Two or three years ago it was common knowledge that the real estate market wasn’t going to recover until 2011. Last year, the common knowledge expectation was extended to 2012. Earlier this year, we were hearing 2014 and most recently, some experts have stated that they don’t expect the real estate market to recover until 2015 or beyond.
A popular strategy that’s been used by homeowners thinking about selling their homes has been to wait a couple years until the market improves and they can get a better price. Needless to say, this strategy has failed miserably as prospective sellers have seen property values drop by as much as 40% in many areas. With the recent uptick in sales activity, many sellers are reemploying this failed strategy. This may not be a good idea. Consider the following:
- The National Association of Realtors or (NAR) recently showed that 10% of the people that own homes want to move, but are waiting until the real estate market recovers.
- Expired and withdrawn listings—Every seller that’s waiting to sell their home should research the number of people that had their home for sale and let the listing expire, or withdrew their listing. All of these people are also planning to sell when the market improves.
- Lis Pendens and future foreclosures—The wait and sell later crowd should also research the number of properties in their neighborhood that have had Lis Pendens filed on their property. A Lis Pendens is usually a suit of foreclosure filed by a bank. Most people researching this number are shocked by how many future foreclosures or short sales will occur.
All prospective sellers should consider that the inventory of homes available for sale is still very high in most areas. By the time all the foreclosures are absorbed and the people that want to sell actually do sell their home, it could be years before everything gets cleaned up.