Third, the housing market will not be hot for a long time. A very long time.
With these assumptions, it is clear that it is still a buyer's market and will be for some time. So looking for a house right now is understandable. But why would anyone want to sell in 2011?
Don Abrams is the owner of Abrams Coastal Properties on Balboa Island. In 2003-08, Abrams sold 50% to 70% of all homes on Balboa Island from 2003-08 and was the top selling Realtor in Newport Beach in both the number of sales transactions and the dollar volume of sales in 2008.
According to Abrams, there are two main reasons why someone would sell their home at this time.
"The one that you hear the most about is the distressed seller, the person who needs to sell and doesn't have a choice. And that's a fair amount. In Costa Mesa, for example, it could be as much as 40% of the reason for the sale. In Rancho Santa Margarita, it is as high as 60%. Distressed sales are not as prevalent in Newport Beach, where it accounts for about 10% to 15% of the overall sales."
The other reason for selling now is to avoid being distressed, that is, sellers are looking at their overall financial future and can see that they need to make a change now to help avoid potential disaster in a few months or a year.
"These people are thinking that this is the time to scale back," said Abrams.
For the distressed seller, the sales process is particularly distressing.
"Buyers are much more demanding today, not only in terms of price, but in the condition of the home," said Abrams. "In the past, a lot of buyers would accept things as is, which is always how I'd like to sell, but buyers today want things fixed up."
Abrams described our home purchase in 2002. In a hot real estate market, we overlooked a number of issues with our prospective home, including the need for flooring, paint and major landscaping needs. If I were shopping today, these would all be on the table as a condition of the sale.