UK House Sellers In Denial About The Property Crisis - Energy Too?
Posted by Doug Low on September 29, 2008 - 10:25am in The Oil Drum: Europe
A recent article in the UK's Independent newspaper suggests that house sellers in the UK are unable or unwilling to accept the fact that we are in a new housing paradigm. House prices have fallen drastically over the last year, but the sellers are still asking for pre-credit crunch prices. This article looks at a specific example of this unwillingness to accept that circumstances have changed, and asks what are the implications for the coming energy crises.
At the end of April this year, our landlady, somewhere in Scotland, let's call her Kate, decided she wanted to sell her flat. Before we left, a selling agent told me that Kate bought the flat for £162,000 in 2005 (we were considering buying the flat at that time). House prices in Aberdeen subsequently rose an average of almost 30% in 2006. When Kate put her flat on the market it was 'offers over' £195,000, which implied she was expecting something like £230-240,000. My immediate reaction was - how much? This was the price Kate might have got before the financial problems started August 2007, but was sure she did not have a hope of selling at that price. As it turned out, she didn't. Whereas before onset of the sub-prime scam / credit crunch she might have expected 20-30 people to at least view the flat in the first week, after two months only a handful had turned up for a look, and nobody put in an offer. So Kate took the flat off the market and rented it again.
Now you might think she had learned a lesson from this. Even back in April average house prices had fallen a few percent from the peak, but the writing was on the wall. Banks were being considerably more careful about lending money, buyers were becoming scarce and house prices were falling fast. It turns out that the reason Kate took her flat off the market was because she thought the price she was asking was too low. So presumably she thinks that next year, or later, property prices are going to rise again.
The sad point about this affair is that it is not just our ex-landlady that is overly optimistic about property prices. An article in Monday's Independent (Rightmove: Housing market 'on its knees') would strongly suggest that this is in fact a national problem:
... Rightmove said asking prices fell by 1 per cent during the first three weeks of September, an improvement on the 2.3 per cent drop seen in August, but still leaving prices 3.3 per cent down on the same month last year.
While the sale price of the average home has fallen by about 12 per cent over the past year, asking prices have fallen at a slower pace, suggesting that sellers have still not fully realised the realities of the market, at least when they first put their properties up for sale.
If I am interpreting this article correctly, actual house prices have fallen by 12% since a year ago, but the asking prices have fallen only by 3.3%. In other words, the sellers don't actually seem to be aware that there is a housing crisis on at the moment, and are still asking for pre-credit crunch prices. Surely this has got to be a major factor in why UK property sales are reaching record low levels? The sellers prices are too high, and it is blatantly obvious where the prices are headed, over the next 1-2 years. Most forecasts in the media currently forecast a drop from peak to trough of 25-35%, with one or two suggesting falls of as much as 50%.
What has all this got to do with energy? I would guess that 95-99% of people I know do not know much, if anything at all, about peak oil, peak gas and peak coal. Worse, they do not care, yet. If we are to get through the down slopes of the peaks without anarchy and chaos, we have to collectively become very energy-aware. At the very least we need to have some inkling of what peak oil or gas or coal implies so that we can, for example, start voting for politicians, locally and nationally, who are willing to tackle the issues head on (politicians that actually show some leadership skills), changing our lifestyles and attitudes, and in general taking remedial if not emergency actions.
But the example above of house asking prices being out of sync with actual selling prices does not ogre well for our ability to act before the horse has bolted. The particular example above was not a one off act of over optimism, or more accurately perhaps, denial of a new reality, it seems to be endemic to most property sellers, and by implication, most people. It is not as though these same people are not aware that house prices are falling fast. Every month for the last 8 months or so, once or twice a month when the they are announced, the number of sales and prices of properties make the evening headline news because they are reaching new lows, on the downside of peak house prices. And yet we collectively pretend there is no problem. If we continue with this attitude regarding the coming energy crises, we are in trouble.
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My immediate reaction - never to discuss my personal matters with you (or the friendly selling agent)
Re your post, Eh? How does 'offers over 195,000' imply that she expected to get 18-23% above that? Is this some unwritten law with the Scottish 'offer' system?
Using the Nationwide House Price Calculator just as a rough guide:
Q2 2005 - 162,000
Q2 2008 - 207,158
So does not look like she was being unrealistic.
