Love's Real Stories

Buyers are snapping up houses as fast as they hit the market, and sellers often have the luxury of picking and choosing among multiple offers. Home prices are moving up. Conditions such as these are generally referred to as a “seller’s market.” But sellers aren’t convinced their future is so bright, according to the 2012 California Home Sellers Survey by the California Association of Realtors.

The survey says only twenty per cent of California sellers believe home prices will rise in ten years. 12 per cent think prices will rise in the next five years, and only nine per cent believe prices will rise in a year.

Buyers have a completely different outlook. 73 per cent see prices rising in the next ten years; 41 per cent in the next five years; and 25 per cent in the next year.

So what’s with all the seller pessimism? The President of C.A.R., Don Faught, said, “In contrast to record high housing affordability and record low financing rates experienced by home buyers in 2012, the real estate market looked quite different from sellers’ perspectives. The last few years have been extremely difficult for many homeowners, which may indicate why more than twice as many sellers (74 percent) considered strategic default in 2012 than last year, reflecting homeowners’ hardships in a difficult economic environment.”

An Eeyore-type outlook among sellers is understandable. It’s been a rough six years of fallen prices, foreclosures, short sales, defaults, and as President Faught mentioned, “strategic default.” A strategic default could be called ”pre-meditated foreclosure” wherein a homeowner decides “I’m sick of throwing money at this depreciating asset of a house, the bank can have it. I’m taking a walk.” Not many homeowners actually did strategically default, but if 74% contemplated it, as President Faught says, we get a good picture of a bad situation.

The seller outlook might be glum, but you have to admit, things are looking up, or at least not down. Read the latest headlines, seller: “Home Prices in January Reach Levels Not Seen Since 2006”; “Home Sales Reach Highest Level in Four Years”; “Conditions Ripe for Further Price Appreciation in 2013.”

The seller’s life might not be a bowlful of cherries, and you might not be laughing all the way to the bank; but wait, is that a little smile I see?