Are house prices really dropping? (Bethesda, Rockville: how much, neighborhood, buying)

[pythagras]

Here's an interesting blog I found:
Bubble Meter

[george12345]

Zillow is NOT ACCURATE AT ALL for many areas. I do not not where they get there info but it can be off by ALOT.

George

[AlicynD]

It's true, Zillow is not accurate. All they do is pull from a couple mile radii of your property and pull comps that way. That means they don't care what the inside of your house looks like or anything that actually goes into coming up with a market price for your home. You could have a million dollar home next to a townhome community and they're calculating based on those - not comparable at all.

[bobrulez]

Out of control spending is what got us into this mess to begin with. A weaker dollar will make US goods more attractive to non-US consumers, all else held equal. This will, all else held equal, increase our exports, which will, all else held equal, put upward pressure on the value of the dollar. The system is self-correcting to a degree.

The worry is that the fed will continue to lower interest rates. This will act as an inflationary pressure, as people will spend more freely. We do not need to spend our way out of this problem. Free spending is what caused it in the first place. Eventually all debts need to be repaid, be it through direct replayment, inflationary pressure, or increased taxes to bail out select groups. There is no such thing as a free lunch and inflation acts just like a tax.

To those who cry that a hit to the real estate market will put this country in the poor house, I remind you of this... An asset is essentially worthless (it has value, but it is indeed worthless) until you convert it into cash (i.e. sell it). So what if you've lost $50k this year on the value of your house. What's that against your virtual gain of before? You have not lost a dime (or gained a dime) until you actually close the sale. The same is true for any asset class.

The real estate market will not be what burries the economy. The real estate market, coupled with the credit market, coupled with high unemployment will be what kills the economy. As long as people have stable jobs, access to easy credit, or a method to take cash out of their house, people will continue to spend. It's when all 3 legs get taken out that people have no means to spend.

[TuborgP]

Originally Posted by bobrulez

Out of control spending is what got us into this mess to begin with. A weaker dollar will make US goods more attractive to non-US consumers, all else held equal. This will, all else held equal, increase our exports, which will, all else held equal, put upward pressure on the value of the dollar. The system is self-correcting to a degree.

The worry is that the fed will continue to lower interest rates. This will act as an inflationary pressure, as people will spend more freely. We do not need to spend our way out of this problem. Free spending is what caused it in the first place. Eventually all debts need to be repaid, be it through direct replayment, inflationary pressure, or increased taxes to bail out select groups. There is no such thing as a free lunch and inflation acts just like a tax.

To those who cry that a hit to the real estate market will put this country in the poor house, I remind you of this... An asset is essentially worthless (it has value, but it is indeed worthless) until you convert it into cash (i.e. sell it). So what if you've lost $50k this year on the value of your house. What's that against your virtual gain of before? You have not lost a dime (or gained a dime) until you actually close the sale. The same is true for any asset class.

The real estate market will not be what burries the economy. The real estate market, coupled with the credit market, coupled with high unemployment will be what kills the economy. As long as people have stable jobs, access to easy credit, or a method to take cash out of their house, people will continue to spend. It's when all 3 legs get taken out that people have no means to spend.

That is a famous quote. I was wondering where you learned to use it or who made you familiar with it?

[pythagras]

Originally Posted by AlicynD

It's true, Zillow is not accurate. All they do is pull from a couple mile radii of your property and pull comps that way. That means they don't care what the inside of your house looks like or anything that actually goes into coming up with a market price for your home. You could have a million dollar home next to a townhome community and they're calculating based on those - not comparable at all.

It seems pretty accurate for my neighborhood based on what houses are selling for. I don't think its completely unintelligent. There are several million dollar homes near some half a million dollar homes and it seems to catch that fine.

You can claim ownership of a home and add improvements. Plus, inside improvements only modify the value slightly with respect to the neighborhood. The proffessional appraiser we used didn't even come inside, they just pulled up a (mildly suspect) list of comparables.

[Pene]

Take my word for it, I am a real estate broker in seven states. we haven't even seen the tip of the iceberg. The market is already crashing and it will get worse for the next couple of years. Don't buy now, hold on and wait for it to hit bottom

[TuborgP]

Originally Posted by Pene

Take my word for it, I am a real estate broker in seven states. we haven't even seen the tip of the iceberg. The market is already crashing and it will get worse for the next couple of years. Don't buy now, hold on and wait for it to hit bottom

You never know the bottom til it is over and started back up and you never know the peak until things are heading south. What seven states are you licensed in as we all know every market is different?

[TeamBenya]

Originally Posted by Pene

Take my word for it, I am a real estate broker in seven states. we haven't even seen the tip of the iceberg. The market is already crashing and it will get worse for the next couple of years. Don't buy now, hold on and wait for it to hit bottom

I love blanketed statements like this.... There is no evidence that it is going to get worse over the next couple (2+?) of years. The fact is we simply don't know what is around the corner, and anything is possible. Will values rise?- Not likely, but we're probably going to see somthing down the middle.

Everyone has a different opinion obviously, and I can respect that, but as a broker in 7 states, don't you think a statment like this is a little sensationalistic and overdramatic? Think about it like this: If someone is looking to sell and buy right now to downsize, would that be smarter to do NOW while the differences in value are greater and the chance to pay down or eliminate monthly payments is better?

If you own a $400k house, and want to downsize to a $350k house (for retirement perhaps?) and you owe $250k if you sell now at 400k, you are putting down 150k in equity into your new 350k home (not factoring associated costs, this is strictly an example), and you would still owe 200k. If you wait until the market drops (how far will it go? Let's say 20% for arguments sake) your 400k house would be worth 320k, correct? The house you wanted to buy would be worth 280k if the market drops evenly. So now the amount of equity you can roll is only 70k(320k-250k). What would that make our final amount due on the new house once the equity is factored in? Try 210k.

So by waiting like you said everyone should do, people moving from one home to another to downsize just cost themselves $10,000. OOPS...

Another factor is people who want to move up that are comfortable being handy around the house. If your home is in nice shape, you could sell now and buy a foreclosure that needs a little work. You can spend the same amount you make on the sale on a larger home and enjoy more living space for the same monthly payment provided that you're comfortable with the repair work that may be involved. It's a smart option to avoid the "equity loss" horror stories we're hearing right now.

[titaniummd]

Originally Posted by seethelight

I am looking to buy a house in Bethesda sometime later in 2008. I am looking in the $700,000 range. I have heard from the news that prices are dropping in Bethesda, but are they really?

I lived in 20852, Rockville/N Bethesda.

Just to look at what was offered in my old neighborhood, the price offering for a house was 30 - 40 k less than what my neighbor sold their house for (same size but I don't know what is in the current offered place).

I just think that the prices in Bethesda,Rockville, (in Mont Co) are normalizing to what is reasonable to pay.

The market was at its peak in 2004-2005 here. Investors were flipping houses making a huge profit. Many people were buying in cash.

I checked Zillow and it reflects a trend in the prices of houses but not the actual value. In 2005, zillow showed my neighborhood listing houses at 787k. Each subsequent year, it trended down. In 2007 it showed that the house price dropped about 100k - when I sold my house that trend in pricing is what the market was willing to pay. It listed my house for a certain amount and I sold for 10 k higher than what Zillow state the 'value' to be.