17 replies to this topic

[Steve Heard]

Zillow Ranks Top Buyers’ and Sellers’ Markets

With the home shopping season well under way, Zillow took a look at recent data to determine markets where sellers have the power and those where buyers are in control. Our analysis shows many home sellers are thriving in the San Francisco, San Jose and Las Vegas metro areas, where price cuts are sparse and homes often sell for at or near their asking price.

On the other end of the spectrum, the Chicago, Milwaukee and Cleveland metros are buyers’ markets, with homes taking longer to sell and buyers logging average discounts of 5 percent off the asking price.

Zillow analyzed data on sale-to-list price ratio, number of days listings spent on Zillow and percent of homes on the market with a price cut, and ranked the 50 largest metro areas to determine whether buyers or sellers have more negotiating power in a given market. In this analysis, a sellers’ market is not necessarily one where home values are rising, but is a market where sellers are more likely to sell their home for close to asking price and where listings spend less time on the market. A buyers’ market is one where buyers have more bargaining power, thanks to listings lingering longer on the market and sellers being forced to cut asking prices.

“It’s refreshing to see some markets swinging back in favor of sellers, with asking prices being met and listings spending fewer days on market,” said Zillow Chief Economist Stan Humphries. “The housing recession has been long and rocky, and we’re seeing more balance during this summer selling season. Of course, many markets are still firmly in favor of buyers, and we expect that to continue until the recovery takes more of a hold nationwide.

Top Sellers' Markets
1.San Jose, Calif.
2.San Francisco, Calif.
3.Las Vegas, Nev.
4.Sacramento, Calif.
5.Phoenix, Ariz.
6.Riverside, Calif.
7.Washington D.C.
8.Los Angeles, Calif.
9.Salt Lake City, Utah
10.Austin, Texas


Read more: http://www.zillow.co...ellers-markets/

As always, we have to be cautious and not declare that the worst is over. There is always the uncertainty of the future, but for now it seems, with buyers anxious to take advantage of low prices and interest rates, and dwindling inventory, those in position to sell find no shortage of offers, if they price their homes right.

[asbestoshills]

Of course it's a hot market for sellers, but does that include sellers who are being forced out on a short sale? How about sellers who can barely make even but move to relocate etc. This is a very different kind of hot market as far as I'm concerned. We owe more than our home is worth now. Lovely. It pisses me off every time I see someone buying a house for a $75,000 less than what I paid for mine. The banks are a joke. In order to prevent the mass foreclosures Obama should've never given the banks one red cent as an incentive program that wasn't even forced upon them. He should've said, no more bank unless they refinanced to current rates and/or reduced the principal to fair market value. Then for all the banks that helped their customers, they could recoup the amount it costed them in personnel time to re-do the loans. Problem solved. This country is bankrupt. There are cities where the city wages have been cut to minimum wage. What a disgrace as a nation if you ask me. So completely embarrassing and an outrage. People should be protesting, but no as long as they have television to divert themselves they are just fine.

[Carl G]

Steve - what is the data on bank-owned homes? Are banks going to start moving them? We've had a bank-owned home on our block for a couple of years; the yard is dead.

[SacKen]

I'm interested in how many of these buyers are investors vs owner-occupy buyers? I could easily see a frenzy by investors that believe we're at/near the bottom. I see investor frenzy as a false hope that will self correct eventually.

[Steve Heard]

Of course it's a hot market for sellers, but does that include sellers who are being forced out on a short sale? How about sellers who can barely make even but move to relocate etc. This is a very different kind of hot market as far as I'm concerned. We owe more than our home is worth now. Lovely. It pisses me off every time I see someone buying a house for a $75,000 less than what I paid for mine. The banks are a joke. In order to prevent the mass foreclosures Obama should've never given the banks one red cent as an incentive program that wasn't even forced upon them. He should've said, no more bank unless they refinanced to current rates and/or reduced the principal to fair market value. Then for all the banks that helped their customers, they could recoup the amount it costed them in personnel time to re-do the loans. Problem solved. This country is bankrupt. There are cities where the city wages have been cut to minimum wage. What a disgrace as a nation if you ask me. So completely embarrassing and an outrage. People should be protesting, but no as long as they have television to divert themselves they are just fine.

I know that whatever one posts, whether it is announcing a yard sale or housing stats that someone is going to have an issue with it, so I expected a less-than-favorable response from someone.

