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Unsold Homes Rise As Sellers Fail To Budge

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My mates house has been on the market since August last year. He is planning on reducing the price by 10% next month to try and sell it in the Spring. It was overvalued by the Estate Agent in the first place and a 10% reduction will still have been overpriced pre-crunch. I doubt it will sell for anymore than 25% below the valuation.

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My mates house has been on the market since August last year. He is planning on reducing the price by 10% next month to try and sell it in the Spring. It was overvalued by the Estate Agent in the first place and a 10% reduction will still have been overpriced pre-crunch. I doubt it will sell for anymore than 25% below the valuation.

Still, saved £400 on a HIP :lol:

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The stock of available housing is rising , the spring bounce will so obviously fail :lol: , and by April EA's will be telling there sellers that the market has dramitically changend since last year , and so they will have to reduce there asking prices accordingly , and not reducing by p1ssy amounts like 1k or 2k , but by a minimum of 10% off asking just for starters .

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The greater the supply of unsold houses on EA's books, the greater the downward pressure on prices.

Sellers would be better off taking a hit now in return for a sale than holding out for an unrealistic asking price when it looks like in 3 months time the supply of unsold houses will be much increased and thus prices pushed even lower.

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Still, saved £400 on a HIP :lol:

He scoffed at my suggestion to STR this time last year. Now he has moved due to job relocation and the place is empty. It has been used as a cash machine so he was delighted when the estate agent valued it near to what he thought it was worth. I was gobsmacked but that's why average house prices according to Rightmove are so detached from reality. Unfortunately reality will be hard pill to swallow.

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Guest Shedfish

all these people in these chains needing to sell... little me at the bottom, nothing to sell, no need to buy.. deposit getting a little bigger all the time. i might start looking again in the summer. i might not

<yawn>

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Round here it's mixed. Some sellers obviously won't budge, but I've seen drops from 175 to 150, 160 to 135, 145 to 135 on houses that I would probably live in happily enough. Then I look at the rental properties and think there another 20k min to come off all of them.

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The greater the supply of unsold houses on EA's books, the greater the downward pressure on prices.

Sellers would be better off taking a hit now in return for a sale than holding out for an unrealistic asking price when it looks like in 3 months time the supply of unsold houses will be much increased and thus prices pushed even lower.

This is what has always baffled me about the stagnation argument. If estate agents need sales turnover to survive, and nothing is budging, surely they are going to put pressure on sellers to lower the price, and hopefully get things moving again.

Also, in Freakonomics there was an interesting bit where they talked about real estate agents in the US and their incentives to get the best price for your house for you. To summarise, they found that RE agents sold their own homes for more than equivalent homes they were selling, by being willing to hang on for the right price. In the case of selling other peoples homes (i.e. their job), balancing turnover vs the amount they would make in commission, achieving an increase of say $10,000 on an offer, that commission was too small to make it worth their while, far better (for them) to instead convince the vendor that an offer was a good one that they ought to accept.

So how could house prices possibly plateau? Between people who must sell for whatever reason and EA who need turnover in order to survive, surely this pressure must push prices down. No EA wants to be the one with property on their books for months if not years!

UM

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Sellers would be better off taking a hit now in return for a sale than holding out for an unrealistic asking price when it looks like in 3 months time the supply of unsold houses will be much increased and thus prices pushed even lower.

Makes sense to me, but I doubt many vendors look at things that way. Their reasoning is more likely to be,

-None of the houses around me have reduced their prices, so why should I?

-None of the houses I'm looking at buying have reduced their prices, so I can't afford to reduce mine.

-The couple around the corner sold their place for £xxx,xxx last year, since then prices have gone up and I've got a tasteful avocado bathroom suite, so my house is worth more than theirs.

-Interest rates are coming down, and it's nearly spring, so I'll hang on a bit longer before doing something silly that I might regret.

-The estate agent assured me £yyy,yyy was a realistic price.

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This is what has always baffled me about the stagnation argument. If estate agents need sales turnover to survive, and nothing is budging, surely they are going to put pressure on sellers to lower the price, and hopefully get things moving again.

You're right, in order to get a profit an EA has to get a sale.

But you're missing the step before that, in order to get a sale an EA has to first get a house to sell. And that unfortunately requires giving fantasy prices to prospective vendors.

House prices won't start coming down until vendors go to their EA and say, "I absolutely have to sell, what price will guarantee some offers?", and my previous post gives some solid reasons why that's an extremely slow process.

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You're right, in order to get a profit an EA has to get a sale.

But you're missing the step before that, in order to get a sale an EA has to first get a house to sell. And that unfortunately requires giving fantasy prices to prospective vendors.

Yeah, that's one seriously vicious circle.

House prices won't start coming down until vendors go to their EA and say, "I absolutely have to sell, what price will guarantee some offers?", and my previous post gives some solid reasons why that's an extremely slow process.

So that means we have a bit of bumping along at the top (that stagnation we were talking about) and then prices begin to drift downwards/fall off a cliff? In the last crash what did agents do about the recalcitrant vendors with their unsold houses sitting on their books making them look bad? Did any withdraw their services? Can they do that within the bounds of the contract?

UM

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Makes sense to me, but I doubt many vendors look at things that way. Their reasoning is more likely to be,

-None of the houses around me have reduced their prices, so why should I?

-None of the houses I'm looking at buying have reduced their prices, so I can't afford to reduce mine.

-The couple around the corner sold their place for £xxx,xxx last year, since then prices have gone up and I've got a tasteful avocado bathroom suite, so my house is worth more than theirs.

-Interest rates are coming down, and it's nearly spring, so I'll hang on a bit longer before doing something silly that I might regret.

