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Old 01-30-2008, 12:06 AM
 
Location: Highlands Ranch
6 posts, read 13,283 times
Reputation: 11

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It is so true that you have to compare with the neighborhood you a looking at, even the same street if you can or the same model of the home. Also you need to look at what sold, at what price and no more that 90 days ago.
There are a variety of reason why homes are priced at where they are.
Are you perhaps looking at Clarke Farms?
There are several reasons why that one home may still be sitting at near $275K without price reduction including: it may already be priced right and maybe they have had a lot of activity and even offers, but for some reason they fell through (that happens). So if/when there is a good amount of activity and interest on a home there may not be a need for a price reduction.
The reasons for that home being priced higher than the other could be numerous, some of which could include that the higher price home may be in a better location, i.e. back to open space, have large yard etc. it may have a full basement (finished even). The other home may not be in a similar location, does it back to another home, smaller lot, smaller basement etc. And on top of all those considerations, having upgraded kitchens etc. do make the homes more appealing.
Also, the price per square foot may not be that different.
It really makes a difference once you start viewing the homes in person too, it may look like one thing on paper and when you see it may be better or sometimes not.
Good luck on your search.
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Old 01-30-2008, 07:14 PM
 
2,652 posts, read 7,785,188 times
Reputation: 1882
While real estate is local, it is true about the upper end prices arent as affected during a downturn.

The most affected are the entry level homes. Mid level homes are affected too, depending on many things.. Desireability of neighborhood, economy, rates, etc.

Heres the reason: The people buying those $500K and up homes obviously (for the most part, not always) are pretty well off. So... when the interest rates go up, they can till afford that home. They also know that a home is not really an asset, and don't expect to live there for two years and make $200K off the house.

Now we get to the lower end. Usually people right out of college or entering the work force. Usually not making a whole lot. When the interest rate was 5%, they could afford that house. BUT... they just start working so they had to get that ARM. Thats ok, when it goes to adjust you do one of two things:

1. Sell for a huge profit (the 2005 mentality)
2. Refi and keep the payments low

Well two years go by, the rates have went up to 7%, and they didn't get that $30K per year raise they anticipated.

Now what. They have a house they cant afford so have to sell. Well so does everyone else on the block.

And to top it off, rates went up (they are down a little bit now), and lenders tightened up their lending standards. So now they can't sell that house because nobody qualifies for the loan. Or the house next door.

That is where we are at now.
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Old 01-30-2008, 07:53 PM
 
1,176 posts, read 4,034,881 times
Reputation: 463
I know a guy who has had his condo on the market for over a year. He now rents it, shows it only once a week and refuses to lower the price.

This makes me shake my head -- but on the upside he is selling a lot of other condos for other people who realize they can get a better deal elsewhere.
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Old 01-30-2008, 09:54 PM
 
5,748 posts, read 10,739,753 times
Reputation: 4502
Quote:
Originally Posted by Luke9686 View Post
The people buying those $500K and up homes obviously (for the most part, not always) are pretty well off. So... when the interest rates go up, they can till afford that home. They also know that a home is not really an asset, and don't expect to live there for two years and make $200K off the house.
Well, I guess that explains the transplants with whom I recently spoke. Their house is on the market for $550k, or about $65k more than comps. Last month, they managed to cure the notice of default issued in November through re-financing, but there's still that nasty mechanic's lien from the HOA.

Why can't they lower the price? Oh, that's right...they used all of the equity from the sale of their old house outfitting the new house with granite countertops, wood floors, high-end appliances, and snazzy furniture. It's a pity the housing market has ground to halt in our area, since the job promotion that will pull them out of this mess requires relocation to yet another state.

When they moved here to Colorado they had a great opportunity to purchase a moderately-sized house for cash and live comfortably with lots of room to spare in the bank account (and room to negotiate if they needed to sell). Instead they bought the McMansion with a view, thinking prices would continue to go up. Now, they're stuck.

Sorry, Luke, I don't buy your theory about high-end buyers. It's an unusual person who lives beneath his means, no matter what the income level.

(For the California bashers: the transplant is not from the golden state.)

