Concrete walls rose along the sides of Edith Macefield’s home, and still she did not budge.
She didn’t budge even when the cranes came, or the construction workers, or the noise that accompanied the development around her. She didn’t budge when developers reportedly offered her $750,000 for her 600-square-foot Seattle home, or again when the offer reportedly jumped to $1 million.
Despite everything, Macefield, in her 80s during the mid-2000s — the period when this played out — wanted to stay put. Her bungalow in the Ballard neighborhood became known famously as the “Up” house, named for the Pixar animated movie about a man fighting to stay in his home as development sprouted up near him.
In interviews, Macefield said the money didn’t matter. Her mother had died in the house, and Macefield wanted to do the same. So developers forged ahead, building a retail complex that engulfed her property.
In 2008 at age 86, Macefield died — inside her home. The property’s fate today remains uncertain.
Her story, while an extreme example, underscores an issue that many in real estate often contend with: Trying to persuade a homeowner who doesn’t want to sell to put the property on the market.
Sometimes, as in Macefield’s case, the proposition is from big developers with deep pockets. In other cases, as I highlighted in a February column, it's smaller investors targeting homeowners with "We Can Buy Your Home As Is" letters, hoping to buy properties quickly and flip them for a profit.
In most cases, however, it's potential buyers or Realtors attempting to persuade the owner of an attractive property to sell.
The issue is particularly apt now, as inventory nationwide and in the Philadelphia area has hit historic lows — meaning there are not enough homes on the market to meet buyer demand. According to the latest data from the National Association of Realtors, just 1.75 million existing U.S. homes were available for sale in February, marking the 21st consecutive month that inventory fell on a year-over-year basis. Down 6.4 percent from the year before, February's supply was at just 3.8 months, the trade group found. Five to six months is considered healthy.
Translation: There's no doubt it's a seller's market.
So if that's case, why are more homeowners not selling? And what can buyers, developers, and Realtors do to persuade a reluctant owner to sell?
In some markets across the United States, observers say, some homeowners aren’t selling simply because they're not in a financial position to do so. According to data firm Attom Data Solutions, 5.4 million properties across the U.S. remain seriously underwater, meaning the loan balance on the property is 25 percent higher than its value.
For those in better financial positions, however, concerns still remain: Many homeowners were burned by the recession — and fear buying again after selling. In a seller's market, too, the potential for overpaying in a competitive situation exists.
"The biggest hurdle or objection that we hear is, 'I'm afraid I won't find a place to move,' " said Chuck Barbera, a Realtor at Re/Max Fine Homes in Malvern and Wayne. "They want to take advantage of selling now in the seller's market, but they are also buyers and concerned about the other end of it."
In persuading homeowners to sell, plenty of statistics work in their favor, Barbera and others say. Among the more compelling arguments: Interest rates seem to be rising, but they remain at historic lows. Currently, a 30-year fixed mortgage is hovering around 4.3 percent. Compare that to 1982, when rates were in the 17 percent range. If you're a homeowner looking to buy, Realtors say, rates are expected to rise.
Even more, Barbera said, sellers have the upper hand. If you are trying to drive the price up on your home, it's better to sell now than wait. As the late 2000s showed, a market downturn can be unexpected, and each day that a property sits unsold, the risk of upkeep or a needed major repair grows.
For owners not ready to sell, other arrangements can be made. Rent-back agreements, which allow sellers to rent their homes from the new buyer, remain popular, observers say.
“It’s pretty stuck in the seller’s side right now,” Barbera said. “But likely in a few years, I’d say, there’s going to be a switch.”