Yes, prices are going down but if you were selling a house today how would you price it:
1)the current market price
2)5 - 10% above the that price
3)50% below that price 'cause everyone is talking the market down and that is what 'the experts' or 'soothsayers' say it will be worth next year or the year after, maybe
Fair enough. Although most of my info did not come from the selling agent who I do not know.
Yes. You raise a very good point here. In England, I think the asking price tends to imply the maximum price the seller actually wants, whereas in Scotland it is the minimum. There are two methods of selling a house in Scotland, 'Fixed Price' and 'Offers Over'.
Historically, the vast majority of houses were sold using 'Offers Over', and this is still the case. 'Offers Over' means those interested in buying the property put in an offer over the asking price, and the seller usually selects the highest bid. Prior to our buying a house in Edinburgh 7 years ago, autumn 2001, the spread between overs-over price and actual selling price was typcially 10-15%. After 2001, the spread was typiclaly 20-30%, depending on location (what city, where in the city), house or flat, local amenities etc. Edinburgh for example boomed after the new parliament was completed and for houses in prime sites, you typcially had to put in an offer about 30% over the asking price. At the height of the madness, offers were sometimes 50+% over the asking price. In Aberdeen, the big boom did not arrive until 2006 when the average property price rose by almost 30%.
Fixed-price means - this is the selling price, take it or leave it. Until recently, fixed-price implied there was either something wrong with the property, in a 'bad' location, needed a lot of work done on it, or the owner required a quick sale for whatever reason. But the number of fixed-price sales, although still very much in the minority, has exploded over the last year or so. For example, in the NE of Scotland, Aberdeen and Aberdeenshire, there were for many years about 100 properties for sale fixed-price. By autumn of last year, the number was up to 400, and by spring of 2008, it had increased again, to over 700 (Housing bubble could be on brink of bursting). The selling prices have not dropped much, yet, while the total number for sale has risen, as has the proportion for sale at fixed-price. Personal observation suggests that all types of property are now going for fixed-price, but the sellers are still hoping to get yester-years prices.
If a house is put on the market at offers-over, and the price is perceived to be too high, buyers will not go for it. What they can do, and I am sure some are, is put in a lower offer before the bid-date (closing date) ends. But sellers still have not adjusted to the new, much lower prices people can afford and, for now, are refusing the lower offers. Thus the growing number of fixed-price houses that are not selling. Given the rate at which property prices are currently falling in the UK, in a year's time the sellers may well look back at the offers being made now with nostalgia.
Typically, all estate agents have a record of the asking and selling prices of properties, at least locally / regionally. So the estate agent would be able to tell the seller what the track record has been over the last year. There have been various articles in the UK media over the last few months saying this is becoming increasingly difficult because in some areas so few properties are being sold. For now, where there is doubt, the advice seems to be, go high rather than low.
The website www.ourproperty.co.uk let's one find out, for free, all recent transactions for any UK postcodes. Also, they will send you emails with the monthly data as it becomes available.
In Scotland 'Offers Over' implies you expect to achieve around 15-20% more than that price, and offers are submitted in a blind auction, 'Fixed Price' means that you will sell at that price to the first person to offer it.
I am not surprised that the fall in asking prices is lagging the fall in selling prices. There are a number of factors for this.
One is that with prices rising, selling prices were tending to be only marginally below, if at all below, the asking price, hence pushing up prices. Now that they are falling, that gap is widening. Ultimately, what people ask for does not matter, the issue is more how they react when they don't get it.
Which leads on to the next point. For most people, their house is their only "investment". They therefore want/expect the price to go up. But the extra complication is that in most cases, their house is also their home. They therefore get emotionally attached, so find it harder to accept reality. This will always act as a drag on falling house prices.
As for your main point, unfortunately you are right. For example the world has been aware of the potential impact of Global Warming, and most people in the west are aware of it, but most do little about it, if anything, unless prodded (eg by their council collecting recycling). It is a case of "someone should do something" without appreciating that someone is all of us. The reaction to recent high energy prices is a perfect example of this. Rather than dealing with the underlying issues, ie using less, they moan and demand that the government tax the energy companies so that their bills will be subsidised.
Re Global Warming, I am pleased to say that the Conservative Party (our main opposition party and probably government in waiting) have made public plans to ditch a third runway at London Heathrow in favour of a TGV-style high-speed rail network linking London, Birmingham, Manchester and Leeds. I am hopeful this could mark a turning point in the UK.
