Farmington » Everything about the tidy rambler in this desirable west-side Davis County neighborhood makes it a candidate for a quick sale.
Everything, that is, except the price.
At $299,999, it appears to be priced at least $30,000 too high, considering that a new-home builder will set you up with a similar home brand new for around $270,000. (In fact, one is waiting.)
It's a situation that's playing out all along the Wasatch Front -- from Sugar House to Sandy -- where some sellers are stubbornly letting their properties languish on the market instead of lowering the price enough to get their properties sold. I witnessed it firsthand recently as I accompanied a family member who was on a house-shopping mission.
There's a term for this, of course. It's called "sticky" home prices -- when they go up a lot faster than they go down.
And it's also why it takes so long for real estate markets to hit bottom in certain areas. The Wasatch Front's market "hit a brick wall," as one builder describes it, in summer 2007. But here we are, in spring 2009, and the median price of homes and condos in the Salt Lake area is $224,450, off only 8 percent from a peak of $243,500 in June 2007.
It can be difficult for anyone who has not been on the wrong side of a real estate boom to understand why their home isn't selling at what they consider a "fair" price (I've been there). But it doesn't matter what you paid for a home, what it appraised for two years ago, how much you spent on home improvement, how much you owe on your mortgage or what you think your property is worth.
All that matters is, what are buyers willing to pay.
Ryan Kirkham, president of the Salt Lake Board of Realtors, said some sellers will contact a Realtor and say, "I need to sell my home, what is the market value?"
Then there are the folks who say, "I need to sell my home, and here's what I need to get for it."
The latter, he says, often end up with homes that wither on the market.
"You have to realize a home is worth only what the market will bear," he said. "Some people understand that, and they get their homes sold, and some don't."
Still, it's painful to watch your home equity slip away, or worse yet, have to contemplate a short sale, a credit-marring situation in which you convince your lender to accept less than it is owed.
Many who bought homes along the Wasatch Front two to four years ago and who need to sell now are in the worst positions. So, too, are those who used their homes as piggy banks by taking out home-equity loans.
That helps explain why home prices are remarkably "sticky" locally, even when conventional wisdom would suggest that cutting asking prices is the best strategy for making a sale.
This has resulted in a huge inventory of unsold houses, or in some instances sellers deciding to take their homes off the market or renting them out or making payments on two properties (if they had to move) -- anything to avoid making that paper loss real.
But in most cases, sellers who need to sell cut their asking prices, maybe multiple times. In many areas of the Wasatch Front, builders are following suit.
Moody's Economy.com, predicts that prices in the Salt Lake area will lose some of their "stickiness" in the next year, on top of the 8 percent decline that's already been seen in many neighborhoods. The popular economic forecasting service predicts another 10 percent between now and mid-2010.
Still, some sellers wait, hoping for a miracle. You can't blame them. Most of us have watched helplessly as the values of our stock and retirement portfolios have declined. Watching your home equity slip away is almost the final insult.
In Farmington, when I visited the homebuilder's office for the second time and the sales lady explained that prices for new homes had just been cut again, the price made that existing home going for $299,000 an even worse deal than before.
Would I be interested in a new pricing sheet, she asked?
At least someone was willing to wheel and deal.
Lesley Mitchell writes One Cheap Chick in daily blog form at blogs.sltrib.com/cheap
