May 9th, 2014 9:44 AM by Jackie A. Graves, President
Home prices are moving
so far, so fast, that at least 1,000 local housing markets have hit all-time
price highs, according to Zillow.
It should come as no surprise, therefore, that potential home sellers are giddy
"I even hear them
say that prices are skyrocketing," said Jeremy Cunningham, a northern
Virginia real estate agent with Redfin, a real estate brokerage. "When you ask them
what their data source is or where they're getting their information, it's more
of a vibe."
Forty percent of
sellers surveyed by Redfin said they are planning on pricing their homes above
market value when they list in the second quarter of this year; that's up from
33 percent at the beginning of the year. Redfin polled 1,128 active home
sellers across 25 U.S. cities.
Confidence is behind
it all. Fifty-two percent said they were confident that now is a good time to
sell, versus just 37.5 percent three months ago. This, conversely, as sales of
existing homes were actually lower in March by 7.5 percent from a year ago, according
to the National
Association of Realtors.
Another survey of
1,000 homeowners and renters by mortgage giant Fannie Mae found
that those who say it is a good time to buy a house held steady in April at 69
percent, but those who say it is a good time to sell increased 4 percentage
points from the previous month to 42 percent, an all-time survey high.
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(April's) upbeat jobs report, concern about job loss among employed consumers
also has hit a record survey low. These results are in line with our
expectations for increased housing activity and gradual strengthening of the
housing market going into the spring and summer selling season," said Doug
Duncan, Fannie Mae's chief economist.
More sellers now say
they are pricing their homes high because they are willing to wait if it
doesn't sell, according to Redfin. An increasing number of sellers also say
they are pricing high because they need that value to pay off their mortgages.
Nearly 10 million U.S. homeowners were underwater on their mortgages at the end
of last year, according to Zillow.
The Soricelli family
in northern Virginia thought about selling their home a year ago, but held off,
hoping that prices would improve. After watching solid home appreciation in the
neighborhood and across the country, they decided to put their home up for sale
this spring. Their asking price, however, was higher than their real estate
agent, Cunningham, thought was realistic.
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"My wife and
myself, we take a lot of pride in our house and did a lot of upgrades,"
said Brad Soricelli. "We put a lot of money into it, so in trying to
reconcile that with what the market is now, there was a little back and forth."
Cunningham said he is
usually able to talk his clients back to reality by showing them comparable
sales, but the data can be confusing. That is especially true in markets where
investors and all-cash buyers are more prevalent.
Sellers are more
likely to get their asking price from an all-cash buyer, and all cash means
there will be no appraisal issues. However, for those in markets where there
are fewer investors and all-cash buyers, commanding an above-market price is a
dicey proposition. Even if they do strike a deal with a credit-dependent buyer,
they are at the mercy of the appraiser, who will make the final decision as to
the real market value of the home.
"When you look at
comps, it's very difficult. The trends are hard to identify," said
Cunningham. "You could have on any given street, price variations of
$50,000 to $75,000 for the exact same house."
The Soricellis did
take Cunningham's advice and brought their asking price down. The house sold in
one day, but they say they have no regrets.
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"Not having to go
through waiting and some of the aggravation of having your house on the market
for a period of time is worth a certain amount of money," said Brad
Especially when they
look across the street. Their neighbor's house, which has already undergone a
price drop, is still sitting on the market.
—By CNBC's Diana