Housing News
Home sellers who bought after 2007 now overprice their homes 14%
Seattle real estate signs, photo by AR McLin.
Home seller behavior in modern times
According to a study performed by real estate search company Zillow.com, home sellers who bought their home after the housing bubble burst in 2007 overprice their homes an average of 14.1% as opposed to people who bought before the bubble (prior to 2002) and those who purchased during the bubble (2002-2006).
Home sellers who bought prior to 2002 price their homes an average of 11.6% over market value and those who bought during the bubble are the most conservative at 9.3% over market value. The bottom line here is also that listings are still roughly 10% or over market value when listed, regardless of home values struggling across the nation and sales remaining anemic.
New sales price based on the original purchase price
Most interesting to us is that the study reveals post-bubble buyers were the most likely to base their asking price on the original purchase price of their home than home sellers who bought before or during the bubble. Zillow notes that despite home values have been dropping since 2006 and are at 2003 levels, post-bubble buyers are sticking to their guns on pricing and going to market with the original price they paid rather than the current state of the market. Zillow sums up by saying, “buyers who bought during bubble years more likely to price realistically.”
Why post-bubble buyers think differently
Zillow Chief Economist Dr. Stan Humphries points to a litany of reasons. “Post-bubble buyers seem to believe they escaped the worst of the housing recession, as evidenced by how they price their homes today. But 2006 was just the beginning of the housing recession, and it is continuing in earnest to this day. That means that even people who bought after the bubble burst need to break out the pencil and paper and do serious research into what has happened in their market since they first bought their home, whether it was four years ago or six months ago.”
Zillow studied current listings but set out to do some forecasting. They surveyed homeowners who indicated they plan on selling their homes in the next four years and found that of those that purchased their home prior to the bubble, 17% noted purchase price would be the primary factor in pricing their home to sell in the next four years. Of those who purchase prior to the bubble, only 4% indicated they would use the original purchase price as the primary factor and 9% of owners that purchased during the bubble would. Homeowners who purchased after the bubble burst are four times more likely to use the original purchase price of their home to price it now or within the next four years.
Realtors struggling with sellers to be realistic
It is unclear the impact of having a Realtor versus not having a Realtor makes on this equation and although it gives a bit of predictability to seller mentality over the next few years, it presents a challenge to Realtors struggling to get homeowners to understand market conditions.
Realtors should understand the three types of home sellers as studied by Zillow- those that bought before, during and after the bubble, and take the year of purchase into account as an indicator of seller mentality.
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Housing News
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Click here to continue reading this story…
Housing News
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
Last fall, the News Corp. acquisition of Move, Inc. was given the green light by the feds, and this month, Zillow finalized their acquisition of Trulia.
…Click here to continue reading this story…
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Rachel LaMar, J.D.
July 14, 2011 at 9:36 am
Great article, and spot-on. It really puts into perspective one of the most difficult challenges of the Realtor today. In order for local markets to recover and return to some semblance of normalcy, we need to price homes properly – meaning according to comparables. This is hard for many sellers to grasp, especially when comparables include short sales and REO properties. Buyers just won't even bother looking if homes are not priced right, and this costs Realtors marketing dollars and time.
Jake Scheeler
July 15, 2011 at 8:56 am
Sorry, Rachel, but REO and short sales are NOT comparables; an indication of current prices, yes, but most definitely not comparables. If I catch an appraiser using short sales and REOs in an appraisal for a traditional sale, or any appraisal for that matter, I will not hesitate to call their competency into question and will firmly dispute and reject their so-called "market value".
Market value is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. REO and short sales are undue stimuli, therefore precluding their consideration in establishing "market value". I'm sorry, but it makes me cringe that so many people believe distressed sales are comparables.