Excerpt from a recent Smart Money Magazine Article
August, 2010
A big part of any decision to sell a house is where a homeowner thinks prices are heading. So how do owners feel after the brutal market of the past few years? Surprisingly—perhaps naively—optimistic. A recent survey of 479 homeowners in 20 U.S. metropolitan areas found that people were about five times more likely to say their own homes would see their prices increase in the next 12 months than they were to say their neighbors’ homes would do better.
Robert Shiller, a professor at Yale University, and Karl Case, a professor at Wellesley College, survey homeowners every year to gauge how confident they are that their homes will increase in value. Only once, when the housing market was at its worst in the recent crash, did the poll results slide into the negative. In general, the average respondent figured his home was bound to jump in value in the near future. “People don’t change their opinions that quickly,” says Shiller.
Whether they’ll regret those opinions later, only time will tell. If his expectations are out of whack with reality, an overoptimistic seller could wind up waiting for a higher price that will never arrive. But pessimists should tread just as carefully: An overly downbeat seller could wind up dumping a house at a price far below what it could fetch a year or two later.
The worst of the home-price nosedive may be over, but selling a home can still feel like an agonizing stalemate. Nationwide, the average home sits on the market for 150 days, up 43% from two years ago, according to Altos Research. In the Burlington, Vt., area where we're working, the typical high-end house stays on the market for 284 days. To be sure, things aren't as grim as they once were, with low mortgage rates and Congress's now-expired tax breaks having lured bargain hunters into the market. But buyers have become ruthless nickel-and-dimers, the pros say, combing the web for sales data, tax records and any other clue that can justify a lowball offer. Homeowners, meanwhile, aren't hesitating to pull properties off the market if offers are weak. And in many communities, this mutual wariness is slowing sales traffic to a crawl.
Excerpt from article that appears in August 2010 Smart Money Magazine
