The National Association of Realtors is reporting a record 11.2 months of supply of homes on the market. Inventories in the 680 Corridor are mostly in the 4 to 6 month range.

Existing home sales nationally rose 3.1% in July over June's figure. The pattern of increased home sales suggests that much of the activity is occurring in parts of America where foreclosed homes are flooding the market and buyers are snapping up the deals.

Analysts at UBS are saying they don't expect a recovery in housing until mid-2009 and a Wachovia economist says, "We are not yet ready to call the current levels a bottom but clearly most of the declines are behind us."  Another housing market analyst says he thinks the market could easily sit at the bottom for at least a year.

The NAR reports new-home sales are projected to drop 8.8 percent to 464,000 in 2009 from 509,000 this year.

Homeowners hoping to wait it out until 2009 may have to wait longer. Another 5% drop in values and an interest rate hike of 1% could put a homeowner in a position of having to wait another two years to get what they could get today for the sale of their home.

Real Estate is Local - get our FREE Real Estate Market Detail Reports for YOUR East Bay community.

Agents balk at overpriced homes is the cover story in the Sunday Homes Section of the Contra Costa Times today. Kathleen Lynn of the New Jersey Record wrote the piece. Everything in quotes is taken from Kathleen’s article.

CCTimes says – They (real estate agents) don’t want to waste time marketing houses buyers won’t bother to look at.

This article strikes at the heart of the major challenge in selling a house – pricing it right.

• The seller wants top dollar
• The agent wants to get it sold

You can’t accomplish either of these goals if the house is not priced right to bring in the buyers. We (Realtors as a group) continue to meet sellers that think they control the price. They are sorely mistaken. They can set whatever price they want, but, in the end, the market determines the price.

In an appreciating market, you can set the price at the high end and the market will eventually find you. But, in the current market, if you set the price high, you will most likely end up chasing the market down and wind up losing more money than if you priced it right to begin with.

“Sellers tend to rely on agents to set their price, according to the 2007 National Association of Realtors profile of buyers and sellers. When asked what they want most from real estate agents, 16 percent of recent sellers said they wanted help in pricing the home competitively, the NAR found.”

In my opinion, the first sign you may have the wrong agent is when they ask you what your home is worth. (As a home seller, always ask the agent first, if they insist on you going first - thank them for their time and move on) An agent may be asking to see how far apart your price is from what they tend to suggest, but, unfortunately, there are still a lot of agents out there that lack the experience in real estate to price a home properly in a challenging market like today’s. It’s also sad to say that many real estate agents have little or no business background or negotiating skills. Thus, they tend to shy away from anything that looks like it may be confrontational – like talking reality with a misinformed seller.

“Sometimes that means they get news they don't want to hear. Two years ago, for example, she did a market comparison for a couple thinking of selling. At that time, she valued their house at $569,000. They weren't ready to sell then, but they recently came back to her because they are ready now. In today's softer market, she suggested listing the house at $539,000. The sellers' reaction: ‘Are you kidding me?’”

There is hope, though, for all involved. Housing prices seem to be stabilizing despite continuing negative media coverage. The effects of the new lending standards have had their effect in reducing the number of qualified buyers available. This is especially true in the first time buyer market – which influences the move-up buyer market.

Continued downward pressure on local housing markets is going to come from continued foreclosures in the immediate area or price slashing from new home builders that are trying to survive.

Price it Right – Get it Sold!

The National Association of Realtors (NAR) 2007 Predictions

• Sales
• Predicted = 6.4 million
• Actual = 5.65 million
• Predicted Growth = -1.2%
• Actual Growth = -12.8%
• Variance = 11.5%
• Volume
• Predicted = $1.7 trillion
• Actual = $1.5 trillion
• Predicted Growth = 0.3%
• Actual Growth = -13.5%
• Variance = 13.8%
• Price
• Predicted = $225,229
• Actual = $218,900
• Predicted Growth = 1.5%
• Actual Growth = -1.4%
• Variance = 2.9%

In 2007 NAR was -

• Too optimistic when they think the market is going down
• Too pessimistic when they think the market is going up

NAR’s 2008 Prediction

• Sales will increase by 0.7% to 5.69 million transactions
• Up from 5.65 million in 2007
• Down from 6.5 million in 2006
• Prices to hold even in 2008
• Unchanged from $218,900 in 2007
• Down from $221,900 in 2006

 These predictions are based on existing homes. Remember 2007:

• Too optimistic when they think the market is going down.
• Too pessimistic when they think the market is going up.

