June 23, 2010
By JOSHUA BROCKMAN
Selma Jager has sold real estate for 38 years and has the trophies and plaques to prove it.
But it’s hardly a trophy moment in Prince George’s County, Md., which borders Washington, D.C. Jager says most of her listings have been sitting on the market for months.
“I’m calling it a declining market,” Jager says. “The prices from the sellers’ point of view are going down, dwindling, declining. And the buyers feel that the prices are too high. And that’s the problem.”
Selma Jager, a real estate agent in Prince George’s County, Md., says business has been tough because sellers see prices declining and buyers still feel they’re too high. Joshua Brockman/NPR
This tough market is especially exasperating for real estate agents because home prices are the lowest they’ve been in ages. Interest rates are also at historic lows. This combination should be attracting buyers.
A Window For First-Time Homebuyers
In fact, mortgage payments on a median-price home fell below 20 percent of median household income. That’s the lowest level in nearly 40 years, according to a recent report by Harvard’s Joint Center for Housing Studies.
Nicolas Retsinas, the center’s director, says the implosion of the housing market hurt many people, but first-time homebuyers have emerged as winners.
“With prices falling back to levels that were last seen at the beginning of this decade, with interest rates at historic lows, if they have good credit — and that’s a big if — owning a home now becomes an option,” he says.
‘I’m Gorgeous Inside’
In the Maryland suburbs, Jager gives an NPR reporter a tour of homes she’s trying to sell. One is a brick house on a quiet block that’s been on the market for nearly 280 days. In an effort to move things along, Jager added this message to the for sale sign on the front lawn: “I’m gorgeous inside.”
The price of this house started at $349,000. Then, the sellers dropped it by $20,000. The price may move lower still. That’s because the house is competing with many houses that banks now own and are trying to unload at rock-bottom prices.
One third of all U.S. sales presently fall into this category of foreclosures and short sales, according to Harvard’s Retsinas.
“We’re not going to have a sustainable housing market where such a large number of sales are distressed sales,” he says.
Jager says at least two of her nine listings have been on the market for more than one year. So, to stay upbeat, she throws anniversary parties. “At our weekly sales meeting, I bring in cake and ice cream just like you’d celebrate an anniversary,” Jager says. “Unfortunately, it’s not a happy celebration, though, because that means I’ve had the house on the market for longer than a year.”
Low Rates, But Declining Demand
One thing homebuyers can celebrate is low mortgage rates.
Rates have benefited from economic turmoil overseas as investors shifted money into the safety of U.S. Treasury bonds.
“Low and stable mortgage rates are providing important supports to the housing market,” says Keith Gumbinger, a mortgage analyst for HSH.com. “With the ending of the tax credit offer this spring, demand has fallen off to some degree.”
The federal tax credit was intended to jump-start the housing market. But it ended in April. Homebuyers with a binding sales contract have until the end of June to complete the paperwork.
Meanwhile, real estate agents, like Jager, hope that buyers will take the plunge this summer even without the federal incentive.
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