Bank of America survey of Agents for September

In some neighborhoods in Chicago, Months Supply of Inventory (MSI) has already surpassed 10 months. The chart below is from B of A's nationwide survey.

Few lookers left in the market.

Traffic deteriorated further in September, falling short of nearly all agents’ expectations as our traffic index fell to 9.6 from 17.6 in August. 85% of agents said traffic was below expectations, 12% said it met expectations, and just 3% said it exceeded expectations. As one agent noted, “It’s another month, but the same problem: no one can get a loan and sellers want too much for their property, so buyers are back to sitting on the fence.” In addition, agents pointed out most potential buyers are also sellers and they can’t move because their homes continue to languish on the market. One agent said, “I had one open house where no one even showed up.”

Prices continue to fall, but buyers look for greater reductions.

Home prices fell again in September, as our price index was unchanged at 19.5 from 19.4 August (any reading below 50 indicates lower prices over the past 30 days). Despite the recent price declines, agents seemed to note a growing gap between buyer and seller expectations, with several making comments such as, “Sellers have unrealistic price expectations,” and, “buyers are looking for lower prices than sellers are willing to settle for.” Appraisers appear to be helping to jumpstart the negotiations, as agents say appraisals are coming in very low. “I had one house recently appraised at $400,000 just get reappraised for $370,000. Not surprisingly, inventories increased and time to sell lengthened in September, with our indices falling to 20.8 and 9.1, respectively, from 24.6 and 11.4 in August, short of a neutral 50.