Tuesday, March 22, 2011

Buyers Ready to Snatch Bargains This Spring

Bargain prices on housing combined with low interest rates below 5 percent may bring the real estate market its busiest spring season in years, economists say.

Distressed sales continue to put downward pressure on home prices, which may lure more buyers off the fence and ready to snag a deal during the typical prime-time buying season.

Some builders are ramping up discounts on new homes as well as boosting commissions to brokers to try to spark more transactions.

Sellers of existing-homes also are getting more competitive in pricing their homes.

"After three years of the housing downturn, people are becoming much more realistic in terms of valuing their homes," says Lawrence Yun, chief economist at the National Association of REALTORS®.

An improved job market with better income potential may also motivate more people to buy, says David Berson of the PMI Group.

“Household formations are also very important," Berson says. "Kids may have moved back in with their parents, or two people may have moved in together, because of job concerns. Now they can move into their own place."

While interest rates are sitting comfortably below 5 percent for now (30-year fixed rates averaged 4.76 percent last week), economists warn the attractive low rates won’t last long.

"Few think mortgage rates are going lower," says Mark Zandi, Moody's Analytics chief economist. "It's more likely they will be 6 percent than 4 percent next spring. This lights a fire under buyers."

Source: “Discounts Expected in Spring Housing Market,” The Wall Street Journal (March 22, 2011)

Wednesday, March 02, 2011

Sellers Need to Get Practical About Price

Sellers whose homes have lingered on the market for months--or years, in some cases--are banking on this spring to turn the tide.

Foreclosures and short sales are still flooding the market, which means many sellers are still up against big inventories and some big bargains that may pull away buyers.

As such, more real estate pros say it’s time to have tough conversations with sellers about slashing their sales price of their home, particularly if it hasn’t garnered any traffic in recent months or years. After all, spring usually brings out more buyers, as home shoppers look to buy and move before the next school year.

"We have had a problem with sellers who are nostalgic for the way it was," says Ron Phipps, a Warwick, R.I., real estate professional and the president of the National Association of REALTORS®. He says what home owners could fetch for their home during the housing boom is not practical today. "You have to be where the market is, not where it was," Phipps says.

Phipps suggests encouraging sellers to check out the competition by visiting open houses or viewing online virtual tours of similar homes for sale to see how the seller’s house compares in price and appearance.

"You have to be very realistic about what is keeping your home from selling," Phipps says. "Sometimes it may actually be the person in the mirror, if your expectations are not realistic. Ultimately, there is a price at which all things sell."

Source: “Longtime Listings Try Again in Spring,” Associated Press (March 1, 2011)