Subprime Crisis Makes It Maddening to Sell a House

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for sale signs

"For sale" signs line the street of a Kansas City neighborhood. Jason Beaubien, NPR hide caption

itoggle caption Jason Beaubien, NPR

As the subprime mortgage crisis deepens, the summer of 2007 has become a gut-wrenching time to sell a home. Real estate prices keep falling. Potential buyers, who are being squeezed by rising interest rates and tighter lending rules, seem content to wait on the sidelines.

Amy and John Cascone know all about it. They love their four-bedroom detached house in Kansas City's northern suburbs. But they both work in the extreme southern part of the city. Amy's commute is about an hour each way. John's is about 50 minutes.

"My husband and I finally came to our senses after our two children were born," Amy Cascone says, "and we decided we just needed to live closer to where we work."

But for the past 14 months, nobody has wanted to buy the Cascones' house.

Their two-level, wood-frame house was built in 1995. A glass fireplace separates the living room from a spacious, modern kitchen. Upstairs, there's a Jacuzzi. Around the block, the development has an Olympic-size swimming pool and tennis courts.

Originally, the Cascones asked $259,000 and thought they'd have no problem selling. Eventually, they ratcheted down the price to $245,000.

"We were sort of embarrassed to hold our heads up in the neighborhood," Amy says. "It was so cheap. But still we got no traffic, or very little traffic."

Now, they've decided to finish the basement and market the house as a five-bedroom.

Amy says the selling process has taken a toll on the family. She hates never knowing when a real estate agent might call wanting to bring a prospective buyer to see the house.

"It's terrible, because at 6 o'clock in the morning, when you're running out the door to work, you're having to Windex all the windows," she says. "You're having to keep it in show condition every single day of the week, when you may only get one showing every eight weeks. It's very mentally, physically taxing, to say the least."

She says she hasn't been able to relax for the past 14 months, yet they haven't received a single offer for their house.

Real estate agents say that in this market, sellers such as the Cascones need to "make concessions." That's code for slashing prices. But John says he would rather put up with a two-hour commute than give his house away.

Across Kansas City in Lenexa, real estate agent Charles Wilson stands in the kitchen of a two-year-old townhouse. It has two bedrooms and three-and-a-half bathrooms.

"In a normal market, this would probably sell in two or three days," Wilson says. "It's a fantastic property. I'm really surprised it hasn't sold."

The list price is $180,000, and it's been on the market for a little more than a month.

Wilson, who has been selling real estate for 23 years, says people who don't have equity in their homes are in a difficult position right now. And so are the banks holding those loans.

This year, Wilson says, he has started to see what are called "short sales," where the property sells for less than the mortgage. The lender is then asked to absorb the difference. He had never done a short sale before, but is now negotiating three such deals.

"Maybe the mortgage companies created this monster. I don't know," Wilson says. "But it's going to be this way for a while."

Despite the difficulties facing sellers there, Ken Fears, an economist at the National Association of Realtors, says Kansas City is actually one of the healthier real-estate markets. Sales are falling, prices are down slightly, but this area didn't have the huge run-up in prices that occurred in some other parts of the country. Still, Fears says, the bottom isn't yet in sight.

"I think for the market to come back again and for sales to pick up, we'll have to see a little more concession on prices," Fears says.

And that's something sellers across the country dread hearing.

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