Is the Lure of Low Home Prices Finally Ringing in Buyers?

by Chicago Agent

Record levels of affordability may finally be grabbing some homebuyer's attentions.

It’s no mystery that home prices are low. CoreLogic’s latest Home Price Index fell from October to November, and prices have fallen by an average of 32.8 percent from their 2006 peak.

What has not followed suit, though, are home sales. Though the most recent existing-home sales stats were up by 5 percent and pending-home sales reached their highest level in 19 months in December, current home sales would never suggest that home affordability is at its highest level in 40 years. A new poll from HouseHunt, though, suggests there may be a turnaround.

In HouseHunt’s poll, 40 percent of respondents reports seeing more buyers in the fourth quarter of 2011 than the third quarter, compared to 32 percent who saw more in the fourth quarter of 2010. As a Builder Online piece on the poll pointed out, HouseHunt sought responses from the agents and brokers in the 1,500 communities in 46 states that use its online services.

Chris Cochran, a Riverside, Calif.-based broker/owner quoted in HouseHunt’s press release,  said his sales activity has increased greatly, though it does come at a cost.

“I’ve been just as productive now as I was in the heyday of real estate,” Cochran said. “It’s good news for buyers and bad news for sellers because sellers are losing equity by the minute and buyers are able to get a fairly-priced home and a really, really low interest rate.”

According to the survey, it seems other agents are experiencing the same predicament. Nearly three-fifths of respondents said they are getting less than 95 percent of their property’s listing price, an unchanged total from 2010. Though 51 percent reported negative appreciation in sales, that number is down from the 57 percent in 2010 and the 62 percent in 2009.

Michael Bearden, HouseHunt’s president and CEO, said in Builder‘s piece that the homebuying atmosphere is unprecedented, though economic conditions are still tricky.

“There is still a lot of real inventory as well as shadow inventory to be liquidated,” Bearden said in an e-mail. “It is probably the best time to buy a home since I have been in real estate, and I started in 1978. Yet, with incredibly low interest rates and favorable buyer conditions homes are still not selling at a rapid pace because unemployment is high and job security is not a given.”

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