Blame Realtors for High Home Prices

Seb FreyCommentary

Greedy Realtors Drive Higher Prices

I remember a few years ago – back say between 2005 and 2007 – there was much wailing and gnashing of teeth regarding high home prices.  What was causing it?  There were many in the media pointing fingers every which way.  There was a lot of talk about how greedy home sellers, mortgage lenders, and yes, many would blame Realtors for high home prices.  Greed, greed, greed, pure and simple.   Of course, the market crashed in 2008 and the spotlight went off Realtors and stayed on the banks for many years, blaming them for predatory lending and liar loans and and all the rest.  While of course there was plenty of predatory lending and liar loans, there’s quite a bit more to that story, although it isn’t very pertinent to what’s going on in today’s real estate market. So let’s take the greedy banks, easy-money policies, and rapacious mortgage brokers out of the equation for the moment.  In case you haven’t noticed, housing prices are again skyrocketing, and the mortgage market is markedly different today than it was 7-9 years ago.  So let’s turn the focus back on Realtors, and ask:  are Realtors to blame for high housing prices? I’m going to come right out and say it:  damn straight we are.  Actually, I’ll go so far as to say: if Realtors aren’t to blame for higher home prices, why do we even exist? Indeed, the whole raison d’être for real estate agents and brokers is to push up home prices.  After all, if you could sell … Read More

The Incredible Shrinking Housing Market

Seb FreySilicon Valley Real Estate

The Incredible Shrinking Housing Market

Some new housing data was released, revealing the incredible shrinking housing market. For starters, 31% of all homes sold in Q2 of this year were either short sales or bank-owned foreclosure sales, which together are collectively known as “distressed sales”. The percentage of overall market activity that was distress-driven actually went up from 26% year-over-year, even thought the total number of distressed properties sold went down. More about that in a moment. One finding that deserves a good long look is the discount at which distressed properties are purchased. According to these findings, REO sales and short sales, on average were purchased for 32% less than comparable non-distressed properties. 32% is no chump change, by any means. The fact that he number of distress sales has dropped off yet they have gained market share can only mean one thing; that fair-market sales have dropped off further. This is indeed the case, as non-distressed homeowners are refusing to list their homes. This is due on part to the hit that their equity has taken over the last few years, but that is merely one part of the story. Fair-market listings are being undercut on price at every turn, meaning that even if they are listed, in many cases they are less attractive to buyers and don’t make it to the closing table. This is important to note because fair-market sellers have a special role to play in any healthy housing market. In many cases, fair-market sellers sell their home, and buy another, more expensive home. The mid-high … Read More

Wise Words to Aid Home Buyers

Seb FreySilicon Valley Real Estate

Happy Buyers

Sometimes the reporting on the world of real estate gets so caught up in the rapidly changing landscape that the elements of buying and selling real estate that are most important for the public are not given the attention they deserve. Yesterday a great article in the San Jose Mercury News came out where a series of industry professionals gave wise words to aid home buyers. Since the article is basically a series of quotes, it seems most fitting to just go ahead and list our some of the best ones, one-by-one. While they are pretty self-explanatory, they are very easy to lose sight of once buyers get into the process. Jim Walton, vice president of consumer credit with MetLife Bank in Irving, Texas “There is more to home- ownership than a housing payment. Homeownership requires a commitment to a property and to a community.” “A lender can tell you the maximum mortgage you qualify for, but financial experts recommend that you determine your own upper limit for a housing payment.” “Buyers should take a disciplined approach to saving for a down payment, and then they need to be able to continue to save after they buy, for home maintenance and emergencies.” “A rent-versus-own calculator can be a good resource, but generally these will show you the maximum mortgage you qualify for at the best rates.” “Buyers need to factor in maintenance costs which can run from 1 (percent) to 4 percent of the home value per year.” Marc Schindler, a certified financial planner in Bellaire, … Read More