patrick.net

DATA:

http://www.housingtracker.net/old_housingtracker/

My interpretation: inventory always appears to plummet this time of year, particularly right before the holidays. I expect this year to be the same. That being said, the above inventory data does not tease out how much potentially more inventory there would be if it weren't for "gatekeeper" realtors like your example.

Anectodally, a realtor acquaintance in Palo Alto, as well as our former realtor in Boston are doing precisely what you describe, telling potential shoot-for-the-moon sellers not to bother if they don't come in with a realistic price.

Help, I can't sell my McMansion!

HARM,

That leapt off the page for me too. In FL the sentiment among realtors is that the unrealistic sellers are just cluttering up the MLS for the sellers that ARE sincerely trying to price their home "at the market".

Moreover I get the sense that many of these "un-sellers" fully realize that their price is "out there" but are just trolling for a buyer "fresh off the boat" or truly believe the statue they buried in the front lawn WILL work! It's just "throw your hat in the ring" pricing at this point.

The phenomenon is called Phantom Inventory, and it is a well known/studied.

I outlined how it contributes to sticky-price action here.

If you think back to your basic econ 101, there were always just two simple curves or lines, Supply and Demand. Where they meet is the price. In real-estate, there isn't just one Supply or Demand line for a given type of home in a given area.

For existing home sellers especially, there is a great reluctance to drop prices, namely because it is their only point of control. What happens is sellers self-select onto different supply curves, with some willing to drop prices and others not.

Obviously, after buyers quit buying on the higher supply curve, those sellers have supply that isn't really in the market. It's phantom supply, because no one will buy it.

It's like the guy who lists something common on E-Bay for 5x what the other thousand sellers are asking. That guy's item isn't real inventory, it is phantom.

The traditional job of a real estate agent in this case should be to educate sellers about the market, and convince them to move their listing from phantom to real. I think this is one of the things that will help to shake out newbie "me-too" realtors from the true pros. A pro can still make good money in a down market if they are good at getting sellers to price to sell.

un-sellers
Nice!

I wonder how many of these un-sellers plan on re-listing next Spring, when they fully expect the bull market will magically reappear? I wonder how many will return to find an even more crowded field of competing inventory and even fewer qualified buyers, where the only thing selling is cut way, way below their minimum price point.

Our carpenter’s realtor-wife had 31 listings at the end of August. My husband asked ‘how’s it going’ and he replied that she told ALL of them that if they were not willing to lower their price she could no longer continue to list as the marketing/advertising costs were not going to bring in a sale. She now has 5 listings. Guess the rest will wait until spring to get their “price.”

This is why free message boards like C/L is where you will continue to see outrageous prices and in the local paper(which is quite expensive), they will get more realistic.

Psychologically, the reason sellers do this is "Mental Accounting".

People don't think in real terms, and the don't think in total net-value terms. They put costs into buckets in their head, and only consider what's in those buckets. They do not optimize rationally.

A person will buy a stock. It will go up for a while, they'll be happy. They'll register those gains into their mental account even though they aren't realized. Later the stock drops. It drops a lot. They refuse to sell. They want to hold it until it comes back to the high point. After a while they get depressed, it may never come back to the high point. But, it might come back to the original purchase price. They keep holding and eventually sell near the original price. They lost a ton of money in real terms. They lost by not selling much sooner, lower than the high point but higher than the original price. But if you ask them, they'll tell you they "broke even". And nothing you tell them will convince them otherwise. Worse yet, they'll feel they were smart in their course of action, and as they get older they'll force this flawed wisdom down on anyone who will listen.

Weren’t we supposed to get “realistic” dellers by this time of the year?

No, next year.

Allah,

I've tried helping a friend that specializes in Loss Mitigation (loan work-outs). He does it full time and the logistics aren't all that difficult. It's a service a growing number of FB's need so you'd figure, lay up right?

Forget it. Especially when the leads you're getting are in Orange County etc. These people find themselves in disbelief that they're in arrears and are VERY combative when you can get them on the phone! Most tell you; "Oh we're selling, thanks buh-bye yeah bu-bye". WhoTF do they think they're kidding. PERHAPS if they had listed it at a more reasonable price in the first place they wouldn't be in this situation!

Randy H. wrote:

> It’s like the guy who lists something common on
> E-Bay for 5x what the other thousand sellers are
> asking. That guy’s item isn’t real inventory, it is
> phantom.

When Randy posted about “Phantom Inventory” I thought he was talking about the thousands of new homes and condos that are “for sale” but not listed in the MLS and don’t show up in the inventory numbers.

P.S. I’ve been busy and just skimmed the last thread and saw some questions for me. If anyone still has a question repost it in this thread and I’ll try to answer…