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Old 01-03-2010, 03:05 AM
 
Location: Greenville, NC
2,078 posts, read 5,048,672 times
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Quote:
Originally Posted by Bill Hitchcock View Post
The biggest problem I have encountered has been the sellers refusal to understand that price is like the tide. It ebbs and floods. And no matter how hard you try-You can not change the market you are currently in.

Bill Hitchcock
I see 6 things fouling up or rather extending the price correction for an unnecessary amount of time. The truth is that markets won't normalize until homes become affordable again for the area that they're in.

1: The Mark To Market accounting rules change. As long as banks are allowed to hide bad assets they're going to continue to slowly put foreclosed houses on the market. If banks had to show those bad assets they would feel more compelled to get rid of them.

2: The Government continues to attempt to keep people in their houses. If you can't afford the house then it's not likely that a mortgage mod is going to help. Investors simply aren't willing to do the one thing that would help. That's lowering the mortgage principal.

3: Extending the inevitable. Extending the amount of time it takes for a foreclosure to complete. Whether the bank takes your house now or in 3 months really doesn't make a difference. There is a very high likelihood that they're still going to take it.

4: It is too hard to get a mortgage. Credit is way too tight. I know this first hand.

5: As you pointed out, everybody still thinks their house is worth the same as they were back in 2005. Yes it is true that not every area has lost value. But it's not hard to tell where those areas are. They're the areas that never saw the huge run up in prices. They're the areas that just kept chugging along at 6% a year. Go back to 1998 and see what your house was worth. Then add 6% a year until you get to 2010. That's what your house is worth people.

6: Also as you pointed out, there is an over supply of both new and used homes. The new home market has just about dried up and blown away.
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Old 01-04-2010, 07:32 AM
 
Location: Morehead City, NC
1,676 posts, read 5,362,471 times
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As the saying goes-"All real estate is local". The problems, events and situations that we may see on network news or in the Wall Street Journal just might not apply inany given local market.

For example I remember January 2008 CNN released a study of where the top 100 zip codes for foreclosure were. 2/3's of the nations foreclosures were in Las Vegas and So. Cal-Although it was being called a national problem.
North Carolina has the 14th lowest foreclosure rate (According to the NC Association of Realtors) in the country. Cartert/Craven/Pamlico counties (my primary market) has one of the lowest foreclosure rates in the state.
I just checked the Crystal Coast MLS a few seconds ago. There were a total of 1,830 active listings. 75 of those were Bank owned or short sales.

Pricing of a home is ground level. You can forget terms like mark to market, credit default swaps, etc. when it comes to the broker or seller determining the price of a home.

Brokers want the business, sellers want the max. return on their property so objectivity sometimes goes out the window. Especially when the market was so rich there for a while.
But if prices don't adjust to the current market conditions then you'll see things such as a several year supply of inventory and Days on Market over 1,000 days (Looked at a lot of those).
The worst case scenario is when a home goes on the market over-priced and the market continues to fall but the seller doesn't adjust at all. You then get properties such as a home I know of in Emerald Isle. It originally listed at $1,250,000 two years ago and is now at $699K. Ouch!
Bill
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Old 01-04-2010, 09:09 AM
 
551 posts, read 1,700,269 times
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The worst case scenario is when a home goes on the market over-priced and the market continues to fall but the seller doesn't adjust at all. You then get properties such as a home I know of in Emerald Isle. It originally listed at $1,250,000 two years ago and is now at $699K. Ouch!
Bill[/quote]

This is all asking price. From this information $699K could still be too high a price for the house.
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Old 01-04-2010, 10:25 AM
 
Location: Morehead City, NC
1,676 posts, read 5,362,471 times
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From this information $699K could still be too high a price for the house.
You are correct. And that price might be many 100's of thousands below current market value too.
It's a distress sale and often times value falls victim to debt.
Bill
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Old 01-04-2010, 04:18 PM
 
Location: NC
128 posts, read 433,187 times
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This is an interesting topic. I appraise homes in southern coastal NC and I hear local agents, buyers and sellers complain about our market and my response is always the same. If a property hasn't sold after reasonable exposure to the market it's probably priced to high. Homes are selling in my area. Not a lot but they are selling. The majority are what I refer to as "necessity homes" costing $150,000-250,000. The properties that seem to sit on the market for 1000 days or more are mostly beach or island homes and high end subdivisions that came online during the bubble. It really is price that drives sales regardles of location.
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Old 01-05-2010, 07:54 AM
 
Location: Morehead City, NC
1,676 posts, read 5,362,471 times
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It all gets back to the absorption rate, the supply of homes on the market. If you have 5 identical apples all priced the same and you have 5 people who want them-Then it's just a matter of time (due process) before the 5 apples are sold.
But if you 20 identical apples for sale and 5 people to buy them then what do you do? Working on the premise that all are the same-All you can do is drop the price. Price becomes the only outstanding feature.
The fact remains that when the Crystal Coast market was selling the most-it was when it had the least inventory. Now the market is selling the least and has historic high inventory.
The 5 apples, 5 people is a description of a "normal" market. The Crystal Coast is not and has not been in a normal market for several years now. It's been more like 40 apples and 2 people.
For sellers-Its tough. For buyers-Those who can get financing-It's a marvelous time.

Thought I'd include the average sold prices for the entire year of 2009 for a few select Crystal Coast towns.
Bill

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Old 01-06-2010, 03:49 AM
 
Location: Greenville, NC
2,078 posts, read 5,048,672 times
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Quote:
Originally Posted by Bill Hitchcock View Post
But if you 20 identical apples for sale and 5 people to buy them then what do you do? Working on the premise that all are the same-All you can do is drop the price. Price becomes the only outstanding feature.
I totally agree with this. In my former neighborhood they are struggling to sell houses. Everybody thought theirs was worth more than the others. One guy put his up at $499k and his next door neighbor put his up at $599k. Neither house even had anyone looking at them but they still both refused to budge on price. The second neighbor finally just took his off the market and resigned himself to living there. The first neighbor eventually (after 3 years) lowered his price to $379k. Guess what happened? His house sold in under 60 days for just a little under asking price.

Here's the house. It's the 1219 residence. And no one is even looking at 1218.
Edgewater, Maryland Real Estate & Edgewater Homes for Sale - Zillow
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