Been there, done that...

Existing home sales sank 8 percent last month, to the lowest pace on record, according to the latest reading on the state of the battered real estate market released Wednesday. Sales of existing homes slowed to an annual pace of 5.04 million in September, compared with a revised 5.48 million sales pace in August, the National Association of Realtors said.

Last month's numbers mark the slowest annual pace of sales since the current measure - which includes multiple-family dwellings - began in 1999. It is also the steepest one-month and annual drops on record. Economists had forecast that sales would slow to a 5.25 million pace.

"Mortgage problems were peaking back in August when many of the September closings were being negotiated, and that slowed sales notably in higher priced areas that rely more on jumbo loans," said Lawrence Yun, NAR senior economist, in a statement. Jumbo loans apply to mortgages for $417,000 or more. Many lenders pulled out in August due to turmoil in the credit markets. The slump pushed the glut of existing homes on the market to 4.4 million, which represents a 10.5 month supply - the biggest in 12 years. "Sales were dampened by the mortgage cancellations," Yun said.

In addition, the median price of existing homes fell to $211,700 in September, down 4.2 percent from a year earlier. The lack of high-priced sales caused the second largest year-over-year median price decline on record. NAR reported that September existing-home sales suffered more in the West than any other region, dropping 9.9 percent from August and 27.8 percent from last year.

The median price in the West was $308,900, or 8.8 percent below a year ago. In the Northeast, existing-home sales were off 10 percent from August and trailed last September by 13.5 percent. The median price in the Northeast was $261,700, up 0.5 percent from a year ago. Sales in the South slowed by 6 percent from August and were 18.7 percent lower than they were in September 2006. The median existing-home price in the South was $174,400, down 5.5 percent from last year. The Midwest showed a 7 percent drop from August and a 16.2 percent decline from a year ago. The median price in the Midwest of $170,700 was up 1.4 percent from September 2006.

I’m getting a bit numbed to all of these reports, as are my sellers. Maybe it’s because we’ve been in this slump for so much longer than the rest of the country. The Midwest can be “up” a bit on the median price against last year, because we’re at least a year ahead of the curve on this slump. If there is another “upside” to where we’re at in this slump, it’s that our sellers have had enough time in this situation to become realistic about what they can likely get for their homes and new listing prices are starting to reflect that a bit.

It’s just a waste of everyone’s time to list an overpriced house. Even some agents have started turning down listings if the owners won’t let then set realistic prices. Of course there are always some agents who will take any listing at any price, just to get the signage exposure. As a Realtor in this market, it is often best to wait and be the second or third Realtor on a listing, by which time maybe the seller is worn down enough to become realistic on price. Remember that the third leg of the 3-P’s of real estate was price (see post of August 14), with patience and persistence providing the other two legs. All are required in this market.