No one is 'forced' to sell short. Short sales occur when a home owner, for whatever reason, wants to sell their home, but they cannot sell it at high enough price to pay off their lien holders. Alternatives to short-sales include keeping the house and paying as agreed, paying the difference between the sales price and lien amounts out-of-pocket, foreclosure, deed-in-lieu of foreclosure, and loan modification.

If you do have a short-sale, however, note that things have changed. Most banks are more efficient at processing them and more willing to do so, buyers are being more patient and offering higher prices for them, and in some cases banks are paying sellers to cooperate with the sales procedures. It's not perfect, but it is working for many folks.

As for owing more than your home is worth, you are not alone. There are thousands of us in the same boat. I intend to keep my home because I need a place to live and believe that some day it will be worth more than I owe. I am not angry with those who purchase homes at lower prices. They are just taking advantage of the low prices.

It's funny, a friend was telling me about his client who thinks that sellers are being greedy now because inventory is so low and that prices are too high.

I recall when the market was seeing big increases back around 2003 to 2005, some were angry that they sold too soon and missed out on selling at higher prices.

Anyway, the market is indeed hot, and most who are buying homes see great opportunity and time to celebrate rather than be angry.

By the way, most of the sales made these days are equity sales. People who actually owed less than they were selling their homes for.

[Steve Heard]

Steve - what is the data on bank-owned homes? Are banks going to start moving them? We've had a bank-owned home on our block for a couple of years; the yard is dead.

Unfortunately, my guess isn't likely to be much better than yours on this one.

The 'shadow inventory' which has been talked about for years never seems to materialize. 'Shadow inventory' has different meanings to different people, but I think most would say that it includes those homes which:

* Banks forelosed and took possession of but have not disposed of
* Homes where the borrower has stopped paying but the banks have not yet foreclosed on
* Homes where the owner would like to sell but is waiting for the conditions to improve

Experts, bankers, reporters, Realtors and sooth-sayers have been predicting a flood of shadow inventory listings for about 5 years now. They come out with predictions on when they are coming out, ie;

* After the new year
* After the lawsuits are settled
* After they get their acts together
* After the election (this is the latest one, with folks warning that come November they'll open the flood gates. No one can explain why. It's just something they throw out.)

A couple of years ago, a guy at BofA told me to 'wait until September', because they were going to release a flood of them.

So, what's happening? Why aren't we seeing them? Answers vary, and they include:

* Banks not having their acts together
* Banks realizing that flooding the market with homes will depress the values of their paying customers' homes, causing more foreclosures
* Banks preferring to work out modifications and short-sales instead of foreclosures
* Large investors buying blocks of homes in $5million to $10million chunks, and more.

I went to a meeting where a VP from Bank of America said that before they foreclose on a home or approve a short-sale, they look at how many loans they own in the particular neighborhood. They want to avoid 'benchmarking' a neighborhood by selling too low or foreclosing too soon, thereby hurting their paying customers.

Overall, it seems to be a complicated issue, but after 5 years of worrying about it, I think most folks have learned to just go about their business and deal with the market as it is today.

[Steve Heard]

I'm interested in how many of these buyers are investors vs owner-occupy buyers? I could easily see a frenzy by investors that believe we're at/near the bottom. I see investor frenzy as a false hope that will self correct eventually.

While you may see investor frenzy as false hope, many others see investor frenzy as a sign things may be turning around. It also depends on how you define 'investor'.

I don't have current stats, but I remember reading a report that said that in the first quarter of this year, 1/3 of sales were to non-occupant buyers (investors).

Someone buys a home so that he can rent it out, that is an investor. If someone buys a home in order to fix it up and sell it at a higher price, he/she too, is an investor.

Both can be good for the market. The former takes properties off the market and puts renters in them, reducing the number of vacant and distressed properties, and the latter takes distressed properties off the market and puts them back on in a condition more acceptable to the market and at higher prices.

I remember back about 2004 or 5, there was an article stating that 28% of homes purchased were by investors, many of whom were small investors who took equity out of their homes in order to buy rentals.

The problem was, they were leveraging their homes for an investment on which they were counting on write-offs and appreciation rather than cash-flow.

Today, investors can buy lower and get positive cash-flow.

As for my own experiences, of the 16 homes I've sold this year, 3 were listings by an investor-flipper, and one was a purchase buy and investor-landlord.

