MarketWatch: Put your house on the market now? Are you nuts?

[marmar]

MARKETWATCH FIRST TAKE
Bought but can't hold
Commentary: Put your house on the market now? Are you nuts?
By MarketWatch


CHICAGO (MarketWatch) -- Either American home sellers are an incredibly optimistic lot, or they think they are stock traders who need to dump their assets in a declining market. How else to explain the surge in homes going up for sale in April, in the teeth of the worst downturn in housing since the Great Depression?

Because home buyers are spooked by the current environment, in which home prices have been falling in many markets across the country, there has been a glut of unsold homes on the market for more than a year. Sellers have been cutting their prices to attract the limited buyers out there -- the median price of a home sold in the U.S. in April was off 8% from a year earlier -- but that has done little to cut into the inventory.

Against that backdrop, sellers still concluded April was the time to move. The inventory of unsold homes on the market jumped 10.5% in April to 4.55 million units. At the current sales pace, that represents an 11.2-month supply of houses -- nearly double what the real estate industry considers to be a health level.

Of course, April is the biggest time of the year for putting houses on the market. That's because of the school-year cycle; families with kids in school who need to move in the June-August summer recess have to get their homes on the market then in order to sell, buy and close on both transactions before the fall term begins.

But even by seasonal standards the number of houses put on the market last month was high. And here is why that is particularly ominous:

* Many of those potential sales are likely forced. Strapped homeowners who are struggling to keep up with mortgage payments may feel compelled to sell and get what they can for their house before the financial burden overwhelms them.

* Many of those houses are foreclosures. With foreclosure proceedings nearly double what they were a year ago, banks are being handed the keys to record number of properties. Their aim is to get rid of them, regardless of market conditions.

* Many of these moves are not discretionary. Let's face it: The job market is not the most stable right now. Folks who face layoffs or are "asked" to transfer may have little choice but to put their home on the market.

* Many of these properties are failed investments. The speculators who bought -- mostly condos -- in the boom times in anticipation of quick profit have been caught with their windows down. They may have been tempted to hold for a rebound, but like stock traders they will also cut and run with no bottom in sight.

Some of the folks who put their houses on the market in April may end up pulling them off the market in subsequent months, once they see how choppy the water really is. But for most, it's now sink or swim.


http://www.marketwatch.com/news/story/four-reasons-big-buildup-home/story.aspx?guid=%7B06F739D2%2D41F5%2D4ECF%2D97E3%2D2DB84D9F5436%7D

[Warpy]

1. Another boob misreads the market

Houses aren't being put onto the market in record numbers. Houses are staying unsold for longer times. That makes it look as though more people have put their houses on the market because inventory of unsold houses is up.

Most people realize they'll have to live someplace and compare their PITI to equivalent rents and most people come out ahead, unless they bought at the peak of the market in the areas that went completely insane. Some people will always have to sell because of job transfer, death, protracted unemployment or either upsizing or downsizing due to changing family situations. That number remains fairly constant.

The author of this article might live in one of the housing disaster areas like Florida or California and have his provincial blinders on. However, what he's describing is not what's happening in the rest of the country.

[OwnedByFerrets]

2. Or, in addition to what you said,

they may be going on the market because they cant afford to stay in them any longer.