It's been a good run -- for home sellers
In many markets over the past five years,
anyone posting a "for sale" sign in the front yard was
virtually guaranteed to ignite a bidding war. Buyers
pushed prices into the stratosphere in a mad dash to
nab record-low interest rates and roll the dice on one
of the biggest run-ups in real estate history. Lots
of sellers doubled their investment dollars in a few
But appreciation rates in even the hottest
markets, such as New York and San Francisco, are starting
to soften. And in some rather chilly markets, including
those in South Bend, Ind., and Erie, Pa., single-family
home prices have actually declined during the year ending
in December 2005, according to the latest survey from
the National Association of Realtors.
||Metro markets with negative/minuscule
price appreciation in year ending 2005*
|Cedar Rapids, Iowa
|Barnstable Town, Mass.
*Data of median home prices between
year-end 2004 and 2005.
Source: National Association of Realtors, Quarterly
Housing Affordability Index
Slower appreciation rates are good news
for the economy, experts say, as the real estate market
settles into a more sustainable rate of growth. They're
not great news for sellers, who might have to resort
to some creative marketing tactics to set their homes
"Seller concessions have not been common in the last
five years," says Walter Molony, spokesman for the National
Association of Realtors. "Sellers haven't had to offer
them. But as we become more balanced, especially in
areas of high inventory, that's where you'll see the
use of concessions become a bit more common."
Seller concessions are incentives the
homeowner provides to entice buyers. They can include
anything from a decorating allowance (think scuffed
hardwood floors) to contributions toward closing costs.
Historically, concessions have been introduced
during the negotiating process -- often after an inspection
reveals undisclosed problems within the house. But Quicken
Loans Chief Economist Bob Walters says they can also
be an effective way to attract buyers.
"In difficult markets, as it is here in
the Midwest, the balance of power is shifting," Walters
says. "If your house is already priced aggressively
and you've updated the home and done everything you
can for curb appeal, what's left? The only answer for
many sellers, unfortunately, is to cut the price. But
if you advertise in your listing that you can help buyers
get a payment that's hundreds of dollars less per month
than they would pay in a similar home down the street,
you're really differentiating yourself."