We should be congratulating and encouraging them in this. Who knows, this could even be extended to that strange land north of Leeds where Eunan lives.
I thought this was excptionally good news. Made me think that Zac Goldsmith, former editor of the Ecologist, now senior activist within the Conservative party and who understands peak oil very well, has successfully got the Peak Oil message thro to the top members of the Tory party. Presumably they still think they cannot talk about Peak Oil openly, but they can come up with sensible policies and use climate change / the financial crises as a substitute excuse. Unfortunately, the Tories are now taking a right kicking from all angles for their anti-new runway at Heathrow policy. Corporate unease over shift in Tory rhetoric:
Seems to me like now would be a pretty good time for the Tories spell out the Peak Oil problem clearly so no-one is any doubt.
The psychology behind people's reluctance to lower asking price is called prospect theory. The problem is that homeowners view selling at below what they expected as a loss to be avoided, and not as a failure to gain what was arguably an unsustainable high price overinflated by property developer manipulation.
Don't ask me where I've read it, but I'd been led to believe that this is standard behavior when a housing bubble in particular bursts: Actual declines may not be severe, but many owners choose simply to hold the house (on the market or off it) until inflation allows them to claim a nominal gain. This sustains the crisis by adding to supplies, and so the length of the housing correction tends to be proportional to the depth. Meanwhile, the home-building industry contracts to a tiny fraction (in the Great Depression 1/9) of its former size.
Although I think you meant "does not augur well", I much prefer your "does not ogre well" :-)
Guess who's been reading too many kiddies stories recently. Puss In Boots to be precise.
The price of any asset is a function of what someone will pay for it. Thus someone looking to sell today doesn't necessarily know what it was worth a year ago. Same is true of buyers. Is this three bed semi worth £230k, £200k, £180k? Entering the market you are unaware.
As such I'd suggest high asking prices are a result of the estate agents trying to talk up prices (and with it their profits) at a time when volumes are weak. The unreality is probably more theirs, they act as the market memory.
That unreality and looking on the positive side because your job depends on it is common to the finance and political domains when it comes to an energy future. These turkeys are not going to see Christmas coming because they know its their necks on the line. Ignorance is bliss.
BTW you can take a good stab at what the peak-to-trough price swing will be by looking at previous cycles. 40-50% is the best estimate, excepting true oil peak effects.
Actually, RE agents prefer to move the listing as quickly as possible-the price is irrelevant (lower is better so the house will move). The fly in the ointment is the agent that promises to get a higher price for the seller will often get the listing, so it is complicated. Successful agents work on getting the listing and also selling the seller on accepting a lower listing price.
It's called conditioning and starts the moment you sign up with the agent. Up until that point, the agent is talking the price up. After you sign they will immediately start talking it down. Thats how the system works. Get the listing, reduce the price and sell the property. The agent makes their money only if the house sells and the difference in commision between getting you a high price and getting you to reduce the price to the point where it sells is marginal.
On the other hand, the agent might be acting in your best interest to talk some sense into you to reduce the price so the house sells and you can move on with your life.
The problem for agents is a market where nothing is moving. That is the strange period we are in at the moment where we have an inverse peak in the number of properties changing hands. With an ongoing credit crunch, I expect that we will see an extended period where prices become almost irrelevant becasue buyers won't be able to access credit to purchase anything! This presents real estate agents with a real dilemma (and a great ooportunity) in creatively working through transactions where the sellers will need to finaice the buyers in the absence of third party lenders.
People are naturally reluctant to change for the worse and admit a loss. But in case of a house, there is a lot of a monetary loss involved. If someone has purchased their home at the height of the boom, he/she may not be able to recover the mortgage value. If the house is seen as an investment, it is normal to defer selling at what is perceived as a market low.
For these reasons I am not sure this is the same psychological phenomenon as adapting to peak oil. I don't mean people will adapt easily to peak oil. I am saying that this observation on the housing market doesn't necessarily have a good predictive value.
