Homeowners and acceptance of market realities

The Pioneer Press reports from Minnesota. “Welcome to an ultra-competitive spring housing market. Motivated sellers are cutting prices. Axing in some cases. And that new willingness to move the product marks the end of last year’s stare-down between buyer and seller, and could spell a sharper falloff in area home prices over the next year.”

“Chuck Eckberg was stunned when his clients last week announced they wanted to drop the $419,000 price on their house by $20,000. Price reductions are something sellers typically resist like a colonoscopy. ‘I didn’t think we needed to reduce at all,’ said Eckberg. ‘They’re trying to beat other sellers to the punch because they don’t want to suffer through anything they saw, or many experienced, last year.’”

“Serious price reductions that typically don’t start until closer to the July 4 make-it-or-break-it point, are happening now, Eckberg said. ‘I think people are finally saying ‘I get it,’ said broker Steve Hyland.”

While it's true, some people get it, it is still evident in other areas that some people don't. I expect that in the cities that experienced slower rises in home values there will come eventually an acceptance of the trend that is now taking hold of housing markets around the country and in other parts of the world.

For instance places like Washington State, that haven’t yet heard the loud ‘POPPING’ sound and sellers in those less dynamic markets holding out the desperate hope that this Spring will bring an upswing in their sluggish housing markets. They are ignoring reality and bucking the law of momentum.

There are certain realities that none of us are going to escape:

*A slowdown in U.S. consumer spending spreading pain globally.

*A slowdown in construction and all related industries that will take jobs with it, further reinforcing a drop in consumer spending and housing.

*An end to easy money (no-doc liar loans) that fueled the engine for Get-Rich-Quick flipping, and the spill-over effect that will have up the food chain.

*Negative economic psychology reinforcing the downward trend.

It doesn’t really matter what part of the U.S. you are in, you will eventually feel the pinch if only indirectly, as market forces trend even further downward. It is bound to affect all of us to one degree or another.
Vern