When “For Sale” signs sprout like toadstools in front yards, prices fall and buyers rejoice. Today, 4 ½ years after skyrocketing foreclosure rates pierced the housing bubble, Northeast Ohio buyers are still rejoicing.
“Buyers are getting reasonable prices and if they’ve been protecting their credit, they’re getting very reasonable interest rates,” said Carl DeMusz, CEO of the Northern Ohio Regional Multiple Listing Service.
But he’s parsed the statistics and foresees a more balanced market for sellers and buyers next year. He bases his projection on two factors charted by the NORMLS:
- The foreclosure rate has slowed – a reaction against widespread improprieties in documentation by lenders -- causing new real estate listings to decrease 6 percent.
- From June 2010 to June 2011, the number of houses listed as “under contract” to sell increased 33.9 percent in the five-county area, including Cuyahoga, Medina, Lorain, Lake and Geauga counties, and 25.7 percent in the 17-county Northeastern Ohio area.
“The majority of those contracts will go to closing, so this is a good sign” that supply is tightening, DeMusz said. “If the trends continue, next year is certainly going to be better for sellers.”
Yet the much-vaunted buyer’s market has loads of inventory in all price categories, said Carl Horst, spokesman for the Ohio Association of Realtors.
“It’s a perfect time to buy,” added Thomas Bier, senior fellow at the Maxine Goodman Levin College of Urban Affairs. “There’s a lot to look at.”
But the market can’t be “painted with a broad brush,” said Howard W. Hanna, president of Howard Hanna Real Estate Services.
“All real estate is local, and it can be as local as street by street,” Hanna said. “There are a lot of neighborhoods that weren’t affected by foreclosures. Homes in those areas aren’t selling for bargain-basement prices.”
That message is sometimes lost in the media hullaballoo about the buyer’s market, said ReMax Traditions Realtor Judy Makaryk-Rosen.
“Buyers are coming with an attitude of entitlement,” Makaryk-Rosen said. “They say, ‘It’s a buyer’s market. It’s a buyer’s market! I need to get a deal!’ They think they deserve a deal. They are getting a deal, but maybe not to the extreme they expect.”
Howard Hanna agent Cathy LeSueur knows that attitude well.
“Buyers not only want a lower price, but they sometimes also have a laundry list of things they want the seller to do after they’re under contract,” she said.
Upgrades and cosmetic improvements are off the table once the contract is signed, she added.
For sellers, the meaning of “buyer’s market” is straightforward:
“It’s a price war and a beauty contest,” Makaryk-Rosen said.
“If you’re going to sell in this market, you’d better look like a model home,” LeSueur said.
A prospective seller should think long and hard about getting into the market, Bier said.
“Sell only if you absolutely have to,” he said. “People who bought five years ago bought at the top of the market. These people are really screwed if they have to sell, the market has dropped so much.
“But if you’ve lived in your house 10-20 years, it’s OK to sell. You’ll still be gaining.”
While some complain that tight loan standards are stifling buyers, Bier said they’re affecting only people who shouldn’t buy a house anyway – people who have low credit scores, have declared bankruptcy or were in foreclosure.
“Lenders are doing what they should have been doing all along.”