Research indicates that the majority of U.S. home sellers are asking too much for their homes, despite the large drop in prices since the beginning of the recession and market values that have dropped as much as 30%. Homeowners who bought their homes after the recession began tend to price their homes an average of 14.1% over its value as determined by the Zillow Home Value Index. Pre-recession buyers overprice as well, but only to the tune of 11.6% on average. Analysts say this has a negative effect on the market as a whole by allowing inventory to stagnate, which further draws down home values. For more on this continue reading the following article from PropertyWire.
Current residential real estate sellers in the United States who bought their home in 2007 or later are over pricing their properties by an average of 14.1%, according to analysis of for sale listings on Zillow.
Meanwhile, sellers who originally purchased their homes before the run up in home values and those who bought during the bubble also over price their homes, but not by as much. Those who bought before 2002 price their homes about 11.6% over market value and those who bought between 2002 and 2006 price their homes 9.3% above market value, the research has found.
Zillow compared the asking price of a million for sale homes with those homes’ previous purchase price, then factored in the change in the Zillow Home Value Index at the ZIP code level to determine that home’s current market value.
‘Post bubble buyers seem to believe they escaped the worst of the housing recession, as evidenced by how they price their homes today,’ said Zillow chief economist Stan Humphries.
‘But 2006 was just the beginning of the housing recession, and it is continuing in earnest to this day. That means that even people who bought after the bubble burst need to break out the pencil and paper and do serious research into what has happened in their market since they first bought their home, whether it was four years ago or six months ago,’ he explained.
‘Over pricing homes causes them to stagnate on the market and keeps inventory from decreasing – not a desirable outcome for either the sellers or the market as a whole,’ he added.
Zillow also surveyed homeowners who plan to sell their homes in the next four years. Those who purchased their home post bubble are more likely than bubble and pre bubble buyers to base their asking price on the original purchase price of their homes, with 17% saying the purchase price would be the primary factor in that decision. This is despite the fact that home values have been falling since 2006, and are now down nearly 30% from the market’s peak.
By comparison, 4% of those who purchased before the bubble and 9% of those who purchased during the bubble said the original purchase price would be the primary factor in determining their asking price.
These are the results of a recent survey conducted online by Harris Interactive on behalf of Zillow among 4,879 US adults aged 18 and over, of whom 613 were homeowners who plan to sell their home in the next four years.
This article was republished with permission from PropertyWire.