[nychiefsfan]

I recently spoke with a realtor who tried to justify why houses were still selling higher than Just Market Value (the price that a house should sell in a competitive market). She told me I should compare the selling prices of houses in the areas I'm looking that have sold within the past 6 months to get an idea of what to expect to pay for a house in that neighborhood.

I tried comparing a few local areas of interest in the Riverview/Brandon area and there are only a few that are starting to compare at, or slightly below, Just Market Value, which is too high to begin with, in my opinion.

Until the seller’s “greatly inflated perception of what their home is worth” becomes more realistic, the housing slump will continue for a long time and time is on the buyer’s side.

A neighbor bought his house for $270k at the end of the housing boom in August of 2005. His house has a Just Market Value of $217k. He tried to sell it at the beginning of the year for $288k, but has since lowered the price to $259k, $42,000 over Just Market Value. There are a lot of sellers in his position that overpaid for a house and can’t sell it without taking a substantial loss. In this market, the longer you wait to reduce your selling price, the less your house will be worth.

I recently read an article that stated, "The under-pricing game is now over. You are free to bid far lower than the asking price. You might be pleasantly surprised to find out how desperate the sellers are."

We were told by our realtor that we should not underbid because it may insult the seller. I'm insulted by the sellers that are still trying to get June 2005 prices on a house when it's supposedly a buyer's market.

The rules have changed. One cannot compare prices in an area within the last 6 months, because the most recent month is the most telling statement of what a house is worth in that particular area. And each month, that number continues to drop.

There's no sign in the near future that this will end anytime soon. Economist Gary Shilling forecasts a drop of 40 to 50 percent in home prices in overpriced areas such as CA and FL. While that may not be good news for the realty business, it's wonderful news for us. This downward spiral is predicted to last at least 5 to 10 years, similar to previous housing slumps.

My wife and I are in no hurry to buy an over-priced house, especially when prices are continuing to fall while the market is over-flooded with unsold houses. We're currently pre-approved for a loan, but there will be plenty of opportunity to buy a house at a fair price for many years to come.

One realtor hit the nail on the head when he said, "Based on the number of homes on the market and the general lack of available home buyers, you would think it is a real Buyers Market. But, it's not. We had such a run up in the market through 2005 with both purchases and refinances that lots of people owe more on their home than their home is worth - and lot's of these people are selling - and they don't have much room to negotiate - so they leave the price high on their home. Other sellers who don't owe so much on their home, and don't have to sell, don't want to drop their price too far below their competition (the people who can't drop their price)."

Your thoughts?

[SKB]

Patience is the key right now, pretty soon panic is going to set in and you are going to see a mass flood of short sale listings.

We to are planning on making a purchase, my thoughts are the Fall 2008 we will see our 50% corrections.
I don't agree to a slow decline, Americans are far to impatient for that to happen. People will not be able to sell or stay so they will simply mail back the keys and walk away. After that banks will start trying to unload their losses as quickly as possible.
My prediction is that prices will drop 50% in Florida by next years end and continue to slowly decline or stay flat for many years to come.

I wouldn't bother to try to get a realtor's opinion in this market as their livelihoods are involved so you will not get an honest answer anyways.

If you are not, you should be reading the thehousingbubbleblog.com this site will give you all of the up to date information on what is really happening with the market. They feature Florida usually every day.

SKB

[Prichard]

There's a good reason for this. Most houses are lived in. They provide far greater utility than just a place to invest money. Most people don't want or need to move around all that much. So, people have a natural tendancy to sit and sit and sit on their land until they finally get the price they want. For most people, until that happens, there's no pressing reason to sell or move.

[pslOldTimer]

Originally Posted by nychiefsfan

...Just Market Value (the price that a house should sell in a competitive market).

Where are you obtaining your numbers for Just Market Value? If they are from the county property appraiser's numbers, you should take them with a grain of salt. There are often vast differences between what the property appraiser says is Just Market Value and the actual market value of the property. For one thing, the property appraiser does not do a full appraisal on each property, just a curbside appraisal at best. They also leave out significant factors such as commissions and selling costs There are also political or personal variances in the values that any given property appraiser's office sets.

Market value is that value that is determined by a willing seller and a willing buyer. The most pure form of market value is determined by auction, assuming there is a valid cross-section of buyers at the auction.

The property appraiser's value should almost never be considered in any serious discussion of real market values.

[Jammie]

I'm insulted by the sellers that are still trying to get June 2005 prices on a house when it's supposedly a buyer's market. //Unquote

I like that. I understand exactly what you're saying. It seems that some people just don't understand that their homes are no longer worth what they were just a few months ago. IMHO, you have the right to make whatever offer you want to make. If it's not accepted, so be it.

SKB, hopefully you're right. Not sure if it'll drop that much, but it'll definitely go lower then it is right now.

Actually just from reading posts there seem to be several people who want to sell NOW and don't plan on waiting around. Many people have gotten jobs elsewhere and need to relocate. Many have gotten tired of Fla. and have moved out of state and cannot continue to support two houses. It is a buyer's market right now and I don't know why that is so much harder to accept then when it was a seller's market.

[rpow53]

On the news this morning it reported that the "new" housing market was up more than it has been in 14 years. there is no housing bubble, just a lot of nervous buyers. The only people that will lose their home are the ones that could not afford it to begin with.

[LingLing]

Re: Economist Gary Shilling forecasts a drop of 40 to 50 percent in home prices in overpriced areas such as CA and FL.

Lennar development "Cielo" in Palm Beach Garden was selling above ~$550K in July, 2005. Now Lennar is selling them at ~$320K. The sales person chased us down the street to try to make us put one dollar down to buy one of those. We just don't like the development. I guess in some extreme cases, you will see 40-50% price drop. Lennar now starts to offer to pay realtor's comission for the buyers who'll have to sell their houses first (at this point, marketed as an exclusive to our company employees). We sold our house in CA last year (September, 2006). The same house was sold recently again ($40K more after addition of a granite kitchen countertop). So...

[HockeyMom72]

As a buyer, it seems to me that it is the sellers who are nervous. A house we looked at in October is now down $150,000. Another, which we no way could afford 6 months ago, is now down almost $200,000. It is now affordable.

As I said to my husband then, sit tight. These homes are not worth what they are asking and they are going to come DOWN. I am still not quite ready to commit. Nervous? Nope. Having bought and sold 3 homes in 30 years, we have learned a thing or two about real estate. Worst thing you can do is RUSH into it.

[Rhett_Butler]

Originally Posted by Prichard

There's a good reason for this. Most houses are lived in. They provide far greater utility than just a place to invest money. Most people don't want or need to move around all that much. So, people have a natural tendancy to sit and sit and sit on their land until they finally get the price they want. For most people, until that happens, there's no pressing reason to sell or move.

This would be true if most people who caused this bubble in the first place were buying property "for the utility and not an investment" but that simply isn't the case.

It's simple. Real Estate prices got out of hand and outpaced the market and salaries didn't follow.

New homes are selling for less than existing homes with many more incentives so I don't see how a seller of an existing home can sit on his house if he really needs to sell, and let's face it. MOST people that are trying to sell thier house need to get out of it for one reason or another. I personally don't think prices will drop 50%, but I don't think 25% is out of the question at all...

[SKB]

Originally Posted by rpow53

On the news this morning it reported that the "new" housing market was up more than it has been in 14 years. there is no housing bubble, just a lot of nervous buyers. The only people that will lose their home are the ones that could not afford it to begin with.

You forgot to mention the other part of that news brief.

" ignited by the biggest decline in median prices since 1970. ”