[Chad Vander Veen]

OK realtors, any of you who can sell my house for $310k gets my business

[Steve Heard]

OK realtors, any of you who can sell my house for $310k gets my business

I'd love to take a crack at it.

The last time you listed it, there were 288 homes on the market to compete with, and about 110 were priced less than yours.

Today, there are 85 on the market, only 21 priced below $310K, and narrowing it down to 3 bed 2 bath homes of 1500 sq ft or more, there are 7.

So, your home would get more attention today if priced correctly. The question is, what's the correct price.

The average for a home of your ere and size is $154 per sq foot. You have to consider amenities, condition, and location to take a real educated guess at it.

Let's talk about it.

[asbestoshills]

I know that whatever one posts, whether it is announcing a yard sale or housing stats that someone is going to have an issue with it, so I expected a less-than-favorable response from someone.

No one is 'forced' to sell short. Short sales occur when a home owner, for whatever reason, wants to sell their home, but they cannot sell it at high enough price to pay off their lien holders. Alternatives to short-sales include keeping the house and paying as agreed, paying the difference between the sales price and lien amounts out-of-pocket, foreclosure, deed-in-lieu of foreclosure, and loan modification.

If you do have a short-sale, however, note that things have changed. Most banks are more efficient at processing them and more willing to do so, buyers are being more patient and offering higher prices for them, and in some cases banks are paying sellers to cooperate with the sales procedures. It's not perfect, but it is working for many folks.

As for owing more than your home is worth, you are not alone. There are thousands of us in the same boat. I intend to keep my home because I need a place to live and believe that some day it will be worth more than I owe. I am not angry with those who purchase homes at lower prices. They are just taking advantage of the low prices.

It's funny, a friend was telling me about his client who thinks that sellers are being greedy now because inventory is so low and that prices are too high.

I recall when the market was seeing big increases back around 2003 to 2005, some were angry that they sold too soon and missed out on selling at higher prices.

Anyway, the market is indeed hot, and most who are buying homes see great opportunity and time to celebrate rather than be angry.

By the way, most of the sales made these days are equity sales. People who actually owed less than they were selling their homes for.

I totally disagree that people aren't "forced" to do a short sale-bs! If you bought with a predatory lender and cannot get a modification b/c the bank "loses" your paperwork countless times (I have seen at least 5 friends this has happened to) and they offer you a short sale or a foreclosure, you are forced to do this to lessen the impact on your credit score. HELLO, this has been happening for years now, and only recently have people with equity (people who have owned their homes 20 plus years are empty nesters looking for smaller properties usually) are moving or yuppies who bought 20 Plus years ago. THERE are tons of homes that haven't hit the market and you see them vacant every day and in every neighbrohood. The crooks on Wall Street moved to Main St, but the people on Main St weren't bailed out. If you were one of the 1 percent who got a modification, and probably not a good one you saved your home. There are a few and I mean few banks that are lowering their principal loans to market value-however, these are usually homes that are v. high end, think celebrity or v. low end-think condos in Florida. NOW, I have seen a new trend which is supposedly illegal but a lot of friends are doing. They buy a new house in one spouses name and then short sale their own home and stop paying on the mortgage to get a home that used to be out of their reach. Lots of people I know have no equity and a high house payment but have good jobs adn good credit and are moving to their dream home with way lower interest rates than their current home payment and are getting amazing deals on dream homes. Sometimes they are paying a few hundred less a month for double the square footage. They don't have to short sale but choose to do so for their own benefit.

[Robert Giacometti]

I totally disagree that people aren't "forced" to do a short sale-bs! If you bought with a predatory lender and cannot get a modification b/c the bank "loses" your paperwork countless times (I have seen at least 5 friends this has happened to) and they offer you a short sale or a foreclosure, you are forced to do this to lessen the impact on your credit score. HELLO, this has been happening for years now, and only recently have people with equity (people who have owned their homes 20 plus years are empty nesters looking for smaller properties usually) are moving or yuppies who bought 20 Plus years ago. THERE are tons of homes that haven't hit the market and you see them vacant every day and in every neighbrohood. The crooks on Wall Street moved to Main St, but the people on Main St weren't bailed out. If you were one of the 1 percent who got a modification, and probably not a good one you saved your home. There are a few and I mean few banks that are lowering their principal loans to market value-however, these are usually homes that are v. high end, think celebrity or v. low end-think condos in Florida. NOW, I have seen a new trend which is supposedly illegal but a lot of friends are doing. They buy a new house in one spouses name and then short sale their own home and stop paying on the mortgage to get a home that used to be out of their reach. Lots of people I know have no equity and a high house payment but have good jobs adn good credit and are moving to their dream home with way lower interest rates than their current home payment and are getting amazing deals on dream homes. Sometimes they are paying a few hundred less a month for double the square footage. They don't have to short sale but choose to do so for their own benefit.

