Monday, October 17, 2011

WSJ: Decline in Housing Inventory Won't Lead to Rise In Prices; CAAR Remains Hopeful Charlottesville Albemarle Area Market Is Different

Last week when the Third Quarter CAAR report came out, the big news was that there was a -7.3% year-over-year decline in home prices in the region.*   This is a large drop, and should be motivating sellers with equity to cut prices, since buyer traffic is declining, sales have declined and we have now entered the "slow" time of year.

Instead, what the CAAR narrative focused on, and what it got local media entities to focus on, was the idea that a decline in inventory could actually "lift" prices.

This blog refuted that notion, with a post about why local declining inventory doesn't equal "health."

Now the WSJ has noticed the phenomenon on a national level:
While falling inventories are typically a sign of health, because reduced competition can boost prices, that isn't the case right now. Instead, real estate agents say, people are pulling their homes off the market rather than try to sell them at today's discounted prices.  At the same time, banks have been more slowly moving to take back properties through foreclosure ever since processing irregularities surfaced last fall, temporarily reducing the supply of foreclosed properties.  The shrinking supply isn't driving up prices because demand is soft.
(italics are this blog's)  The article also uses the words "slim pickings," which certainly describes the $350k and under market in the Cville area.   Read the whole article.

"Waiting out the market" has proven itself, for the past 6 years in this area, to be a $$$ losing strategy.  As the local housing market is nowhere near a recovery, and there are daily national headlines about how troubled housing is, why would anybody expect a "lift" in prices?

The idea that prices could "lift" is a disservice to sellers as well as to buyers.

*In some micro-markets (aka "neighborhoods"), the price decline is steeper (more about prices in an upcoming post).

Related:  How to Make a Lowball Offer

1 comment:

Anonymous said...

Sorry--not directly related to the post, but:

WOW. Has anyone seen this new listing?
MLS# 493260

Is this house not either going to be taken by the Western Bypass or have it running literally right beside the pool deck? And Tommy Brannock is marketing it as "a bird sanctuary"? Really? And of course asking is about 20% higher than the current county tax assessment, and 10% higher than the property has ever been assessed for, even at the peak (and yes, I know assessments don't = value).

I wish there was a way to post a giant "BULLSHIT" on the mycaar site itself. I know the "four corners" legal standard but Tommy Brannock should be ashamed of himself.