Fallout: The Financial Crisis

Home price cuts for Coldwell fire sale

Marketplace Staff Oct 6, 2008
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Fallout: The Financial Crisis

Home price cuts for Coldwell fire sale

Marketplace Staff Oct 6, 2008
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TEXT OF STORY

Kai Ryssdal: For those looking to sell houses, however, things aren’t getting any easier. Credit is hard to come by, and a lot of buyers think prices still have a ways to fall. Now, comes Coldwell Banker with a plan to move some of those buyers off the sidelines. Starting Friday, the real estate company will cut house prices up to 10 percent for 10 days. But, as Marketplace’s Janet Babin reports from North Carolina Public Radio, it may take more than discounts to sell homes in this market.


Janet Babin: So how many for sale signs can you count on your street? The number of homes for sale jumped 50 percent from 2005 to 2007, according to the Census Bureau. And listings are still climbing. But nothing slashes inventory like a good old fashioned sale. That’s what Coldwell Banker CEO Jim Gillespie is hoping, anyway.

Jim Gillespie: We hope to bring buyers and sellers together. We think we’re close to a tipping point; we hope that this will happen.

So do 25,000 of Coldwell’s clients who’ve faced reality and agreed to lower their asking prices. But that’s only about 15 percent of sellers who list with Coldwell. Still, Mike Castleman with housing research firm Metrostudy says it’s a start. He says real estate agents and sellers have to do something.

Mike Castleman: This inventory, this oversupply of units on the market, until they’re liquidated, we can’t really return to a stable pricing situation.

But no matter how low prices go, you can’t buy if you can’t get a mortgage. The federal bailout package is expected to loosen credit markets. But it may not come in time to make a difference for Coldwell. Glenn Wallace owns a discount realty firm in North Carolina. He says mortgage financing has dried up and bailout money isn’t here yet.

Glenn Wallace: Unless these buyers are going to pay cash for these houses or have super stellar credit, it’s more than likely that they won’t be able to get loans to buy them.

Even more homes will come on the market next year, when another wave of adjustable rate mortgages resets.

I’m Janet Babin for Marketplace.

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