The true sign of a slumping housing market: “For Rent” signs
My wife and I didn’t have the best timing. We bought a house in early 2006, right when housing prices in our area peaked. It seemed as soon as we left the closing table, housing prices in our neighborhood — a suburb of Chicago — began to fall.
Ah, well.
Back then, you had to act quickly to get the house you wanted. You’d tour a home, think about an appropriate offer and call your real estate agent. Then you’d find out that someone else had already made an offer. Yes, it was a real pain of a market for buyers.
Today, of course, that’s all changed. Housing prices have fallen, rather dramatically. Sellers aren’t getting multiple offers. They’re lowering their asking prices on a regular basis. And homes are sitting on the market for months, and often longer.
And every time I take my 18-month-old son on a walk through our neighborhood I marvel at how so many of the “For Sale” signs outside homes have turned into “For Rent” ones.
That is the true sign that the housing market is gasping. The “For Rent” signs only come up when owners give up on actually selling their homes for a decent price.
My wife and I, on a whim, toured a recently gut-renovated home in our neighborhood. The builder did a magnificent job. The hardwood floors sparkled. The updated kitchen looked like something you’d see in Better Homes and Gardens magazine.
The builder’s face fell, though, when my wife and I told him that we were just looking, that we weren’t in the market for a new home just yet but wanted to keep our options open. (This was a lie, too. We just wanted to see what the house looked like inside. Yes, we were the bane of all real estate professionals: the nosy neighbors.)
The poor builder had been trying to sell the home for more than half a year. He’d lowered his price significantly. But he had no takers. Eventually, the “For Sale” sign outside the home became a “For Rent” sign. Today, that sign is gone, and someone’s inside the house, renting it.
I’m sure financially that helps the builder/owner a bit. But it’s not like selling.
The media and politicians seem to be thrilled with the latest housing-sales report from the National Association of Realtors. But I’ll believe that a housing recovery is truly happening only when I see all those “For Rent” signs transform back into “For Sale” signs.