Some time ago I learned an interesting term: value discovery phase. It can be related to the valuation of any asset. It’s particularly applicable when values decrease. In the stock market the VDP can last just minutes: bad news is released about a corporation and the stock immediately looses value. The market can immediate reset its value. This was contrasted to the housing market. Obviously, when housing prices start to slide there is no immediate method to establish the VDP. It takes many months, but more likely years, the new price levels. There was a very similar but local real estate bust in Houston in the early 80's when the oil industry contracted significantly here. Real estate agent kept telling (for the obvious reason) buyers and sellers that market had bottomed out and was improving. In fact, it took at least 10 years for a noticeable improvement. But even with that, I knew one fellow, who bought in 1979, and even by 1994 his home had not recovered to the price he had paid originally.
Home sellers are stock in the same position as stock players: sell not and accept a lower return, or even a loss, or hang on to it and wait for recovery. If the home seller doesn't have to sell they'll likely wait it out. If they can't then they suffer the loss and move on. It's a hard choice. Back in 2000 I knew a fellow that owned Enron stock when it fell to $10/share. He said he wasn't going to sell it at a loss. He eventually sold it for $0.12/share. Difficult choices to be made for sure.
Economic downturns are caused by many things, but eventually we will get one at the same time as a nation's oil consumption ultimate peak - even though peak oil may not be the ultimate cause of the downturn.
The implication of less affordable/available energy post-peak in a 'net-importer' country is that any economic recovery can't be to a higher level than before (in the way we in the OECD have come to expect with ever more affordable energy for the last 200 years or so.)
If a country's house prices do not ultimately recover to a higher 'real' price than the recent peak then that will be good evidence for that country's peak oil now, not in the 30 years time expected by CERA.
"He said he wasn't going to sell it at a loss." When trading shares one of the most important things to do is to have a stop-loss and stick to it. It is human nature to want to have made the correct decision and selling out acknowledges a wrong decision has been made.
The question should now be "is there a market?"
The BBC reports that mortgage lending in August was £143M, which is just 2% of the lending made in August 2007.
http://news.bbc.co.uk/1/hi/business/7641535.stm
If the average selling price is around £200K thats is only 700 to 1000 houses with completed sales in the whole of the UK.
The other issue is given the small number of transactions, are the average prices we seeing accurate. With fewer transactions, individual transactions can have a bigger impact on the average. No way of telling.
Careful what you are reading, I think the article is badly worded. It says "...Banks and building societies lent an EXTRA £143m.... 32,000 new mortgages were approved in August, a new record low and 70% fewer than a year ago...."
So whilst a new record low is claimed (going back how far?? less then at any time in WW1, Great Derpression, WW2, the last boom??) it was far more than 700 to 1000, and also note that many people do not have mortgages so it is not a measure of totla completed sales.
As I have said in various posts on TOD the impact of the "credit crunch" on restricting lending is more urgent than depreciating assets. Much higher deposits are now required and many first time buyers will now have to save this extra deposit or loan it from the bank of mum and dad.
According to Reuters, last week the Fed lent nearly $188 billion per day, on average, to banks and money managers.
This Telegraph article says although 32,000 were approved, the vast majority did not actually take the money. Financial crisis: Mortgage lending plunges 95 per cent as housing market suffers
How can we deny the decline in the housing sector. It’s not just the US anymore, the contagion has affected the global economy, and has a way to go before it becomes bottomed out. The reason we need to remember why this is occurring is the method of distributing mortgage loans. Loans are combined into packages, which for bonds, that give a particular yield based on the mortgages credit rating, and length of term etc. What is KEY, is that both AAA rated mortgages and CCC mortgages were being combined and portrayed as AAA, which is totally absurd. These bonds were sold on the WORLD MARKET. Not just in the states, therefore we will all feel the decline in housing prices, for at least a few months to come. Further Clarification
A friend of mine recently sold a flat for 95,000 - when other flats
in the same block were on the market for 125,000.
He's in the antiques business and 'understands' buying and selling.
Needless to say he's a happy bunny !
His logic is very simple -
He actually sold a flat worth between 25,000 to 45,000.
He uses simple arithmetic.
I bought it for X pounds
I've owned it for Y years
Inflation/performance of the investment against the same amount
of money deposited in generally understood investment mechanisms
such as savings accounts etc. (remembering that alot of investment
vehicles available to the general public are both less performent
as well as involving a cap on the amount you can invest).
He's happy.
Especially as a mutual friend of ours was involved in a development
last year that involved building all the infrastructure (roads,
street lights, houses .. the lot). When they added it all up they
had an unit price per house of just under 30,000.
