I recently overheard a homeowner say that his Realtor had told him to "hold off" on listing his home for sale. I really wanted to say something to this person about how wrong this was, but circumstances didn't allow. I've thought about this comment and feel that it is a really irresponsible thing for a Realtor to tell a homeowner. Think about it:
In Newtown, home prices have come down 22% off the "peak". If you purchased a home during the peak for $500,000, its value today is $390,000. Should the market continue to decline in 2009, this same home's value will be less a year from now. For example, if the real estate market declines another 6% in 2009, this same home would be worth $366,600 a year from now.
In a "normal" real estate market, home values appreciate between 2-5% a year (depending on the market). So if in 2010 and 2011 home prices increased 3% per year, the value of that home would be worth exactly what it is today!
Do I think this homeowner received good advice from his Realtor? No! What does this homeowner stand to gain by holding off on listing his home for sale? Nothing, but he will get to pay the carrying costs for the home each month in the hopes of improving his equity position in the home. It's a fallacy to hold off on listing your home for sale in this market. If you must sell your home, get it listed for sale with a good, honest Realtor at a realistic price. This will help to reduce your overall losses on the property.
Now keep in mind, the scenario above is hypothetical. Actuality could be a LOT worse.