My New Blog

When will the housing crisis end? That is a very good question. Really the answer to that question is always more local than national. The real question is, “When will the housing crisis end for Burnett County?” Let’s look at the Multiple Listing Service statistics. At present there are 436 active residential listings in Burnett County. That includes homes on lakes and off lakes. The average list price is 230,774, and the average days on market for active listings is 176. In the past year there were 208 closed listings with the average price at 202,573 with the average days on market at 179. This means that essentially we have a two year supply of homes on the market based upon last year’s sales. The difference between the average sale price and list price is about 12.5%. We know that homes in the area typically sell at about 94% of asking. That means that on average the listed homes are at least five to six per cent over priced if we go just by the averages. So part of the solution may well be that sellers look carefully at what they have their home priced at. An over priced home will not sell in any market.

The second thing that needs to be looked at is the over supply. Some people do not have any choice but to sell their home. Other people choose to test the market or they are looking to simply do something different. That’s fine. It’s a free country. But much of the over supply could be eliminated by people deciding not to sell their home and take their house off the market or not put it on the market and wait for better days. Price is after all a function of supply and demand. The lower the demand and the greater the supply the lower the prices will be. Even if demand is stable prices will tend to drop due to an over supply. So let’s say 20% of the people that have their house for sale really don’t need to sell. That would take about 80 homes off the market. Realtors also have a responsibility to manage the supply. I know it is hard for realtors to turn down a listing. But if a realtor finds that a person doesn’t have to sell knowing the market situation, maybe the noble thing to do is say, “You know, there is a huge over supply on the market. If you really don’t have to sell maybe you should wait until the market is better.” That could go along way to help stabilize prices for those who really do need to sell.

The third thing that needs to happen is the psychology needs to change. I recently read an article in money magazine that states many people that actually make money do so by going against the herd mentality. They buy low and sell high. And they typically buy when things are bad. It takes some real fortitude to buy when the market is down, but in reality that’s the best time to buy. Two of my sons bought houses in the past year. They would never have been able to afford their homes without this down market. They got excellent buys. Granted I told them don’t expect to buy and then sell in a year or two, but NOW is clearly a good time. Interest rates are going up some, but they are still historically low. The government is out there to spur on the housing market by giving grants to first time home buyers. If you are thinking, “Well maybe the market will go down more” then you are probably going to miss the bottom and buy on the upswing. My suggestion to people is if you want a home of your own NOW is the time. We may never see a period of low prices AND low interest rates for a very long time.