Last edited by formercalifornian; 01-30-2008 at 11:22 PM..
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Old 01-31-2008, 04:28 PM
 
Location: Aurora, Colorado
2,212 posts, read 4,597,439 times
Reputation: 2363
Brian&Rita,

YES, the homes we are looking at are in Clarke Farms. You're right about backing to open space...the one that is priced higher doesn't have backyard neighbors, but both have basements. You're right about seeing the house in person...it probably will look a lot different and maybe we'll love it and will consider it a bargain. We are definitely looking to stay long term and have been approved by the bank for much more than the asking price, but we are smart with our finances and don't want to finance more than $220,000. We'll pay the difference. We have been looking at homes for the last 7 months and this particular house has been on the market the entire time. It has been taken off, but then reappears after a few weeks. There could be something wrong with it or it could just be that people aren't qualifying for the mortgage.

Thanks everyone for the inputs...it's nice to hear from people going through the same thing. I think the key here is just to stop looking at your home as some potential windfall. Buy a house you can afford (don't be "house poor"), make it your own, and live in it for a while.
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Old 02-01-2008, 09:50 AM
 
2,652 posts, read 7,785,188 times
Reputation: 1882
Quote:
Originally Posted by formercalifornian View Post
Well, I guess that explains the transplants with whom I recently spoke. Their house is on the market for $550k, or about $65k more than comps. Last month, they managed to cure the notice of default issued in November through re-financing, but there's still that nasty mechanic's lien from the HOA.

Why can't they lower the price? Oh, that's right...they used all of the equity from the sale of their old house outfitting the new house with granite countertops, wood floors, high-end appliances, and snazzy furniture. It's a pity the housing market has ground to halt in our area, since the job promotion that will pull them out of this mess requires relocation to yet another state.

When they moved here to Colorado they had a great opportunity to purchase a moderately-sized house for cash and live comfortably with lots of room to spare in the bank account (and room to negotiate if they needed to sell). Instead they bought the McMansion with a view, thinking prices would continue to go up. Now, they're stuck.

Sorry, Luke, I don't buy your theory about high-end buyers. It's an unusual person who lives beneath his means, no matter what the income level.

(For the California bashers: the transplant is not from the golden state.)
My theory wasn't about high end buyers. It was about the upper level of the market, not being as volatile.

You were talking about one situation. I was looking at the market as a whole. Generally, the upper end of the market isn't hit as hard as the lower levels.

Not saying it doesn't take a hit. But during a downturn, a lot of time you will see the median price go up for this reason. Especially at the beginning a downturn.
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Old 02-01-2008, 04:30 PM
 
5,748 posts, read 10,739,753 times
Reputation: 4502
Sorry. Luke. I didn't mean to get carried away. The situation I mentioned absolutely infuriates me, because I got an earful of belly-aching from this couple, and I had to bite my tongue from saying "you have nobody to blame but yourselves."

Generally, I agree with you about the stability of the upper-end market, but even that segment isn't immune from this mess. It's unfortunate that the volatility in the lower end of the market will eventually make its way up the ladder. With the market grinding to a halt, it appears that even financially-stable, move-up buyers are having problems, because they can't unload their houses and, thus, are prevented from purchasing more expensive properties, affordable or not.
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Old 02-01-2008, 08:50 PM
 
Location: Avondale, AZ
1,209 posts, read 4,245,117 times
Reputation: 918
We went thru the decline in the early 90's in San Diego and it seemed the more expensive properties took a bigger hit than the cheaper ones. Our 'low-end' house lost about 10% during the downturn, about 16k. I saw a home that was once valued at 600k sell for 350k with a Mercedes thrown in. I always thought that the lower end homes would not depreciate as much because there is a larger group of buyers for them. I have no stats for this, just something I noticed back then.
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Old 02-05-2008, 01:41 PM
 
Location: Morrison
17 posts, read 75,522 times
Reputation: 17
My 2 cents:

The Denver market is not nearly as bad as the national media paints the "real estate market" as a whole. Florida, Vegas and Phoenix had ridiculous appreciation and now their bubbles are bursting. We didn't really have a bubble to burst.

I agree that the $250K-$500K market is tough right now. Foreclosures have added alot of inventory in that price range.

How long it takes to sell a home is all based on price. There are lots of houses languishing out there because the sellers have to get a certain price for it to break even. The market doesn't care what you owe. It's worth what it's worth.

The stuff that's priced fairly sells. What helps is having some sort of niche and having something that can stand out from the crowd.
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Old 02-05-2008, 01:55 PM
 
Location: Las Flores, Orange County, CA
26,346 posts, read 82,794,063 times
Reputation: 17500
Quote:
Originally Posted by ColoradoLion View Post
Florida, Vegas and Phoenix had ridiculous appreciation and now their bubbles are bursting. We didn't really have a bubble to burst.
Sounds about right to me.


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