The developer expected a return of several hundred percent.
There's an interesting Peak Oil line here.
We know that alot of reserves will be left in the ground as they
will prove uneconomical to produce.
We also know that there is the countryside ... littered with
uninhabitable houses due to there being no way to make a living
in the area inspite of the idyllic locale.
The same I guess as in the States, only now it's applicable to
parts of the surburbs.
Why is the over inflated housing market so toxic ?.
Probably because the figures are in, Peak was 2005, and those
crunching the numbers are starting to sum up the courage to look
over the edge .. and they are beginning to realize what a long way down it really is.
By the way - I thought China held 200 Billion of American debt ?
This means that given that the deal in the US seems to imply that
the banks will have to make up the difference of any shortfall when
the assets are realized in 2013, the Chinese have 5 years to off
load that debt ? - Or is the US just going to print the 200
billion it needs ?
Strange times indeed.
X-Rated.
Lots of swearing.
Made me Larf -good summary of our prdicament.
http://thecrownblogspot.blogspot.com/2008/09/gordon-browns-downfall-hous...
Reality can be painful.
It's not just house prices, you hear tourism operators say 'when things get back to normal'. However the new normal won't be the old normal. I don't know whether to feel sorry for people who held on to property hoping to make a killing only to see it decline in value. Those people ignored early warning signs so they gambled and lost.
Other issues in house prices are downsizing by baby boomers in the next 20 years, commuting and heating costs, widespread unemployment and the increasing role of local government that will increase property taxation. The basic work and lifestyle model needs a rethink.
Hi Folks,
For those who recall the last UK housing mess in the early-mid nineties, you will know that this is just the beginning. While then the main factor was double digit inflation and recession, this time round it has been over-geared debt. The renting example does not give the 'investment' dividend - ie how much is the rental income per annum or yield relative to investment cost? If its anything under 10-12% your landlady friend is screwed, as are most folks who bought btl in the last five-six years. Professional 'Rigsby' types always knew this was the income needed to maintain the property and put some by for 'voids' - periods with no tenants. The best place to look for current value is at the auction houses - many properties are still not making reserves - which should tell one something about the market. Recent wannabe property magnates are in for some tough times - when people can't pay a mortgage, they often cannot pay much in rent either.
There is a long way to fall - think what the average household income is, times it by three and a half, and there you have the long term traditional average house value.
Now, how does one spell that phrase so common in the early nineties? Oh that's right, n-e-g-a-t-i-v-e e-q-u-i-t-y... no wonder people don't want to drop their prices - and under a Labour (as in I am labouring the point) government too...
There should be stronger legislation that recognises that housing is more than just a 'commodity', being peoples homes as well and that a stable housing market is essential for a stable economy.
One final point Re:PO, the pain this approaching debacle will cause will make it psychologically much more difficult for people to face and accept the coming energy crisis - they will be looking for signs of normalcy and comfort from whatever sources they can muster - including BAU behaviour.
L,
Sid.
Inflation is actually good for over-stretched borrowers, as long as their pay rises are fairly close to the inflation rate. If inflation is 10% and pay rises are 8%, you generally end up better off (since your debt does not rise with inflation) than with inflation at 2% and pay rises at 0%.
The early 1990s saw sky high interest rates which were the killer.
It is certainly true that the mortgage market should be regulated far more - there should be absolute caps (i.e. 3.5*single salary, 2.5* joint, repayment only), because a mortgage has to be affordable for 25 years, not just when the going is good.
As far as BTL goes.. you are totally correct. An easy way to get fair value for a BTL flat is to multiply the real world monthly rent by 100, so a £600pcm flat is worth £60k. After all, £60k in the bank will get you £300 a month in interest with no void periods, repairs, maintanance, tennants, block fees or management costs. These flats were being sold at £180k, 300% overvalued!
Hmmm ... those figures have been proven to work in a world of ever increasing energy since we get the real economic growth required to pay the interest ... however, post peak energy that mathematically can't be the case anymore!
So, if we are at peak oil(as seems ever more likely)I suspect obtaining money to buy a house, saving for an adequate pension (or anything else requiring the payment of interest) won't be as simple as you might think.
Hi,
Don't need real economic growth to pay the interest. It's perfectly possible to have a steady state position; and people will always have to pay a chunk of their income towards housing.
