Days on market vs. price expectation

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Submitted by moneymaker on May 15, 2015 - 10:03am

How many days on market today suggests unreasonable price expectation by seller? I'm thinking 45 or more. Should have made this a poll but got to leave here soon, seems like a lot of houses are lingering when there is low inventory.

Submitted by spdrun on May 15, 2015 - 10:04am.

Good. Lingering homes are the solution, not the problem. Time for uppity sellers to get some sense drilled into them by Mr. Market.

Submitted by flu on May 15, 2015 - 10:43am.

spdrun wrote:
Good. Lingering homes are the solution, not the problem. Time for uppity sellers to get some sense drilled into them by Mr. Market.

Maybe sellers aren't in a hurry or desperate to sell... I wouldn't be.

Submitted by flu on May 15, 2015 - 10:44am.

moneymaker wrote:
How many days on market today suggests unreasonable price expectation by seller? I'm thinking 45 or more. Should have made this a poll but got to leave here soon, seems like a lot of houses are lingering when there is low inventory.

What time during the year?

Submitted by SD Realtor on May 15, 2015 - 11:22am.

Hi Moneymaker

Unfortunately, the answer is that each case varies somewhat. I made a post earlier in the thread by nervousbuyer on the subject.

It all depends on initial pricing with respect to comps. A less relevant factor is overall pricing as well. In the other post I was referring to communities in La Costa valley and some others in and around 4S Ranch. In these areas many sellers were coming in with initial pricings that were up to 10% above comps and had no reason being there. After about 40 days they were starting to come to church and bringing the pricing down.

Those were homes that were priced in the 900 and more range and had no reason being above say 850. One in particular came all the way down and has now received two offers in the past few days.

If they would have priced correctly to begin with they probably would have received higher offers to begin with.

So yeah your 45 day number is not a bad generalization. I would agree with you.

Submitted by spdrun on May 15, 2015 - 4:52pm.

Maybe sellers aren't in a hurry or desperate to sell... I wouldn't be.

Most sellers aren't the average person on this forum. If the house is on the market, they want to sell it. Either they need to move and they don't want to be landlords (it gets a bad rap), they can't make payments, or they want to move up. Most listings are also by broker, and brokers want to earn a commission. Therefore, there's pressure to sell.

Submitted by flu on May 15, 2015 - 5:00pm.

spdrun wrote:

Maybe sellers aren't in a hurry or desperate to sell... I wouldn't be.

Most sellers aren't the average person on this forum. If the house is on the market, they want to sell it. Either they need to move and they don't want to be landlords (it gets a bad rap), they can't make payments, or they want to move up. Most listings are also by broker, and brokers want to earn a commission. Therefore, there's pressure to sell.

If you say so.

Submitted by spdrun on May 15, 2015 - 5:15pm.

How many people do you personally know who take selling their home lightly?

Submitted by flu on May 15, 2015 - 6:29pm.

spdrun wrote:
How many people do you personally know who take selling their home lightly?

I don't know many people desperately selling because they have to. Come to think of it, I don't know anyone that is desperately trying to sell. I see a lot of people probably asking for a high price to see if it sticks. And in this market, anything is possible.

Submitted by spdrun on May 15, 2015 - 6:37pm.

You're already said that your circle of acquaintances is largely self-limited :)

Submitted by joec on May 15, 2015 - 6:38pm.

I think flu's point is people who bought in the past downturn or refinanced are in no "financial pressure" to sell. Most had to come up with down payment since there was no ninja loans at that time and their income was verified hard.

I bought in 4S and we paid in the 600s so if things are at the 800s or 900s now, then with what our mortgage is compared to rents (all rents I see now are higher than my mortgage even considering CFD fees)...You add in tax benefit of a mortgage and the cost to carry your home is much less for the buyer from the recent downturn.

Since the buyer I described above (bought during the downturn) above can rent out their home to a family for less than forcing a low sale price, they will just pull the home from the market if they don't feel like they can't get the price they want.

Some might sell still to just get rid of it, but as I mentioned before, I know of a few people in the area renting who has left with no desire to sell since the rent easily covers their mortgage and where else are you gonna put the money?

Of course, there will be people who DIDN'T buy closer to the bottom and there are divorces, job transfers where people have to leave...and that's why there are transactions, but if you're 200k+, maybe you aren't hurting too bad...and, if it's not a divorce, you can still rent it out.

Submitted by spdrun on May 15, 2015 - 6:40pm.

Most people "don't want to become a landlord, it's too much trouble." You're also not thinking of people with HELOCs that are resetting, and people who are running out of options after their foreclosure was delayed by the Homeowner's Bill of Rights.

Submitted by flu on May 15, 2015 - 7:35pm.

spdrun wrote:
You're already said that your circle of acquaintances is largely self-limited :)

Well, like I said before, striving for economic "diversity" isn't that high of a priority in my life. But if it is for you, because it makes you feel better about yourself, and that floats your boat, go for it :).

Submitted by flu on May 15, 2015 - 7:42pm.

spdrun wrote:
Most people "don't want to become a landlord, it's too much trouble." You're also not thinking of people with HELOCs that are resetting, and people who are running out of options after their foreclosure was delayed by the Homeowner's Bill of Rights.

HAHAHAHAHA... HELOC resetting... HAHAHAHAHA.....

