Salt Lake City Market Update - Something's Gotta Give

My experience in the first 3 months of this year (2007) is that there were many Sellers (whether of their own initiative, or based on advice from their listing agent) who were putting their homes on the market as if the market was still appreciating at a 20% appreciation rate (which I believe it is not). My clients and I have seen many of these Sellers resort to price reductions of $10,000 or more, some multiple times.

Still, we have seen homes that were reasonably priced for today's market conditions and we have seen those homes sell quickly, often within days of listings.

Although the market has slowed down (in terms of appreciation rate), our understanding is that the Salt Lake area is still achieving positive appreciation somewhere between 5 and 10% (But not 20%) yearly.

The market was also slower during the winter, but the Spring and Summer could easily create renewed activity and more action in the market, possibly reviving the slowing appreciation rate.

My concern is that there may be too many listings on the market that are overpriced. This presents only two possible foreseeable options:

1. Buyers decide to pay the premium on these homes.

2. Seller's decide to not be so aggressive by overpricing their homes.

There is still demand in the area for housing. The homes that are priced well (as mentioned) do see some fierce competition for them and sell very quickly. So I get the impression that we aren't the only ones out there who have been waiting patiently for Seller's to come back to the reality of what the market will bear. The more reasonably priced homes that are put up for sale, the more their sales will contribute to market stimulation and activity and, perhaps, appreciation.

The dilemma is this:

Who is either willing or motivated to sell now? (which would create that stimulation), and

Who would rather wait, hoping to take advantage of the busier marketplace and the higher sales prices? (Once the Buyer's decide that they must buy something soon).

Right now, Seller motivation seems to be the key. Most Buyers have all Summer before they NEED to be in a home. Most of my current Buyers who have moved from other states have easily found temporary housing they can stay in on a month-to-month basis.

Those who must sell are selling at a reasonable amount (based on a 9-19% appreciation factor for comparables, based on area and considering how long ago the sales took place). They are also moving somewhat quickly because the competitive active listings are overpriced, making the reasonable listings look like such good deals.

Those who do not have to move, and will only move if they are able to pick up the premium value may hold out, slowing down the market as a whole, but still inspiring fierce competition among the homes that are properly priced.

Has anyone else ever been in a market like this? What happened? I'd like to hear some different outcomes.

Thanks!

©2007 Homebuyer Representation, Inc.