[bbender]

Hi,

Do you all agree with Merrill Lynch Report?

http://money.cnn.com/2008/01/23/real_estate/merrill_forecast/

I have a condo in Stamford, have a very low offer from the expectation and on other hand have a couple who is ready to rent out my place.

Should I rent it out or sell it for very low price. Feel nervous after reading this report.

What do you all suggest?

Thanks a lot.
Brooke

[skytrekker]

I try and do a diligent job regarding Connecticut housing trends and prices.

Connecticut saw a large price rise in condos and single family homes from 2000-2006.
In many cases prices rose 50-75%. However overbuilding did not occur- the problem that decimated housing and the states economy from 1989-1992. So our economy may be less burned then other areas of the country. Housing prices did not reach a nadir to 1996, in the last downturn, from the speculation and overbuilding from the 1980's- that kind of negative drag is less intense this time around. In fact when prices peaked here in 1988- they did not return to those levels till 2002. 14 years!

Nonetheless... in the state;

There is a build up of inventory currently- and housing prices have thus far fallen statewide anywhere from 8-15%. They are likely to fall further in 2008. Sales are off in many areas of the state by a substantial amount.

Concerning your own property; You hear many economists like Yale's' Robert Shiller who see another 4 years of sliding prices- though at a decline that is stable. Others see a real estate recovery in late 2008. Others see 2009, or 2010.

I would rent the property out. But do not expect to see any rapid rise in its value for several years. If you do not want to hold on to it- reduce it another 5%- it will sell eventually if its a quality condominium.

[JayCT]

Real estate is very local. Some parts of the country are experiencing significant problems others are not. A lot depends on where you are located. It is hard to say what you should do. I faced a similar deliema years ago in the last downturn. Couldn't sell so we rented. It was tough for a couple of years but it worked out in the long run. The question is do you want to be a landlord? It does take some effort and is not always profitable in the near-term. Long term however, it usually works out. Good luck, Jay

[skytrekker]

Originally Posted by JayCT

Real estate is very local. Some parts of the country are experiencing significant problems others are not. A lot depends on where you are located. It is hard to say what you should do. I faced a similar deliema years ago in the last downturn. Couldn't sell so we rented. It was tough for a couple of years but it worked out in the long run. The question is do you want to be a landlord? It does take some effort and is not always profitable in the near-term. Long term however, it usually works out. Good luck, Jay

Great advice Jay

however I would tend to question the old concept that 'real estate is very local'
since 2000 housing values have soared everywhere from Spain, to Ireland to the coastal USA-
those 'localities' are far more widespread then any time in history.

[JayCT]

Originally Posted by skytrekker

Great advice Jay

however I would tend to question the old concept that 'real estate is very local'
since 2000 housing values have soared everywhere from Spain, to Ireland to the coastal USA-
those 'localities' are far more widespread then any time in history.

This is true. The world is getting smaller and smaller every day. Jay

[skytrekker]

Originally Posted by JayCT

This is true. The world is getting smaller and smaller every day. Jay

Yes globalization is part of the equation- however the Federal reserve reduced real interest rates to nothing, causing lax lending, massive speculation, creative financing, 'Carry trade', hedge funds- all from easy money.

What makes me laugh is the FED is again pouring vast amounts of money into the system- devaluing the dollar, causing a massive boom in commodities and fueling inflation.

Globally, the same thing happened- London real estate prices are now the highest in the world.

[MuttMommy]

Brooke,

I'm not an expert in the Stamford condo market but I can tell you what is generally happening in CT.

Homes that are desirable areas are still selling; some are in a sellers market still. The homes that are still selling are mostly first-time or low-middle end of the market that are in good condition. Fixer-uppers are sitting and high-end homes are mostly sitting. Again, this is a generalization.

I think we are going to see a slow, steady decline of only a few % points. CT doesn't have nearly the foreclosure or sub prime mess that other states do. And we didn't see the massive speculation that California, Florida and Nevada did either which drove prices up.
However, I think CT has another looming problem and that is the age of our population - what happens when all those Baby Boomers that make up the majority go into nursing homes and there are no young people around to buy their homes? I'm more nervous about the ten-year forecast than I am about 1-2 years, but I'm also not selling right now.

I would check around, maybe a realtor in the Stamford area has a blog that would publish the absorption rate in your area. If there is less than 6 months of inventory on the market in your segment (condos selling for $400,000, eg), then you should be able to sell now.

If your unit has already been on longer than the average days on market for your segment, then the problem may be something else - either price or condition.

Is your condo staged to sell? Doing some very inexpensive things like freshening up paint, cleaning out clutter and rearranging furniture can make a big difference. It makes a big difference, especially if buyers have a lot to choose from.

If it looks like there is a lot of inventory on the market in your area and you don't or can't afford to take a lower offer, perhaps renting would be best, as long as you want to be a landlord for a year or so and have extra money set aside in the event something happens. I don't want to scare you but I can't count how many condo owners I've known who have had issues with renters.