And, of course, if inflation is positive then the real world repayment decreases over time..
I don't think you fully understand - if real world inflation is positive then the real value of your house or pension savings is falling, each £ of your money buys less and less, this is ultimately unsustainable, usually resulting in failure of the fiat money (this has happened to at least 3800 currencies so far and is happening in Zimbabwe now!)
In the case where there is flat growth or deflation there will be insufficient money in our fractional reserve system to pay the interest and the debt isn't repaid in full, at first the banks become illiquid, then insolvent, and the people who invested in or saved with the banks lose their money - this is the current unfolding OECD banking situation. Central Banks and tightly controlled rules were created to try and stop this situation occuring - the rules that are known to work have been deliberately broken in recent years.
People will always have to pay a chunk of their income towards housing, but they can only afford to borrow to do it and pay back with interest if their real income is growing over time. It was learned long ago that interest can only be afforded in growing economies, which is why usury is banned in many religions. In the long run, infinite growth of anything is impossible in a finite system like the Earth.
Your argument, like Gail's a few days ago, seems to be that debt makes no sense save in a growing economy.
If you have capital and are living in a world with negative growth, then holding onto it implies a stable store of money.
Fiat currency is unlikely to have this quality in this sort of world-wide condition - Japan was a special, not a general case, and monies from there could be invested abroad, albeit at a low effective rate of interest.
The investment problem then becomes one of minimising your losses year on year, rather than making money.
Someone still gets to hold the biggest pile of chips, even if the pot is smaller.
Perhaps it is even possible to argue that the reason for the lack of investment in infrastructure such as energy production, distribution and transport is due to the artificially high return rates available from asset bubbles in real estate and finance, certainly this underinvestment has been most pronounced in the bubble economies.
According to this line of thinking the collapse of those bubbles would perhaps result in more of the admittedly reduced resources available for investment going towards real productive assets.
About the only other places they can put their money is into agricultural land and commodities - and rising oil prices would increase the return on other energy investments.
BTW, there have been times when the economy was contracting, seemingly without destroying the pattern of lending at interest, although precise figures are difficult to come by as the economy was less sophisticated.
14th century Europe springs to mind, after the Black Death, when falling population his the economy hard.
It should be noted though that in England, for instance, they rapidly switched to a less labour intensive economy based on sheep.
When put to their shifts people are pretty inventive in keeping things going, regardless of theoretical concerns over resource limits.
At a personal level when considering the feasibility of buying a house, say, then a situation where nominal rates are fairly low, but there is a high rate of inflation due to a general inflation would mean that it might well make sense to buy a house as in real terms the interest is negative, regardless of the nominal rate.
It all depends on inflating the money supply enough.
The capitalist system has survived many occasions of low or negative real growth.
Hi Fluffy,
Yes - it wasn't so much inflation as the
ERM (Exchange Rate Mechanism of the then EU common market - Sterling dropped out of this eventually losing 20% of its value in September 1992 - George Soros was blamed for speculating on the £) which forced interest rates up. Now it is the LIBOR rate - the rate at which banks lend between themselves - which is the problem. Which means that BOE interest rates have been effectively decoupled from debt repayment rates.
Oh dear oh dear oh dear...
L,
Sid
According to Calculated Risk, LIBOR hit a new all-time high the other day at 6.88% House prices are already falling before we hit recession proper, which suggests there is more pain to come. It looks like stricter and more costly financing will meet decreasing employment. It doesn't bode well at all.
http://calculatedrisk.blogspot.com/2008/09/libor-hits-all-time-high-of-6...
This site is always good for a [UK] laff:
http://www.propertysnake.co.uk/
I agree that many sellers and would-be sellers have not come to terms with the real drops in prices. In England, this means that any offers tend to be way below the asking prices. However, I'm not sure that this is the main reason for the drop in the volume of transactions. Surely, a (if not the) key reason for the drop is that mortgages are a lot more restrictive and expensive than they were a year or so ago.
The other reason is that, despite all the "Property Ladder" type programmes on TV, many sellers still don't seem to understand that, in the current market, they need to make an extra effort to make their property look attractive to buyers.
My impression is that properties in the better locations, sensibly priced and well presented and which are in the markets appealing to buyers still able to get mortgages, are selling; but, unless, all those criteria are met, it's much harder or impossible to get a sale.