Today's Real Estate Market
January 21, 2009
From 2003 until sometime in 2005 or 2006, the real estate market was described as a sellers' market. Sellers' markets are characterized by properties selling quickly and at the seller's asking price. Sellers become unwilling to negotiate and typically buyers will concede to the seller's price. Generally sellers' markets are also times of rising prices.
Sometime in 2006-2007 the market transitioned to a market where sellers no longer held the upper hand, and buyers began to sit on the sidelines as they watched to see if sellers would reduce prices and by how much.
Unfortunately, by 2008, the absence of buying activity had seriously affected home values and those homeowners who had entered into 100% financing, began to find that they owed more than their home could be sold for. The foreclosure rate accelerated and by late 2008, almost 50% of the properties being sold were bank-owned with a smalal portion being shory sales. Because the affordability rate became almost 60% the Inland Empire, buyers began to buy and, using traditional terminology, the market was portrayed as a "Buyers' Market".
As this real estate market unfolds, agents have come to create a new term for the market we are experiencing: "Bankers' Market". In a "short sale" situation, it is the bank/lender who decides what the price and terms of a transaction will be. In a "real-estate-owned" transaction the bank/lender sets the price and offers the property "as-is". The buyers can take it or leave it. There is no negotiating.
Since it is the bank/lenders that also provide the financing, they also determine how much they will lend on any particular property. This is the market where neither the seller nor the buyer is in control. The banks/lenders set the price, set the condition of the property and set the criteria for the loans. According to the media, banks are in trouble because of their past lending practices. If they would consider the give and take between sellers and buyers in establishing prices, there might be fewer real-estate-owned properties and more "short-sales' in which the lenders might lose less of their investment.
From 2003 until sometime in 2005 or 2006, the real estate market was described as a sellers' market. Sellers' markets are characterized by properties selling quickly and at the seller's asking price. Sellers become unwilling to negotiate and typically buyers will concede to the seller's price. Generally sellers' markets are also times of rising prices.
Sometime in 2006-2007 the market transitioned to a market where sellers no longer held the upper hand, and buyers began to sit on the sidelines as they watched to see if sellers would reduce prices and by how much.
Unfortunately, by 2008, the absence of buying activity had seriously affected home values and those homeowners who had entered into 100% financing, began to find that they owed more than their home could be sold for. The foreclosure rate accelerated and by late 2008, almost 50% of the properties being sold were bank-owned with a smalal portion being shory sales. Because the affordability rate became almost 60% the Inland Empire, buyers began to buy and, using traditional terminology, the market was portrayed as a "Buyers' Market".
As this real estate market unfolds, agents have come to create a new term for the market we are experiencing: "Bankers' Market". In a "short sale" situation, it is the bank/lender who decides what the price and terms of a transaction will be. In a "real-estate-owned" transaction the bank/lender sets the price and offers the property "as-is". The buyers can take it or leave it. There is no negotiating.
Since it is the bank/lenders that also provide the financing, they also determine how much they will lend on any particular property. This is the market where neither the seller nor the buyer is in control. The banks/lenders set the price, set the condition of the property and set the criteria for the loans. According to the media, banks are in trouble because of their past lending practices. If they would consider the give and take between sellers and buyers in establishing prices, there might be fewer real-estate-owned properties and more "short-sales' in which the lenders might lose less of their investment.
posted by shirley harry at 9:25 AM
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