NEW YORK, Dec. 15, 2008 – Home sales and prices will continue to fall next year and more people will try to sell their homes more cost effectively, according to 2009 predictions made by ForSaleByOwner.com, the nation’s leading by owner real estate website.
Based on trends among real estate consumers, ForSaleByOwner.com also predicts that the Internet will continue to play a more prominent role in the selling and buying of homes, as real estate websites continue to make it easier to complete real estate transactions without paying expensive real estate commission fees.
“While 2008 will be remembered as perhaps the most painful year for real estate in decades, declines in home sales and prices will likely continue well into 2009,” said Greg Healy, Vice President of Operations at ForSaleByOwner.com. “As a result, we’re seeing new trends emerge that will affect both the industry and consumers who need to sell or buy a home.”
Healy continued, “Sellers facing lower home values will utilize the Internet and other alternatives to using an agent to avoid the expense of a real estate commission. On the buyer’s side, we expect that in 2009 the industry will reach a “tipping point” where — for the first time ever – more people will find the home they buy after seeing it on the Internet, rather than finding out about it from a real estate agent.”
“Finally, we believe the number of real estate agents and brokers will decline in 2009 and more real estate services will follow ForSaleByOwner.com’s lead in allowing sellers to advertise their home on Realtor.com without having to be on their local Multiple Listing Service,” added Healy.
ForSaleByOwner.com’s Predictions for the 2009 Real Estate Market
- Continued Slowdown in Homes Sales: According to the National Association of Realtors (NAR), there will be an estimated 4.98 million existing homes sold in the U.S. during 2008, the third straight year in which existing home sales have fallen. There were 5.652 million existing homes sold in 2007, 6.478 million in 2006 and 7.076 million in 2005. Prediction: The weak credit market will continue to make it harder for Americans to obtain mortgages, causing the number of homes sold in 2009 to fall for a fourth straight year.
- Falling Home Prices: According to data from NAR, the average sales price of a home sold during 2005-2007 hovered between $266,000 and $268,200. In 2008, NAR has found that the monthly average sales price has ranged as high as $257,900 (June) and as low as 224,700 (October). Prediction: An increase in foreclosure sales and short sales – which have significantly discounted prices – will cause a decline in the average price of all homes sold in 2009.
- The Internet Becomes More Effective Than Agents in Helping Buyers Find Homes: According to the 2008 NAR Profile of Home Buyers and Sellers, 32% of buyers in 2008 said they first learned of the home they purchased by seeing it on the Internet, up from 29% in 2007, and from just 2% in 1997. In 2008, 34% of buyers said that they first learned of the home they purchased through a real estate agent, compared with 34% in 2007 and 50% in 1997. Prediction: In 2009 – for the first time — more buyers will find the home they purchase by seeing it first on the Internet rather than learning of it from a real estate agent.
- More Home Searches Done Online: According to the 2008 NAR Profile of Home Buyers and Sellers, 87% of homebuyers used the Internet to search for a home in 2008, up from 84% in 2007, 80% in 2006, 77% in 2005 and just 2% in 1997. Prediction: 90% of homebuyers in 2009 will use the Internet to search for their next home.
- Real Estate Agents & Brokers Numbers Continue to Decline: In 2000, there were 756,000 members of the National Association of Realtors. Its membership grew as the housing market gained steam earlier this decade, peaking at 1.37 million members in October 2006. Its membership stood at 1.242 million in October 2008. Prediction: As the housing market continues to cool and the Internet makes it easier for people to sell and buy homes, there will be even fewer real estate agents & brokers in 2009.
- Commission Rates Continue to Increase: As homes stay on the market longer and fewer homes are sold, real estate agents will look to increase commission rates to compensate for lower sales volume. Real estate agents typically lower their commission rates during a seller’s market, and increase their rates during a buyer’s market. Prediction: Real estate commission rates will increase from 5.12% in 2007 to close to 6% in 2009, or nearly $18,000 for a home sold for $300,000.
- More Consumers Resist Paying Real Estate Commissions: With home prices experiencing double digit declines across the country in 2008, home sellers are more mindful of the cost associated with a real estate broker’s 6% commission fee. Studies from Northwestern and Stanford universities have found that people who sell their home “by owner” are as effective as agents in maximizing the sales price of their home, and Consumer Reports magazine found that FSBO sellers get closer to their asking price than agent-represented homes. Prediction: Even more sellers in 2009 will utilize “for sale by owner” methods to sell to their homes in order to avoid paying commissions, and to maximize the amount they get from the sale of their homes.
- Competition Increases Following the Settlement of NAR and the U.S. Department of Justice: The May 2007 settlement between NAR and the DOJ requires NAR to allow Internet-based residential real estate brokers to compete with traditional brokers and not be treated any differently. The settlement will lead to more consumer-friendly services and products, and create a more open, competitive real estate market leading to greater savings for consumers. Prediction: More web-based real estate services will follow the lead of ForSaleByOwner.com, which now offers a service that puts a listing on Realtor.com without having to be on the local MLS.
- Lease-to-Own Transactions Increase: As the credit crunch makes it harder for would-be buyers to obtain mortgages, sellers will be more open to a “lease-to-own” transaction if no buyers can be found. Under this arrangement, the owner rents the property and gives the tenant the option to purchase the property at the end of the lease. Prediction: Lease-to-own will become more commonplace in 2009, as sellers need to realize cash flow from their properties and many buyers find themselves still unable to obtain mortgages.
ForSaleByOwner.com is the nation’s leading “by owner” real estate website. Since 1999, ForSaleByOwner.com has saved home sellers more than one billion dollars by providing premium Internet marketing services, MLS listing services, property pricing reports, real estate guidance and information, downloadable legal forms, as well as live customer support, to help customers independently sell their own homes. The company offers a wide range of listing packages at varying prices that provide advertising, information, tools and resources to empower people to sell their homes themselves. In contrast, a person selling a $300,000 home through a real estate agent would be charged a 6% commission fee and pay approximately $18,000. Prospective homebuyers can browse property database, available at http://www.forsalebyowner.com, at no charge.