Sellers confident, buyers not: Area home sales stall

This is supposed to be a buyer's market: Lots of houses are for sale, so the supply/demand scales should be tilted toward the consumer.

But tougher lending rules, job insecurity, and fears that the house purchased today might be worth less tomorrow are taking the flexibility out of the decision to buy.

The result, in many cases, is a dance of delay, a standoff between prospective buyers and sellers. Shoppers look and look, but don't close a deal. Sellers sit and wait, confident that someone will pay their price - eventually.

Derek Dobin of Wynnewood says he's serious about buying. He's searched for two years for a larger house that's also in his price range for his growing family.

"We have watched the homes that go up for sale in our neighborhood very closely," Dobin said. "We have put in bids on a few homes, only to walk away relieved when the deals were rejected."

Why relieved? Because, he said, had any of those offers been accepted, it would have been a financial challenge.

"We bid on a nice, almost-new home out in the Great Valley area, 15 percent below asking, which was stretching us toward our upper limits," said Dobin, 34, a sales manager in the fiberglass industry. A bank was involved with the owners, who had relocated.

The owners, he said, were insulted by the offer and "said they would rather hold the home for two years than sell to us."

Even the "three-bedroom starter home" he now owns was a financial stretch, Dobin acknowledged.

"We refinanced and took out a home-equity line of credit several years ago to help make ends meet when we had our first child," he said. "We never thought we'd still be in our current home, as we are expecting our third child.

"The last few months have certainly moved us to the sidelines," Dobin said.

Chris Ryan, a real estate agent for 35 years, is a first-time seller. He's downsizing and has had the Chestnut Hill house he's owned for 28 years on the market for almost 30 days.

But most buyers, Ryan said - including coveted first-timers who don't have to sell a house to buy one - strike him as less than serious about the single he's listed at $575,000.

"I've either been getting the ones who have been looking for one or two years, or those who are getting married in a year and want to move in a year and a half from now," he said, adding that he'd rather take the house off the market than lower the price.

"They're just wasting our time," said Ryan, 63. "They're waiting for prices and interest rates to drop before they act."

A recent Harris Interactive poll done for the real estate search engine Zillow.com found that 49 percent of homeowners responding nationwide believed that the value of their homes had risen or stayed the same over the last year. And despite the current economic malaise, 61 percent said their homes' value would increase or stay the same in the next six months.

"A significant gap between the reality of home values and homeowners' perceptions persists," said Stan Humphries, Zillow's vice president of data and analytics.

That's certainly been Thomas Kelly's experience.

Kelly, 36, who bought a "very nice, albeit tired" house in Skippack this summer for $65,000 less than the asking price with a 3 percent seller assist, said he was "was completely astounded at the general outlook of most of the sellers we encountered. You'd think we were back in the seller's market of '03."

"Most didn't do much to spruce up their homes," he said, "and seemed to be of the opinion that if we didn't buy it, someone else would."

Zillow's data also showed, however, that this region's market is behaving much as it did in "normal times." In the third quarter of 2008, for example, the market acted as it did in the fourth quarter of 2005, just as the real estate boom was getting started here. Sales were down only 11 percent compared to October 2007.

Couple that with the comparatively small drop in median prices in the eight-county metropolitan area since the market peaked in mid-2007 (down 3.4 percent, to $229,000), and this market actually has many of the attributes of a seller's market.

Which may be why buyers' confidence seems to be at an all-time low, but sellers' confidence isn't.

Angela Testa, who has owned her townhouse in Willistown, Chester County, for 14 years, is certain she can get her asking price, $345,000 - and quickly.

"For-sale-by-owner is my present goal," said Testa, 51, "and I feel optimistic that my property will sell in this - so they say - bad market."

T.J. and Susan Gobreski jumped into the fray earlier this year - with both feet, though not intentionally.

In March, when they test-marketed their Queen Village house for sale on Craigslist at $379,000, they did not intend to buy before they sold.

Yet here they are with their three children, living in East Mount Airy since June after stumbling upon "what we always said we'd buy if we found one" - a house with an outdoor fireplace, purchased for $417,500 with a seller assist.

The Gobreskis still have not sold the Queen Village house, which they've owned since 1996 and spent much money to make structurally sound. But they've had lots of lookers, on a street where there have been two $500,000-plus sales in the last month.

"It is a great time to buy," said Susan Gobreski, 41, state director of the League of Conservation Voters, who added that she and her husband are managing to balance the two mortgages. "There just aren't a lot of buyers out there."

Gobreski said the Queen Village house is worth what she is asking based on comparable recent sales. She believes the economy will recover, and isn't going to lower the price.

"The fundamentals are sound, and homes will retain their value," she said. "Why should I lower the price $10,000 when I can keep it and rent it and make that much and more in a year?"

On the other hand, prospective buyer Tehmaas S. Gorimaar of Doylestown, who is looking for another house there, believes the economy must be overhauled before buyers are comfortable with making a purchase.

"The only alternative," said Gorimaar, 57, a pharmaceuticals-packaging executive, "is for the government to create demand by doubling the interest and property-tax deduction for people who buy a house, say, over the next three years.

"Buyers must see a significant benefit to this bubble," he said. "Without that, they are going to remain on the sidelines. Who would want to make his biggest investment in this climate?"