We put in an offer at $120k, with the owner carrying a portion of the loan… thought we had a great deal configuration out there… and bamm… the sellers rejected the offer completely.
So, we are back at square one. No house, no condo for my mother in law.
But, I have to tell you that I really feel like the sellers made a mistake… I think the market is going lower, and we may be able to buy another unit for less or heck, maybe even come back and buy this same unit from these people for less than we are offering right now… who knows…
What I do know is that the market is nowhere near bottoming… because in order to bottom, the market has to resolve a dump truck load of existing home inventory that is so vast… that it could take 10 years to resolve… I was talking to a colleague a few days ago, and we were trying to identify the signs of a bottom, and we both agreed that one of the best signs is going to be DOM, better known in the real estate world as DAYS ON MARKET.
DOM measures how long an existing home has been on the market, and is a clear indicator of how quickly homes are selling in a general area. During the housing boom, average DOM would be less than 30 days… this meant that the unsold inventory was extremely low, as homes going on the market sold quickly and the queue of unsold homes never built up…
Unfortunately, we have the opposite happening now… I have seen averages of 90-180 days on market for unsold inventory in our area… what this creates is a massive queue of unsold homes… this would be similar to a Car Dealership, where as cars are sold, they are continuously replaced with new inventory… now imagine, if the dealership was selling 100 cars per month… and thus, received 100 new cars from the manufacturer each month to make up for the cars that were sold, to keep the dealership inventory level constant… now imagine, if out of nowhere, the dealership starts selling only 50 cars per month… but, keeps ordering 100 cars from the manufacturer… now, the car dealership has an extra 50 cars on his lot… next month, the same things happens… now the dealer has an extra 100 cars, and so on… this is what is happening in the housing market… an continuous addition to the unsold inventory, and the number keeps rising… people are not buying houses fast enough to keep the inventory stable… there is only one thing that comes out of this… LOWER PRICES. PERIOD.
Lets go back to the dealer, and see what would happen when he has 1000 EXTRA cars on his lot… he PANICS… he starts having FIRE SALES… he HAS TO MOVE THOSE CARS… or else he is going to go under… this is exactly what is happening in real estate… people are stuck with their homes… and prices are dropping, and they cant compete with the huge inventory of unsold homes… and every day, new homes come on the market and further compete with the hapless seller…
So, the moral of this story ?
If you have to sell your home, and you get a reasonable offer… TAKE IT!!! If you don’t, you could end up like the gambler who was up… and by the end of the night, gambles all his money away waiting for that next big score… sitting around waiting for that magical offer to come may never happen.
MANDRAKE
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