Association of Realtors said Tuesday pending sales for existing homes fell 6.5 percent from July and 21.5 percent from a year ago.
Some analysts expect prices to fall further before sales rebound.
Chris Galler, Senior Vice-President with the Minnesota Realtors Association, said the drop is due to high inventory levels, especially in foreclosed properties and builder models.
"All houses will sell. They just have to be priced appropriately," he said. "Priced appropriately means it has to be under what it was last year and it has to be under what it was two years ago."
He said that might mean 5-10 percent less than last year for a home in mint condition.
"If you are pricing your house based on what your neighbors sold a year or two ago, you're not looking at the right numbers," he said.
Sellers are getting less than they ask for in the original price.
In August 2005, the Minneapolis Area Association of Realtors reported sellers were getting 98.2 percent of their original list price at sale. By August 2007, it was down to 94.7 percent.
Time on the market has also increased from last year -- up from 3-and-a-half months in August 2006 to 4- and-a-half months in August 2007.
Roderick and Carrie Squires put their Sunfish Lake home in the market for $995,000 in April 2006. They dropped the price of their great condition, 5-acre lake front property by $100,000.
It's still on the market 17 months later.
"(It's) disappointing rather than frustrating," said Roderick, "I was surprised it hadn't sold by now. I told Carrie, I thought it would sell in two weeks. That shows you how wrong I am."
Galler said buyers want move-in condition.
"Your house has to be as good as the builder's model," he said. "The better your house condition -- move-in condition, neutral colors, very clean, upgraded wherever possible -- that's what buyers are looking for."
The National Association of Realtors blames some of the new housing numbers on demand as would-be buyers are having more difficulty getting a mortgage.
The Squires haven't decided whether to drop their price even more. They have some flexibility in their timeline to downsize.
"There's a lower limit we both have after which we'll say no, no, no. We' can't sell for less than this," said Roderick.
Fortunately, they don't have to sell right away. They'd rather see the right family buy their home.
"It's a beautiful house," said Carrie, "The right buyer will come. I'm certain of it."
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