2007 Real Estate 2008

• Part 1
• Part 2
• Part 3
• Part 4
• Part 5
• Part 6

Click Here to Get In-Depth Local Real Estate Market Data - Updated Weekly

That's right - here at The Harper Team - we eschew obfusication - AND - we give you the facts, so you can too.

From Business 2.0

Top Ten Foreclosure Markets - Does not include any California cities

Bubble Proof Markets - Includes two California cities.

Where Not to Buy – The Bottom 10 - Includes 6 California Cities

Top 10 Cities – Where to Buy Now - Includes 1 California city

Thank goodness it's a big state! 

Changing Their Tunes

The Mortgage Bankers Association on Tuesday pushed back its prediction for a turnaround in U.S. housing, saying housing would regain its footing near the end of the year instead of its December forecast of mid-year.

The National Association of Realtors (NAR) on Tuesday also lowered its forecasts for home sales and construction, although the group still predicts a housing recovery this year.

How do you like your Real E-steak?

Can you say sub-prime meltdown? 

Many lenders we know are advising past clients that used subprime loans in the past several years, to call and check on the feasability of refinancing - "the rules they are a changing." Some of the changes being made as a result of the subprime implosion will affect some home owners' ability to qualify for certain refinancing options. It's good advice to call now and check out where you stand before things change and you have fewer options. 

Agent Commission does not equal more money in the seller’s pocket.

Several recent events have encouraged me to write this post.

• There is a misconception on the part of many, if not most sellers, that reducing an agent’s commission is going to mean more money in their pocket.
• Discount broker flyers aren’t what they appear to be.
• We do it all for less usually means you do it all for less

The other day, I received a jumbo postcard in the mail from McDiscount – a flat-fee discount broker – that featured a bunch of houses with “SOLD” across the images and how much money McDiscount had saved these home-sellers.

Looks great and sounds great until you do a little digging. Example: A house sells for $700K. McDiscount charged the home seller $10K for their services. A full service agent would charge 3% for their side of the transaction = $21K. McDiscount claims – We saved these sellers $11K!

Aaargghhh! Bong! Maybe right, maybe wrong. How long was that home sitting on the market with the sellers making mortgage payments, taxes and maintenance until it sold? How many price reductions did it go through? How much did the sellers spend on advertising?

In my opinion, here are the top 2 reasons why professional agents get higher sales prices

for houses they transact – pricing & negotiation skills. Most home-owners enter the home sales process thinking that they are gong to stand firm on their price. Setting the sales price is one of the most difficult aspects of the process for the home seller because of their emotional investment in the house. It is very difficult for most homeowners to price their home according to market value.

Then after waiting and waiting for the home to sell through the McDiscount marketing plan – YOU do it all after we put it on the MLS – the price commitment begins to falter. Since the property wasn’t priced right to begin with, there are usually two or three adjustments to get it right. All the while the pressure is building rapidly because too much time has now elapsed and the seller is in a position of “having to” do something soon to resolve the situation and get on with life.

Having said all of this, don’t get me wrong, McDiscount is the way to go for some people, especially in a hot market like a few years ago.

But, here are a couple of personal notes about this market:

• I was talking to a former owner of a McDiscount franchise a few months ago. He told me that he sold the franchise about a little over a year ago at the top of the market. He was extremely happy that he had as he saw nothing but tough times ahead for the people that purchased it.
• We met a guy with a house listed with McDiscount. This is a beauty of a house that could have been sold and gone seven months ago, but it wasn’t priced right nor was it marketed – at all. It just sat there and sat there. After a couple of huge price reductions, I think it is under contract – but that owner lost more money than he would have ever paid in commission to an agent to help him sell that house.

Added 3/5/07 - Clifford over at WebHomeUSABlog has this post today: Top Ten Reasons to Sell Your Home Yourself