There will always be those who are going to try and beat the system in some manner.

Regarding your 5 friends, how many of them were FORCED to sign the loan papers to buy/refinance their homes or did they do this on their own free will?

How many of your 5 friends took out one of those "NO DOCS" loans where they just stated what their income was without any verification? Is it possible any of them could have misrepresented their incomes to qualify? We can't just blame the banks for all this when its the people who were agreeing to sign the loans?

I kinda agree with what you are saying regarding banks not being as cooperative/helpful as possible, given they got bail out money. The question then becomes what will be criteria as to what the standards are to help borrows? Those who I know who have gotten modificatiosn were relentless in doing everything they had to get approved. In one case, a friend applied 6 times, before finally getting approved. Some people have accepted their fate and have quit trying to get a modification, because they don't have a job to qualify. There is NOTHING the bank can do in this case. Someone I know was told by the bank, that the banks are so overwhelemd that they don't want to take on any more properities, because its better for the bank to have someone living in them at least maintaining them!

An investor I know has been looking at portfolios of properties to buy from banks. The banks had been unloading properties in this manner that don't show up under the MLS. Just because one doesn't see it being reported, doesn't mean its NOT happening!

I too know some people that are just waiting for the final notice and have been for years! I too see people piling up the stuff they no longer want on the street and moving, leaving the house empty. I've seen 5 like this in the last 10 days! This has been a real eye opener!

Until there are jobs being created that pay enough money, real estate values will remain flat at best!

[Steve Heard]

I totally disagree that people aren't "forced" to do a short sale-bs! If you bought with a predatory lender and cannot get a modification b/c the bank "loses" your paperwork countless times (I have seen at least 5 friends this has happened to) and they offer you a short sale or a foreclosure, you are forced to do this to lessen the impact on your credit score. HELLO, this has been happening for years now, and only recently have people with equity (people who have owned their homes 20 plus years are empty nesters looking for smaller properties usually) are moving or yuppies who bought 20 Plus years ago. THERE are tons of homes that haven't hit the market and you see them vacant every day and in every neighbrohood.

I truly understand your feelings on the matter, but am not in agreement.

I've written and spoken about the banks' practices over the years, including their habits of 'losing' paperwork, but hopefully those days are in the past. New procedures put in place by the banks, along with government intervention, including HAMP, HARP and the recently signed Homeowner's Bill of Rights are helping borrowers work out solutions. The system if far from perfect, but much better than in years past.

Note that banks cannot force one to sell his or her home. In most California mortgage agreements, the obligations and remedies are clear. The borrower can pay as agreed, or the bank can foreclose on the property if they follow the proper procedures. Usually, one misses payments for 3 months and gets a Notice of Default (aka pre-foreclosure notice). If they do not pay up for 3 more months, the bank can issue a Notice of Trustee's sale (aka aforeclosure notice), and if the loan isn't paid off after 21 days, they can auction it off to the highest (cash) bidder at the court house steps. There is no language in the agreement addressing either modifications or short-sales.

People request or attempt short-sales, usually for one of only a few specific reasons:

* A change in employment (reduction in pay, loss of job, transfer)
* Loss of an income earner in the household (death, divorce)
* Sellers feeling that the home isn't worth keeping when it isn't worth what they borrowed/owe
* Others less common reasons include incarceration, military service, property condition and inability to rent
* They just don't want to pay for it any more

Predatory lenders are common scapegoats in this, but today they are rarely a factor. If they put borrowers into loans at rates too high for them to afford to pay back, those borrowers would not be still in their homes 7 years later unless they are borrowing from someone else every month to pay that high note. If we mean that they were put into adjustable rate mortgages, those have actually gone down for most borrowers, so they are not a factor.

It is important to note that short-sales are a relatively new (7 year old) phenomenon and it took banks years to figure them out. Some still are.

I have many family members, friends and customers who have lost their homes due to foreclosure or have found themselves having to sell short, not because of the loans they took out, but because prices have fallen below what their properties are worth and they've had one of those life altering events.

