Sue Wilkerson, a Realtor with Terra Venture Real Estate, moved to Ogden, Utah, seven years ago from Northern California. Since then she has watched from afar as the California home she sold has jumped in value about $600,000. In Ogden, where the average time-on-the-market of for-sale homes is 73 days, the raging West Coast seller’s market seems as distant as the moon.
“It’s night and day,” said Wilkerson, “Our houses are so inexpensive compared to California. Most people in California can’t even fathom what we can buy houses for here. It’s not even close.”
While the nation’s real estate industry has basked in a seller’s market for the past few years, some individual regions are reeling in a counter-cycle due to a frenzy in home-building activity, a glut in for-sale homes inventory, a stabilization or drop in home prices, job-market distress or other factors.
A six-month supply of inventory, calculated by the length of time it would take to exhaust the current inventory of homes at the current sales pace, is considered to be the middle-ground between a buyer’s market and a seller’s market, according to Walt Molony, a spokesman for the National Association of Realtors.
The supply nationally has hovered for a while in the 4.5-month range, he said, which is “clearly a seller’s market.” During the recession in the 1990s, the supply was in excess of nine months. A 2003 NAR survey found the average selling time for a home was five weeks. That number was four weeks in 2001 and about eight weeks in the 1990s.
Wilkerson said homeowners in Northern Utah have struggled with the reality that they must price down their homes to sell in a strong buyer’s market. She said the economic lull that worsened after Sept. 11, 2001, knocked out some companies and jobs in Utah. A rise in home foreclosures and a boom in new home construction also put “huge downward pressure on existing home sales,” she said, and those lower prices drew a lot of first-time buyers into the market.
Tom Seelbinder, a Realtor at RE/MAX Advantage in Portage, Mich., knows well what it’s like to work in a buyer’s market. Indeed, he has rarely seen a seller’s market since his start in real estate in 1979. The for-sale inventory of about 2,900 units is a record high for April and a 17 percent increase since April 2003. Homes linger an average 125 days on the market, plus another 30-40 days for inspections and financing, he said. Existing homes must compete with new-built homes, as many buyers prefer a brand-new home to one that is even two or three years old, Seelbinder said.
Layoffs and job transfers by major employers have eliminated many high-paying jobs and created an especially stagnant market for high-end homes. Seelbinder has about 42 active listings with about a dozen more pending.
“I’m used to dealing with inventory,” he said.
Market timing and competitive pricing are important factors in selling homes during a buyer’s market, and such markets draw interest and create activity. “The inventory will get absorbed, eventually,” he said.
What boggles Seelbinder is the tales he hears about the radical West Coast and East Coast seller’s markets. He recalled that an East Coast agent told him how hard it was to get inventory in her area.
“She was saying, ‘We usually try to list the houses on Thursday, then we get offers Sunday and review offers Monday.’ You can’t even relate to something like that in our market,” he said. “It doesn’t even seem real.”
Real estate salespeople in Atlanta, Ga., Charlotte, N.C., and Austin, Texas, also report the telltale signs of a buyer’s market.
Carol Medley Parker, chairwoman for the Austin Board of Realtors, said the buyer’s market in Austin began 18 to 24 months ago.
“It’s just a correction in the market,” she said, as prices had risen too quickly to sustain.
The median price for a single family home has dropped about $10,000 in the last two years, the board reported, and the listing inventory grew to 9,400 units in February, a record for that month. Other regions in Texas have reported similar trends.
New home construction has lured many buyers to the suburbs, Parker said, and builders are offering “tremendous incentives.” The buyer’s market can be frustrating for sellers because existing homes must compete with new homes on the market.
“It is very difficult for sellers to realize the price has to come down. This year they’re finally getting the picture,” she said.
In Charlotte, N.C., the inventory of homes available more than doubled from April 2003 to April 2004, said Dean Nikodemski, a Realtor for RE/MAX Metro Realty. Intense construction activity has created an abundance of new homes, and the average number of days that homes spend on the market grew from 37 last year to 124 now, he said.
“The builders are continuing to build,” he added.
Homes are selling below tax value, he said, and it isn’t uncommon for homes to sell 15 percent below the asking price.
“There are a lot of relocations,” Nikodemski said, as Charlotte has a substantial transient population. “Fifty percent of the homes for sale right now are vacant.”
Atlanta, Ga., too, is not a peachy place for sellers these days.
The market “seems to be deteriorating now,” said Ellen Crawford, a Realtor at RE/MAX Greater Atlanta.
Homes priced at $100,000 might fetch $94,000 to $95,000, and homes in the $250,000 to $400,000 price range seem to spend a lot of time on the market. Some high-paying jobs have left the area and many new home buyers are coming into the area with lower salaries, Crawford said. The foreclosure rate has been abnormally high.
Still, market conditions are “not catastrophic,” she added, and some buyers have unrealistic price expectations. “We’re not bloodletting here,” she said.
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