-The estate agent assured me £yyy,yyy was a realistic price.

I think you're spot on. Just because it would be sensible to sell now at a reduced price and beat the rush, doesn't mean that people will do so.

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And added to SS's list is the fact that at the moment, very few people need to sell. Factors which could cause a forced sale scenario:

1. Can't afford rising mortgage payments and needs to downsize.

2. As above, but being done in a panic to stave off foreclosure.

3. BTLers joining the stampede en masse.

4. Involuntary relocation (e.g. due to work or family reasons).

5. Unemployment, resulting in 1, 2 and/or 4.

6. Divorce, or single two-adult household splitting into two one-adult households for similar reason.

I would expect 1 and 2 to happen first, and think we're seeing the start of it - but not enough to feed through into declining HPs yet. 3 will be next, but I suspect will only show up in the figures in certain isolated sections of the market at first; new-build flats being the obvious one. Then comes 4, as unemployment starts to creep up in the service sector and consumer economies (i.e. the source of most British jobs). A middle-income household wanting to remain one may well be told, 'The bad news is that we're closing our York office, but the good news is that we're offering you regional manager in Truro.' If 5 happens on a significant scale we're into very bad news territory, and 6 is often the fallout from that ('You go to Truro if you like, darling!').

We're only just starting to see the beginnings of 1 in terms of the grand scale of things, so it doesn't really surprise me that at the moment, sellers are playing hardball. They can afford to wait - or so they think, until the process gathers momentum into 2-6. That's when serious scale price drops will start to appear on the statistics.

Edited by The Ayatollah Bugheri

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The lack of a spring bounce this year will hit sentiment so hard that it will be shot to pieces. Reality will sink in – then the asking prices will start tumbling, YOY figures will go negative, the media will start pedaling gloom instead of boom... I can't wait!

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In the last crash what did agents do about the recalcitrant vendors with their unsold houses sitting on their books making them look bad? Did any withdraw their services? Can they do that within the bounds of the contract?

It may well have happened but I never saw it in the 1989/95 crash. What I did see was EA windows full of the same old over-priced or unsaleable run-down properties, for year after depressing year.

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The people who do not need to sell can hold out and refuse to reduce thier prices, but the people who do have to sell are the ones who will bring the selling price index down so the others will have to follow suit eventually.The tightening up off credit and more stringent lending criteria will put more pressure on current prices.

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As I mentioned on other threads, a house near us has been on the market for months with no interest yet the vendor has just INCREASED the asking price by 10%

I suppose every house has its price. I don't want to move and our house is worth about 230K. If someone were to offer us 350K for it, we'd probably sell!

I think a lot of houses advertised by estate agents are for sale on that basis - especilallly in boom times.

Edited by conifer

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Guest The_Oldie
As I mentioned on other threads, a house near us has been on the market for months with no interest yet the vendor has just INCREASED the asking price by 10%

I've seen a few like that, perhaps it's an indignant reaction to the low offers they are receiving :lol:.

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And added to SS's list is the fact that at the moment, very few people need to sell. Factors which could cause a forced sale scenario:

1. Can't afford rising mortgage payments and needs to downsize.

2. As above, but being done in a panic to stave off foreclosure.

3. BTLers joining the stampede en masse.

4. Involuntary relocation (e.g. due to work or family reasons).

5. Unemployment, resulting in 1, 2 and/or 4.

6. Divorce, or single two-adult household splitting into two one-adult households for similar reason.

Or, as EAs put it the 4 Ds

Death

Divorce

Debt

Decade (i.e. changing commitments, mobility etc)

Death and Debt probably push most - it's amazing how long couples who detest each other can manage to get alonf if there's serious money at stake- with Decade being the real optional when-the-time's-right laggards

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Also, in Freakonomics there was an interesting bit where they talked about real estate agents in the US and their incentives to get the best price for your house for you. To summarise, they found that RE agents sold their own homes for more than equivalent homes they were selling, by being willing to hang on for the right price. In the case of selling other peoples homes (i.e. their job), balancing turnover vs the amount they would make in commission, achieving an increase of say $10,000 on an offer, that commission was too small to make it worth their while, far better (for them) to instead convince the vendor that an offer was a good one that they ought to accept.

I asked for people's opinions on this very theory in another thread this week and got slagged off for it. I think I might read Freakonomics.

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can i just ask exactly what the spring bounce is and when it (usually)occurs?I actually heard ab agent use the words so they are expecting it

It's supposed to be the best time of the year for selling a property as this is when most people are feeling good about coming out of the dark depressing winter. Everything is in bloom so gardens look good and there is a general feel good factor – great stuff when you are trying to sell an overpriced property.

For this reason we have seasonally adjusted monthly figures as sellers will try to get more money for a property in the spring months. For instance, in December prices dropped 2% but this was recorded as -0.1%. However, this year, the seasonal adjustment will mean that even if there is a small bounce it will actually be adjusted downwards and will start to show the falls that have been masked by upward adjustment over the winter. If there is no bounce at all, which I suspect will be the case, it will be a knockout punch to positive sentiment. Expect the fun to start in figures being released in April as this will also coincide with the YOY figures turning negative.

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I asked for people's opinions on this very theory in another thread this week and got slagged off for it. I think I might read Freakonomics.

I would reccommend it, if read with a critical mind it's an interesting book although some of it is a bit controversial (mainly the bit about the drop in crime and Roe vs Wade).

UM

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It may well have happened but I never saw it in the 1989/95 crash. What I did see was EA windows full of the same old over-priced or unsaleable run-down properties, for year after depressing year.

A lot of people just decided not to move, but to expand upwards / sideways.

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  • 293 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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