In many cases it has been tragic. I know couples who have ended up in divorce court, and even know of a few who took their own lives in part due to the loss of their homes. No one, however, is forced by the banks to sell. Banks can and have refused to cooperate with short-sales for a variety of reasons, but that is the limit of their power. Today, most of them realize that it is better for them in so many ways (cost, regulatory issues, management) to approve short-sales instead of foreclosing, so they are getting better at it.

To answer your initial question however, yes the 'hot market' statement includes short-sales. In years past, people who were attempting short-sales often found that buyers either stayed away because of fear of the hassle and time commitment, or found that along the way the buyers would get tired of waiting and buy something else or they were making offers below what the banks would accept. Today, with so little inventory available, short-sales are getting multiple offers, sellers are getting higher prices, and more buyers are hanging in to the end. Short-sales represent about 35% of homes sold in Folsom this year, although of today of the 83 homes on the market, only 16 are short-sales.

By the way, we now see buyers who had short-sales and foreclosures over the past few years now returning to the market, buying homes at much lower prices and interest rates. For these folks, they think short-sales and foreclosures were blessings rather than curses, although I'm sure many didn't feel that way when going through the process.

Also note that you don't have to be in your home for 20 years to have equity. There are many people who bought homes, with downpayments, did not take equity loans out, and paid their mortgages down who find themselves with equity.

If sales and inventory trends continue, these folks will continue to see their equity rise.

[asbestoshills]

Yes, those people will have equity if they put the recommended money down and paid their loan down. Also, I know the bank can't force you to have a short sale with a gun, but economically they tie your hands pretty tight:) Also, the banks aren't forced to any programs, but have wonderful incentives to help if they choose. Not only do they make money on the foreclosure they get full price with mortgage insurance. Also, the other poster said people without jobs can't modifications,that's not true. There are specific programs now for unemployed people to get their mortgate paid for so many months etc. My friends all did doc loans and have high incomes, but I think the loan to value was artifically high to the banks bad loans to people who had no biz buying homes. However, I will never blame a middle class family on the thievery of Wall Street no matter how they try to spin it. If there were regulations in place that prevented no doc loans you wouldn't see this phenomenon and the junk loans sold to investors wrapped in phony returns etc. Most people buy very few properties in their lifetime and the banks know it and they also know the emotional impact of buying a home. I know of a couple of people who had their loan docs swapped out at the last minute and were told if they didn't sign the new docs that they would be sued by the owner of the home b/c they were still approved with financing but not the same interest rates or terms as before. There are all kinds of ways the banks got away with stealing and if the regulations were in place, we wouldn't be in this mess and the middle class have NO control of how the economy is going b/c of widespread thievery and sophisticated scams. The rich have been stacking their cash waiting to dive into this market head first to pick up all of the commercial property available and in many cases using the low interest rates to invest as much as they can b/c what goes down, eventually goes back up and they profit from the middle class people. It was never truly poor people who got predatory loans, it was working class, middle class people with jobs.

[4thgenFolsomite]

It was never truly poor people who got predatory loans, it was working class, middle class people with jobs.

I think some people at the middle and at the bottom were stuck with predatory loans. I remember back in the boom period (1990s and early 2000s) all the ads selling/pushing loans to ANYBODY who would be stupid enough not "to be buying a house now before prices keep rising and its too late"!

p.s. I really feel for people who bought homes in Stockton.

[SacKen]

While you may see investor frenzy as false hope, many others see investor frenzy as a sign things may be turning around. It also depends on how you define 'investor'.
...

I just remember reading something a few years ago about how one of the reasons why some places that were hit really hard, including Arizona, Las Vegas, and Miami, were slammed because of an abundance of investor owed properties. Their buying frenzy made people think there were a lot of people looking to buy homes. So more homes and condos were built. Then they realize that all those people don't actually exist (just because you build 10000 units and sell them to 10000 investors doesn't mean there are 10000 people around to buy/rent them).

Then when things go wonky, investors are often the first ones to start dumping (and are often more comfortable and able to take a loss to get out quickly), flooding the market and dropping prices. Whereas most owner-occupied homeowners have reasons besides the value to hold on longer and tend to not start jumping until things get so bad that it doesn't make sense for them to stay.

I liken it to things like the Beanie Babies craze. High investor to "real" buyer ratios have a way of self correcting eventually.