Home > 2015 > Mortgages

3 Reasons It’s Not a Seller’s Housing Market

Advertiser Disclosure Comments 0 Comments

If you’re considering purchasing a home, but worried that rising home prices mean you’ll pay too much for a house, think again. Just because home prices have risen doesn’t mean it’s a seller’s market out there. Here’s why.

1. Home Prices Aren’t Necessarily Inflated

Home prices have gone up, but have they done so unreasonably? Rewind to 2012, the unemployment rate exceeded 8%, short sales and foreclosures were still rampant, consumer confidence was low, the prospect of job growth was bleak and the general consensus was that the economy was still licking its wounds from the recession. People don’t buy homes when they’re feeling skittish about their job. Fast forward to 2015, job growth is getting traction, the banks are clearing foreclosures from their balance sheets and short sales are dropping. The result? Because the pendulum swung so far in the opposite direction with drastically low real estate prices several years ago, today’s prices in general are a reasonable correction of a settling housing market.

The likelihood for prices to continue to rise by leaps and bounds while credit is still tight is a shot in the dark, as wage strength has still not peaked. Remember, banks still have tight constraints on lending and are especially picky when approving large mortgages. Home prices in many markets are in direct proportion to the local economy. Take San Francisco, for example, where home prices are, without question, exorbitant. The tech industry is having a massive boom, driving prices up. The stronger the local economy, the more people working, the more support housing prices will have to remain strong.

2. Many Sellers Have Unrealistic Expectations

This average home price appreciation has brought sellers out of the woodwork in hopes of attaining a maximum price. Many have expectations far larger then what the market will bear. The best example of this is a home listed on the market for longer than 30 days within a strong local economy. Look at Sonoma County, Calif., where if a house is on the market longer than 30 days without a contract, it’s a good sign the property is listed too high. The only alternative is to drop the list price to induce an offer. It’s not uncommon at all these days to have a home close escrow at a price beneath the original listing price. (If you’re a seller who’s not sure what to offer on a house, talk with your real estate agent and take their advice — this is what you hire them to do.)

3. Multiple Offers Are Less Common

A good indication of a seller’s market is when there are large numbers of multiple offers – say eight to 10 – for each listed property. That is a strong indicator of the true seller’s market, much like it was in early 2014 and even summer of 2014. But these days I’m seeing that a handful of offers at best is more realistic. Less competition means a greater opportunity to get your foot in the door.

Consider this: Mortgage rates are down, increasing affordability. More people can afford to pay a little bit more for a home and not feel financially squeezed because their housing payment is lower. Prices do rise in relationship to what a ready and able buyer is willing to pay for a property. But the basics also come into play, including the location of the property, school district, bedrooms, bathrooms and lot size are all critical factors in the listing price of a home. Agents know this, but not so much sellers, who still believe they can get top dollar for their property regardless of whether they really can.

If you’re looking to buy a home, and are putting it off because you think prices are too high, prices will always be too high. Economic cyclical changes drive home prices. We would have to bear a repeat of the Great Recession in order to drive prices to levels they were several years ago. That’s not likely to happen in the foreseeable future. Furthermore, though mortgage rates are low and allow people more borrowing power, strict lending standards still keep in check consumers’ general ability to buy (this calculator can show you how much house you can afford if you’re not sure). Keep in mind your credit score will affect your ability to qualify as well. (You can check your credit scores for free on Credit.com.)

Quick Tips to Getting Your Offer Accepted

  1. Get a real pre-approval upfront. That means letting the lender review your credit report, along with all your supporting financial documentation. Doing so will bullet-proof your loan, solidifying your ability to perform on the contract.
  2. When you submit your purchase contract, have your loan officer call the listing agent and let them know that they have personally reviewed your credit, debt, income and assets – and that you are well qualified. A personal touch can go a long way with the listing agent for them to influence your offer with the seller.
  3. Thirty-day contracts are still the norm – meaning you have 30 days from the seller accepting your offer to complete the purchase of the home, during which time you will secure financing. A standard 17-day loan contingency removal allows you 17 days to cancel the contract if you do not receive financing. So, as a sign of good faith, you can spruce it up with a 12-day loan contingency removal, and increase your deposit on your earnest money.
  4. If selling with a contingent offer, that is selling one house to buy another, list your home on the market, then make an offer to purchase the new home and include a copy of the listing to demonstrate that you are a serious buyer.
  5. Include proof of funds in your offer. Putting down 15%? Great! Prove you are ready to play ball by providing a bank statement that shows you really do have the assets.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

More on Mortgages & Homebuying:

Image: iStock

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team