Homeowners, especially those who bought their
houses after the real-estate bubble burst, are still having trouble
accepting just how much the values of their properties may have fallen,
says a new report from the real-estate site Zillow.
Current sellers who bought their homes in 2007 or later, an analysis of the site's home listings shows, are overpricing their properties by an average of 14 percent.
Sellers
who bought their houses before the bubble, and those who bought during
the big run-up in home values, also are overpricing their homes, but
not by as much. Those who bought before 2002 are pricing their homes
roughly 12 percent over market value, while those who bought from
2002-06 price them about 9 percent over market value.
In the
analysis, Zillow compared the asking price of one million homes for
sale to the homes' previous purchase price, then factored in the change
in the Zillow Home Value Index for the respective ZIP code, to
determine an estimate of that home's current market value.
Stan
Humphries, Zillow's chief economist, says those who bought post-bubble,
in 2008, 2009 or later, seem to think they escaped the worse of the
housing market debacle and tend to price their homes too high as a
result. But 2006 was just the start of the housing recession, which
continues today; home values are now down nearly 30 percent from the
market's peak. And, values have fallen about 12 percent from January
2009 through May of this year, he says.
That means, he says, that
even people who bought after the bubble burst need to take a hard look
at what has happened in their local market since they bought their
home. Traditionally, people tend to overprice their homes a bit anyway,
to allow room for negotiation. But unrealistic overpricing in the
current environment, he says, means properties stagnate.
Sellers,
he said, need primarily to consider comparable sales and asking prices
in their market when setting an asking price for their home. Factoring
in what they paid for their home, or how much they owe on their
mortgage, "leads to conclusions that are divorced from the outside
market," he said, and the market determines whether a buyer is
interested in your house: "The buyer doesn't care what you paid or what
your mortgage is."
Of course, some sellers who owe more than
their house is worth are limited in how low they can price their home
because selling for less than their mortgage means they'll have to
negotiate a short-sale with their bank. "They're hoping against hope
that they can sell at a higher price," Mr. Humphries said.
But
others are simply faced with a reluctance -- understandable, to be sure
-- to sell the house for less than they paid. "They could price more
aggressively, but there's a psychological hurdle," he says. "They don't
want to realize a loss."
Humphries foresees home values
continuing to fall through the middle of next year for a variety of
reasons, including persistent unemployment, a significant pipeline of
homes in foreclosure, as well as high rates of homes with negative
equity, which means many more will likely end up in foreclosure. A
return to a "normal" market is likely at least three away, he says.
ANN CARRNS, On Tuesday July 19, 2011, 2:00 pm EDT
New York Times
