Econintersect: Recently Fortune had an article that proclaimed housing to be the most attractive asset class. In another article Fortune has pointed out that recent events bring the first article into question as house prices have been declining for months, as reported by GEI Analysis. Affordablity has returned to pre-bubble levels but has demand returned to pre-bubble levels? And has supply been correctly priced? Fortune reports that the supply is not being priced correctly in parts of the country.Fortune reports on data collected by the real estate website Trullia.com:
Given Trulia’s micro-look at real-estate trends, it’s hard to find the basis for the most bullish arguments in the housing industry. With inflation relatively low and unemployment, although improving, at a high 8.8%, the report confirms prices will likely drop further this year. But it’s anyone’s guess as to how much, as economists have estimated declines of anywhere from another 15%, 20% or 25%.
In some markets that expectation is reflected in the initial offering prices. Some examples include Detroit (average initial discount of 19% to current market) and Miami, Columbus, Baltimore and Atlanta with initial discounts near 10%.
But in some markets sellers are especially reluctant to offer any discount initially or after homes have been on the market for several months. Realtor Mag provides the following list of markets where sellers are especially stubborn:
- New York City
- El Paso, Texas
- Charlotte, N.C.
- Raleigh, N.C.
- Louisville, Ky.
- Kansas City, Mo.
- Memphis, Tenn.