By: Jed Smith and George Ratiu
According to information in the latest Realtors® Confidence Index, Realtor® comments continued to indicate recovery in the residential markets. All real estate is local, so comments were varied depending on location:
- Pricing: Respondents noted that properties priced at or below market value tend to sell quickly. Properties priced below market tend to be bid up to market value. Properties priced above market value receive little customer interest and ultimately tend to be sold below market value.
- Short Sales: Although the short sale process is slow, it has speeded up slightly in recent months according to a number of respondents. Nevertheless, short sales are viewed as taking too long in a long, drawn-out process.
- Inventory: Numerous comments noted the lack of an adequate level of inventory. Several respondents noted that they would welcome the arrival in the market of any available shadow inventory.
- Multiple Bidding: Many properties are reported as receiving multiple bids. A number of respondents noted that several of their clients had experienced multiple bid rejections.
- Mortgages: Realtors® expressed continued frustration with the mortgage process—unreasonable documentation requests, delays, bad attitudes, and excessive risk aversion. One respondent noted that after a client had submitted detailed paperwork (income tax forms, credit reports, job verification, etc.) the lender then required a copy of the borrower’s birth certificate.
- Appraisal Process: The appraisal process is the second major problem identified by respondents. There continues to be concern over the selection of comps, and qualifications of appraisers.
- Traffic: Buyer traffic is reported as being up slightly. Buyers continue to be price conscious and concerned about the economy and uncertainties; however, there are more buyers in the market. Seller traffic was reported as down by a number of respondents, who indicated that potential sellers who do not need to sell are waiting for additional market improvements.
Overall, this month’s Realtors® Confidence Index seems to indicate a continued market recovery. Confidence and price expectations are up, rising rental rates have favorable implications for the residential market, and time on market continues to decrease. None of the responses indicate a market that is expanding at an exceptionally rapid rate; rather, the responses show a slow and steady recovery.