Fritz Pfister

It appears that the local housing market is slowing down from the activity experienced during the preceding four years when the Capital Area Association of Realtors member brokers posted over 4000 home sales each of those years. The current pace of sales in 2008 would produce around 3400 home sales. A fifteen percent decrease, however not a crash.

There are a number of economic factors causing the slowdown, and will impact future sales. Stagnant to falling job growth is a major contributing factor however there is more.

On April 20 I reported here that at that time the biggest threat to the housing market was barely being mentioned; inflation. Today’s (6-14-08) SJR reports the sharpest increase for inflation in the past six months. The time is near for my prediction to come to fruition, the Fed can not stand idly by while inflation soars, and the value of the dollar falls. The Fed will be forced to raise interest rates sooner rather than later to stave off inflation, and to prop up the value of the dollar, which would bring the price of oil down, because oil is traded in dollars.

The Federal government in its infinite wisdom doesn’t calculate the cost of energy and food when reporting the rate of inflation. How many of you budgeted at the beginning of the year, anticipating that gas prices would be over $4 a gallon, and planned for a 10% increase in the cost of your groceries? If you did, come see me, I need your soothsayer abilities to help predict home sales.

The crux of the matter is the average household is numb from skyrocketing prices in gas and food. The increases in food costs are directly attributable to the higher fuel prices. Now to add to rising prices comes major flooding in America’s breadbasket. The loss of crops will drive food prices even higher.

The stock market is said to be a portend-er of future economic activity, and has built into today’s prices of stock foreseeable future events. The same is true for mortgage lenders and investors. Mortgage interest rates have begun to creep upward in anticipation of the Fed raising rates, and to remain financially profitable.

Housing sales continue to be slow across the nation, in other words fewer buyers means fewer loans on which to make a profit, resulting in mortgage lenders increasing the spread between what they pay for money and what they charge to loan the money.

Higher mortgage rates have two important impacts upon any housing market; fewer buyers with weaker purchasing power, which leads to lower home prices.

This year will prove to be as challenging to sell a home as any during the past 14 years. Why? On average only one in seven homes listed for sale will sell in a month.

If you must sell your home, for you to have success, you must have the best condition, best price, and best agent.

You should also be prepared to negotiate more, because the average sale price to list price ratio is 95.7%, the lowest in a decade. During the sellers market the ratio approached 98% of asking price.

You need to be prepared to be on the market longer, the average days on market to contract in 2008 is 87 days, and that’s for the current listing period only. Counting previous time on the market the cumulative days to contract exceeds four months, and that’s only for those that have sold and closed.

As mentioned earlier, about 3400 homes will sell this year. Your odds of selling during a month are one in seven. However you can get sold if you hire the right agent, and the right company that has the experience and market proven systems that are getting homes sold. This is no time for amateur hour.

If you must sell your home don’t dally; higher interest rates, which makes home selling more challenging, is around the corner if not at your doorstep.

If you must sell your home in 2008, you can have success. However there are only two ways you can succeed, do it right, or take your chances and hope to get lucky. Which will you choose?