Anyone following market predictions knows one thing for sure: Nobody agrees.
Ask a real estate broker if now is a good time to buy a home, and she’ll say…Nevermind. We all know the answer to that, since real estate agents always say now is a good time to buy, whether it’s 2005 or 2009. But still. In their defense, interest rates can’t get much lower (my prediction: yes they will) and house prices look cheap. Why try to time the absolute market bottom if Warren Buffet can’t even do it?
Fact is, no one knows for sure. Who can make predictions when something like an earthquake in Japan or Greek bond default could happen anytime? But here’s a data point I haven’t seen anyone talk about: price convergence of foreclosures, short sales and traditional sales.
When this whole mess started, there was a pricing hierarchy. Traditional sales were the highest, followed by short sales, followed by REO (real estate owned, or bank-owned properties). What I’m seeing now, though, is a lessening of the spread. Bank-owned homes, unless they’re really trashed, sell for pretty close to what owner-occupied homes sell for. Same for short sale homes.
If that’s the case, then we’re gonna see a lender rush to get their properties into the marketplace. Right now, as I understand it, it takes fourteen months (and up) for the foreclosure process to complete itself. That is, it takes more than a year from the time the loan goes into default to the moment the lender reclaims it at auction. And lenders have been holding back their proerties, not wanting to flood a downward pricing spiral with more inventory.
But if you’re trying to find a home for a willing buyer, which I do for a living, it’s getting hard. There’s not much out there.
If I’m right about the end of the pricing hierarchy, 2012 could well see a beginning of market stability and a lot more foreclosed homes coming on the market.
Oh by the way…don’t forget to visit Habitation Station. The site is going through daily upgrades, and your feedback will help make it as usefull as possible.
M Realty: A Tip of the Hat to a Competitor
November 30, 2011Those who know me know I love to rag on other real estate brokers. But sometimes, you run into a competitor who does something that’s not only innovative, but competent. Today I tip my hat to M Realty and its marsupial child, Homequest for their marketing approach. Homequest is a web platform that integrates residential property [...]