It's a scenario that seems to defy economic rules, yet we're seeing it in many real estate markets around the country: Sales prices are rising even as home demands slows. What's going on?

To get an answer, we have to look at sellers. They're typically the last ones to see the market shifting in favors of buyers. They continue to list their properties at ambitious price points even though buyers, wary of the market slowdown, have little appetite to go along. The result is most properties sit on the market longer.

Given the continuing soundness of market fundamentals, the juxtaposition of these different market conditions isn't a mystery. In most markets, whether they're speeding up or slowing down, the buyers are there, buttressed by continually strong economies and low interest rates. For them, it's a waiting game. Once sellers price their homes right, sales will pick up.

This isn't to say all markets will experience a soft landing. There are vulnerable markets today, particularly those facing entrenched housing affordabability problems. During the boom, households in these markets had to stretch their incomes with creative financing to buy. So if rates rise to much, we could see an uptick in mortgage problems, not only inhibiting the home-sale recovery but also dampening local economic growth.

Thus, in part, your fortunes depend on how well policy makers at the Federal Reserve tamp down budding inflation without exacerbating the housing slowdown by precipitating mortgage problems among stretched households.

Source: Realtor Magazine



Worth Quoting...

"Ever tried. Ever failed. No matter. Try again. Fail again. Fail better."

- Samuel Beckett

 

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