Real estate Q&A: Sellers may benefit from waiting out a slow market

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July 29, 2010

By Charles Carter From MCT The Joplin Globe Thu Jul 29, 2010, 08:07 AM CDT

NEW YORK — QUESTION: I bought a condo in Yardley, Pa., in 2008. I put 20 percent down on a purchase price of $245,000. My fiance and I would like to sell the condo and buy a single-family home with more yard space in the same area.

My house has been on the market for 40 days. I listed it for $260,000. I upgraded the kitchen, put in hardwood floors and freshly painted the entire place.

I have had little luck thus far. The pros of selling now are that I could buy a much cheaper place in this market and that mortgage rates are low. My fiance is a contractor, so we are looking for a fixer-upper. He can help me out with the mortgage too. The cons are that my home is my only equity — I have little savings — and I am not sure how low I can afford to go with the asking price of my current home. My agent wants me to lower the price.

I’m not in a dire hurry to sell, but would probably need to sell within the next two years. Is it best to sell or stay?

—Janee L. Ott, Yardley, Pa.

ANSWER: Overall, my advice is to wait the two years. I tend to view the housing market using a long-term approach. But events of the past several years are unprecedented, and so I am cautious with my advice.

Looking at the 20-city composite S&P/Case-Shiller U.S. National Home Price Index, the housing market was on a tear from 2000 to 2006, then headed down at the same rate until about the middle of 2008. Prices started back up but dipped again. They seem to have started up again in the past month or so. California housing prices are leading the latest increase.

Sellers usually list their houses at more than they expect to sell it for, as you probably did. Number of days on the market, or how long it takes to sell the house, is a thermometer for the market. Long periods on the market reflect a “cold” market. The index doesn’t include Philadelphia, unfortunately.

I noticed Robert Shiller from Yale (who started the Case-Shiller Index years ago) just started a monthly “home expectations survey” that asks a hundred top U.S. housing analysts to forecast prices five years out. The list of “experts” includes many recognizable notables. They generally say the housing market will bounce back next year, on the track it was on before 2000.

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Real estate Q&A: Sellers may benefit from waiting out a slow market

Eliminating the state income tax and increasing sales tax was debated during a press day on Thursday at the Missouri Capitol. Do you favor that proposal?

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