People who don't really need to sell their home should not put them on the market at ridiculously high prices.
Prices don't go up 20% just because Sellers LIST their homes at 120% or more of market value. In order for prices to stabilize and/or improve, inventory levels need to shrink or the number of Buyers needs to increase significantly, and quickly.
It doesn't help anyone if more than 63% of the inventory on the market is significantly overpriced.
I work with Buyers Only. We see LOTS of homes. Many of my clients write offers on multiple homes before we get a contract. After lots of negotiations, many Sellers are still 10% above market value and will not budge. My Buyers move on. These Sellers aren't serious. They don't need to sell and won't sell unless they can find a Buyer who is dumb enough to overpay for their home. That's just not likely to happen in today's market.
Because of the amount of inventory, Buyers have the luxury of continuing to make reasonable offers to unreasonable sellers until they find one who is willing to be reasonable and willing to sell their home at (or below!) market value.
Fortunately, there are some Sellers who are listing their homes at or near market value. (Note: THESE are the homes that actually SELL.) Even then, many are still negotiable because of all the competition. (Never mind that most of this "competition" isn't really competition at all.)
My clients aren't the only Buyers who have seen a lot of overpriced inventory and aren't willing to overpay for a home in today's market. Buyers are out there and they will jump on well-priced listings. Multiple offer situations are still common in this economy for well-priced homes. It almost seems that they are more common for a well-priced home... It seems most homes that are priced well are Sellers who are "motivated" to sell.
Bottom line for owners: Do everyone a favor and don't list your home just to see if you can get some uninformed buyer to pay you 20% more than it's worth. Buyers aren't falling for it. Those days are gone. The "boom" is over. Everybody will be better off with less overpriced inventory on the market.
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Finally...
I agree. One thing I don't think gets pointed out enough is the fact that buyers aren't vultures simply because they won't overpay. It's that they can't.
At some point, our community ran out of demographic support for a market in which the majority of listings required between a $70k - six figure household income. (Using the ~$240k median peak as an example). In our region's earning environment, this usually requires two incomes. Because the market depends heavily on the first time buyer. The majority of today's buyers' market does not meet this very fundamental criterion. The majority of the COMMUNITY does not meet this very fundamental criterion. Those who do, are often already homeowners.
Given the rising cost of almost every other commodity and resource (data plans on cell phones are almost mandatory and probably will be within the next few years, home internet connections are necessary for many jobs, and HOA fees are almost unavoidable anymore), it's unreasonable to exceed the 3.5 x income standard for current estimating of your purchasing power.
Just like any ladder, the real estate market needs a bottom rung, or nobody new can climb on behind you. For awhile, creative and/or shady lending allowed total rookies to start off on the 3rd rung of that ladder. There's a reason they're all jumping (or falling) off now. Let's start again, the right way. Unfortunately for many homeowners, this is going to come out their perceived equity, not out of the empty pockets of first-time buyers.
Great thoughts B. Thanks for sharing!