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Sellers Look for Spring Thaw in Housing Market

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Sellers Look for Spring Thaw in Housing Market


Sellers Look for Spring Thaw in Housing Market

Sellers Look for Spring Thaw in Housing Market

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

Spring is a critical season for those looking to sell their homes. Jonathan Clements, personal finance columnist at The Wall Street Journal, talks to Renee Montagne about whether spring will bring a thaw in the housing market.


On Fridays we talk about your money. And today we talk about the money you might be trying to get for your home. Now's about the time home sellers are putting their houses on the market, or this spring may be putting them back on the market. With prices down an average of 8 to 9 percent across the country, many people will have to bite the bullet and slash their asking price.

Here to talk about this is Jonathan Clements, personal finance columnist for the Wall Street Journal.

Good morning.

Mr. JONATHAN CLEMENTS (Wall Street Journal): It's great to be with you.

MONTAGNE: Now, we're entering a critical time for housing sales, right? I mean, this is - more or less we're going into the season.

Mr. CLEMENTS: Exactly. A lot of people either take their homes off the market for the winter months, or if they're listing for the first time they'll list in February or March because spring is the big selling season. And yeah, it's a critical period. A lot of home owners have had their houses on the market for months and maybe even years.

And of course mortgages are increasingly hard to come by. So the real question out there is, you know, are we going to see prices drop, which will encourage buyers to step up to the plate and purchase, or are we going to continue with the standoff where sellers are reluctant to cut prices and buyers are reluctant to commit.

MONTAGNE: There's also an overflow of supply in a lot of parts of the country.

Mr. CLEMENTS: There's something like ten months of supply on the market. By contrast, if you go back to early 2005 near the peak of the market, the supply of homes is only equal to 3.6 months of sales. That is the biggest indicator of the amount of pain in the housing market today.

MONTAGNE: So it sounds like people will have to lower their asking price, but it's a really hard thing to do. Why is that?

Mr. CLEMENTS: Well, for some folks, if they slash their asking price it's going to mean they're going to have to go to the closing with a check, because the price they receive is going to be less than the value of their outstanding mortgage.

But for a lot of folks it's psychological. They have a particular price in mind that they want to receive. Maybe it's the price they paid for their house, maybe it's the price they paid for their house plus the cost of all their home improvements, maybe it's the price that their neighbor got when they sold their home at the peak of the market in 2006. Whatever it is, they are fixed on this particular price and they're very reluctant to drop from that point.

MONTAGNE: So what do you say to somebody like that? How do you make that argument?

Mr. CLEMENTS: Real estate is an extraordinarily expensive asset to hold. I mean, you think about all the costs. You've got your mortgage, you've got your utilities, property taxes, home owner's insurance, maintenance costs. If you add all those things up, the cost of carrying a home is probably equal to something like 1 percent of your home's value every month.

Now, if you're living in the home and you can cover all those costs, they don't seem so burdensome. But supposing you've got an adjustable rate mortgage that you can no longer afford, or suppose you've already moved to another house and your old home is sitting empty or maybe you have a vacation property that you bought as an investment, you don't have any tenant and it's sitting there bleeding money every month, for a lot of people in these sorts of situations they would be much better off cutting their asking price and getting their property sold rather than sitting there and bleeding money month after month.

MONTAGNE: Jonathan Clements writes the Get Going personal finance column for the Wall Street Journal.

Thanks for joining us.

Mr. CLEMENTS: My pleasure.

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