No one’s gonna steal my house! Please read the WSJ story from April 24th.
http://online.wsj.com/article/SB124057365983752607.html”>this link to a fascinating Wall Street Journal article about the disconnect between buyers and sellers of high-end houses. As the article points out, it’s a lot like the old joke about the guy with the million dollar dog: “Well, I haven’t sold him yet.”
The latest data from the National Association of Realtors, which rattled nerves on Wall Street this week, showed national home sales are still weak. But they also showed how home sellers nationwide have split into two camps.
Call them “the haves” and the “don’t haves.” As in: Those who have to sell, and those who don’t have to.
The haves are the distressed sales. These include those in foreclosure, and those in pre-foreclosure “short sales.” Such sales are now booming – at bargain prices.
On the other hand, those who don’t have to sell are often hanging on to 2006 prices. And they are hanging on to their homes.
Prices aren’t dropping. And homes aren’t selling.
This could be ominous. It suggests – though it does not prove – that another shoe could be about to drop in real estate, as those who don’t have to sell realize they need to compete more aggressively with those who do. [emphasis added]
The latest housing numbers tell a story.
In other words, the number of distressed sales has nearly tripled in a year.
That’s the good news. That’s a market clearing, at last. Distressed sales are taking place at prices at least 20% below the rest, the association says.
On the other hand, look at those who aren’t in foreclosure or a short sale. They’re selling their homes while still solvent. This used to be called the normal housing market.
Prices haven’t come down much. In some premium neighborhoods they have may even be rising.
But the volume of those “normal” sales is down sharply. They make up just 47% of 360,000 second-hand home sales. That’s 169,000 transactions.
How little is that?
Even a year ago, when the housing market was already in the tank, these non-distressed sales accounted for 82% of 375,000 second-hand home sales nationwide. Or 308,000 transactions.
It’s like the old joke about the man with the million dollar dog (”Well, I haven’t sold him yet!”).
When a real estate market collapses, volume dies first. Prices fall later. So news that volumes are drying up for non-distressed sales has to be an ominous sign. [emphasis added]
Those who live in premium neighborhoods often fancy that they are immune from the slump. “Oh, good quality will hold up,” they say. It’s true good quality may hold up for awhile. But that doesn’t mean anyone’s immune.
And over long terms, different real estate markets have to maintain some reasonably persistent connections. Otherwise many people would move to the cheaper neighborhoods.
The trade now — in theory, at least — may be to sell the place in an upscale neighborhood like Pacific Heights in San Francisco, if you can, and buy a foreclosure deal out in the ‘burbs.
To put the Newton market in perspective we have 97 houses priced above 1 million dollars! Out of those 97, there are 31 priced above 2 million dollars. Sellers at every level of the market can decide to be proactive or reactive. Either you determine the “reset” of prices or your neighbor will. I would much rather be representing the seller who understands this concept rather than the seller who is chasing the market. There is no average pricing in real estate.