While buyers are feeling good about the housing market and saying it’s a great time to buy, seller sentiment is falling to a record low, a new report by the Mortgage Bankers Association shows. Sellers say they’re unhappy because they can’t snag the prices for the home that they want.
The MBA report finds a large sentiment gap between homebuying and home selling that isn’t expected to narrow for at least five quarters.
From 1992 to 2005, seller sentiment remained high – between 40 percent and 60 percent, according to the report. However, since 2005, seller sentiment decreased to 7.6 percent. Meanwhile, homebuyer sentiment has remained high despite unemployment and economic conditions. Nearly 80 percent of American households say now is a good time to purchase a home.
As home values dropped over the last few years, many sellers refused to budge on their prices to reflect current market traditions. One reason why: About 20 percent of homeowners nationwide are considered “underwater,” owing more on their mortgage than their home is currently worth.
Also, some sellers realize there may be a benefit in waiting to sell or keeping the home on the market to hold out for a higher price, says the author of the report, Gary Engelhardt, a Syracuse economics professor.
“This (trend) could hold prices high enough to drive a substantial wedge between the existing buyer and seller,” Engelhardt says. “And a poor jobs market with limited mobility, a key driver of housing-market transactions, may exacerbate this.”
Source: “Buyers, Sellers Continue to Butt Heads on Home Prices,” HousingWire (Dec. 29, 2011)
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