Here’s a perfect example of what happens to a market when Uncle Sam steps out of it.
Absent the fairy dust, it starts dropping again…
From Reuters by Lynn Adler entitled: Home buyers still calling the shots price: Trulia
“Sellers cut prices on nearly one quarter of U.S. homes listed in June, an increase from May, showing buyers still call the shots in the U.S. housing market, real estate website Trulia.com said on Wednesday.
Sellers lowered asking prices at least once on 24 percent of homes listed as of July 1 compared with 22 percent the prior month, Trulia said in a report provided to Reuters before official release.
More job creation and employment security are needed for a sustained rebound, San Francisco-based Trulia said. Swelling inventory, under the weight of record foreclosures and typical summer selling, remains a formidable obstacle.
“We’re seeing more and more sellers reduce their home listing prices to attract potential buyers, who definitely have the upper hand in negotiations this season,” said Trulia Chief Executive Pete Flint.
Home buying demand came to a screeching halt after the April 30 deadline to sign contracts for up to $8,000 in tax credits.
Applications to purchase houses sank to 13-year lows, according to the Mortgage Bankers Association, as the spring race for tax credits stole from summer sales.
“The slow start to the summer season is creating major concern that we are heading toward a double-dip in the second half of this year” in the housing market, Flint said in a statement.
Sellers slashed a total of $27.3 billion in June from asking prices, more than $26.7 billion in May, $25 billion in April and $22.8 billion in March, according to Trulia. The average discount on reduced homes held at 10 percent from the original listing.
Trulia said it expects prices will drop by up to 5 percent broadly, and by as much as 10 percent in areas hardest hit by high unemployment and foreclosures.
Prices have fallen about 30 percent on average from their peaks four years ago, according to the Standard & Poor’s/Case-Shiller indexes.”
Now maybe home prices will fall to a level that people can actually afford—fairy dust or not it’s unstoppable.
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