Yes, and those won't be the ones pricing their homes astronomically high. Those will be the ones selling at market prices, and those are the ones that probably don't sit 45days as active....In other words, those won't be the ones that stay on the MLS long enough for most of us to be having this discussion.

Submitted by gzz on May 15, 2015 - 8:32pm.

In 92107, fairly priced places over a million still take a while to sell, but they still usually do around the initial asking price. Under 600k disappears in a couple weeks by contrast. So do places under 900k on full size lots.

Submitted by flu on May 15, 2015 - 8:35pm.

Relatively stable job market in san diego + low rates + happy stock market => people in a partying mood and not in a hurry to sell, imho...

Submitted by spdrun on May 15, 2015 - 8:40pm.

Which is why we need a good old-fashioned recession in 2016. Good thing is, it will probably happen in the next 3-4 years if not earlier. Historically, the US has never gone much over 10 years between starts of recessions.

Tick.
Tock.
Tick.
Tock.

Submitted by flu on May 15, 2015 - 8:42pm.

spdrun wrote:
Which is why we need a good old-fashioned recession in 2016. Good thing is, it will probably happen in the next 3-4 years if not earlier. Historically, the US has never gone much over 10 years between starts of recessions.

Tick.
Tock.
Tick.
Tock.

Somehow I don't think you would fair as well as you think....

Submitted by spdrun on May 15, 2015 - 8:43pm.

We'll see. It's all a cycle.

Submitted by flu on May 15, 2015 - 8:45pm.

spdrun wrote:
We'll see. It's all a cycle.

Well, I'm just thinking in perspective. I don't see many people that are looking forward to a recession are oozing with a boatload of properties after the last great recession. And we probably won't see another one of that magnitude for a long time... So....maybe this time it will be different...

Submitted by spdrun on May 15, 2015 - 8:47pm.

Agreed. I should have bought more and gone harder with stocks. But that's a good lesson for the next "opportunity."

This being said, if someone has rental properties in a good enough area that they will rent profitably regardless of conditions, why would they NOT want an opportunity to pick more up cheaply?

Submitted by flu on May 15, 2015 - 8:48pm.

spdrun wrote:
Agreed. I should have bought more and gone harder with stocks. But that's a good lesson for the next "beautiful opportunity."

And like I said, this time it's not really going to be different.

Because I bet when you're in the middle of a turbulent storm, just like everyone else, your economic outlook is being challenged the exact same way AND you'll have a sense of fear, and you'll be one of the same exact people that despite prices already having fallen 40-50%, will think things will fall an additional 40-50%.... Because reality is, the only one that does really well in a downturn are rich people who don't need to blink about their net worth even in a downturn.

Submitted by spdrun on May 15, 2015 - 8:52pm.

I never saw the 2008-9 recession as a storm, only as an opportunity, and I did take it to some extent. I was never afraid as much as detached, but my priorities were different then vs now.

Submitted by flu on May 15, 2015 - 9:05pm.

spdrun wrote:
I never saw the 2008-9 recession as a storm, only as an opportunity. I was never afraid as much as detached, but my priorities were different then vs now.

Sure. ok.

Submitted by joec on May 16, 2015 - 12:04pm.

Is being a landlord really that bad in expensive family based areas? We're not talking about the ghetto here and for places which rent for 4k/month+ to families who have to come down with the security deposit, have a decent paying job, etc etc etc...It doesn't seem like you will need to be as afraid as people make it out to be.

Again, I only see what is around me...but as my parents used to have some more bad area properties when we were growing up in the bay area where you CAN get shot, family oriented places around here is a cake walk.

I would guess most of these newer ish homes in Carmel Valley should have no trouble renting to high single or dual income families who just wants to live/work, etc.

As bad as it is to be a landlord, I'm guessing the +1-2k/month cash flow makes it relatively easy to live with some pain/work (I'm only talking about people who bought long ago or nearer to the bottom).

And yes, I'm only talking about certain areas and not everyplace since I certainly have no interest in renting in East or South SD myself.

Submitted by spdrun on May 16, 2015 - 12:17pm.

It's not that bad. But let the goats keep believing it's bad. :)

Submitted by fun4vnay2 on May 16, 2015 - 11:50pm.

Stock market n real estate is cyclical for sure
Now a days boom n bust cycles are shortened a lot

Social real estate would come down for sure ..
Patience would be rewarded.

Submitted by flu on May 17, 2015 - 4:40am.

rockingtime wrote:
Stock market n real estate is cyclical for sure
Now a days boom n bust cycles are shortened a lot

Social real estate would come down for sure ..
Patience would be rewarded.

Sure. Because all of you can time things perfectly. And know exactly when to sell and buy in both the stock and re markets. And do so in such a way without missing out in the run up in both the stock and re markets over the past few years. Gotcha

Submitted by spdrun on May 17, 2015 - 7:42am.

No one knows exactly when, but traders jumping from windows is a pretty good indication :)

Submitted by fun4vnay2 on May 17, 2015 - 10:18am.

Or the people saying: Buy now or be priced out for ever :-)

Submitted by flu on May 17, 2015 - 10:43am.

spdrun wrote:
No one knows exactly when, but traders jumping from windows is a pretty good indication :)

Somehow I think that would actually make you happy. Though I would say I didn't hear many during the past two crashes.

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