Home sellers dropping bottom lines
Sign outside a house in Pasadena, Calif. indicates a reduced sale price
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Kai Ryssdal: It is a veritable smorgasbord of economic delights out there today. We'll begin with you: the humble American consumer. Retail sales reports from last month came in this morning a bit better than anybody had been guessing. I saw one analyst quoted as saying consumers are starting to dip their toes back in. But only their toes. Mortgage rates are down. Freddie Mac reported the rate on traditional 30-year fixed loans stayed below 5 percent for the second week in a row. Mortgage applications, especially for refinancings, are up. Welcome news for the housing market.
A report out from the real-estate company Trulia says something else is happening, too. Sellers are dropping their prices. Marketplace's Alisa Roth explains why.
ALISA ROTH: Claude Sigmund put his two-bedroom house on the market in St. Paul just over a year ago. He listed it at $145,000. He thought it was worth more. But the realtor convinced him.
CLAUDE SIGMUND: I had a grand total of 54 showings on my house before it finally sold. And I was selling it for $100,000. They offered 90 and I pay closing costs, and that was the best deal I had received.
A lot of homeowners are finding themselves in a similar position. Trulia's a real estate listing company. It says about a quarter of all people currently trying to sell homes have cut their prices at least once. That data doesn't include foreclosure sales.
Chris Mayer tracks real estate at Columbia's business school. He says reality is finally sinking in for home sellers.
CHRIS MAYER: There's an initial loss and people are looking at this and saying, but God, I paid $400,000 for the house. I'm just not going to sell it at $300,000. And over time, people realize that $400,000 isn't coming back and they adjust their expectations.
Of course, the economy's still rocky. And people are still losing jobs. So some homeowners are just plain desperate.
Heather Fernandez works at Trulia. She says more and more people are getting notices of default, the last warning before foreclosure.
HEATHER FERNANDEZ: A trend that we're seeing is an increasing level of notice of defaults across the country, which leads us to believe that sellers are going to have to sell.
She says all this can mean good news for buyers, who if they have cash, can get some very good deals.
In New York, I'm Alisa Roth for Marketplace.