How to make a home sale in the midst of a meltdown
Realistic pricing, cosmetic improvements, and greater patience are needed for today's sellers.
By Kathleen Connellfrom the April 28, 2008 edition
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Andrea and Travis Murray, a couple in their early 30s, live in Akron, Ohio with their three children and a fourth due in May. Their family is relocating to Denver, where Mr. Murray will soon assume a position at a hospital.
As a result of this transition, the Murrays are experiencing the full heat of the national housing meltdown, putting their home on the market at a time when buyers are reluctant. For families such as the Murrays, who for personal or career reasons will be selling in the next 12 months, a well-crafted strategy and knowledge of the market is vital.
A recent survey by the Conference Board on consumer confidence indicated that the number of Americans planning to buy a house in the next six months is at the lowest level since 1994.
The Murrays bought into the "American Dream" in 2003, believing that homeownership was the foundation of financial security. But housing, Americans' primary asset, has suffered a powerful blow as prices have plummeted. Homeowners have witnessed losses of value on which many retirement dreams are built. Home prices dropped over 13 percent on average in 2007 in all but a few markets – the largest annual drop since the early 1980s, with sales dropping almost 27 percent. In our housing-driven economy, Americans have lost over $2 trillion in home equity. Two million homeowners now risk foreclosure. According to housing economists, the housing meltdown will continue through 2009, with an expected additional 10 to 25 percent drop in values in many cities.
For homeowners who do not need to sell in the next five to seven years, the consequences may be limited to accepting less than double-digit appreciation on a home investment. While retirement finances may need to be recalculated as housing appreciation slows, most homeowners will not suffer principal losses.
But people faced with selling their home now face an uphill battle to break even. Unlike a poor stock investment that can be sold quickly at a loss, selling a home in a sinking housing market demands a more complex strategy, extended time, and tough emotional decisions.
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