Where do you side in the great real estate buy-sell divide of 2012? If you’re a homeowner considering selling sometime in the new year, are you apprehensive that you won’t get the price you need or want, and therefore it’s possible you won’t even try to sell?
If you’re a buyer, do you agree that with 30-year fixed mortgage rates now below 4 percent and home prices near cyclical bottom in many areas, 2012 offers extraordinary opportunities, even if listings are fewer than you might prefer?
A new study by the Research Institute for Housing America, the think tank affiliate of the Mortgage Bankers Association, documents a profound market fissure caused by owners’ fears and hesitation – what researchers call “negative selling sentiment.” While nearly 80 percent of consumers in the study’s survey think this is a great time to buy a house, more than 92 percent of current owners think it’s not a great time to sell.
The study was conducted by Syracuse University economist Gary Engelhardt using extensive data from the University of Michigan’s Survey Research Center, which is generally recognized as an authoritative source on consumer attitudes.
Engelhardt said that unlike earlier post-recession periods, owners have been more deeply shocked by the extent and severe side effects of foreclosures, short sales and unemployment. In the aftermath of earlier recessions, such as in the early 1990s, 40 percent to 60 percent of homeowners remained relatively positive about their prospects if they chose to sell – far higher than the tiny sliver who see it that way today.
Many owners “have not adjusted their price expectations downward” to keep pace with local declines in property values following the mortgage bust, Engelhardt said, thereby contributing to the sharp divergence in their real estate visions compared with buyers.
This is consistent with the results of a study conducted in mid-2011 by Zillow, the online real estate and mortgage information company. Zillow found that sellers nationwide were having trouble coming to grips with what market forces had done to their property values. They knew prices had declined, but they didn’t necessarily think those devaluations applied to their houses. For example, people who had purchased their homes in 2007 or later thought their homes were worth about 14 percent more than their actual sales value. People who bought homes before 2002 were slightly more realistic but still overvalued their houses by about 12 percent.
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.