Are house prices really dropping? (Bethesda: sales, real estate, foreclosures)

[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?

[cutgarden]

Dunno about Bethesda, but overall yes, in MD the prices are dropping. The thing is, even with the lower (relative) prices compared to a year ago, houses are still not cheap. Good luck with your house-hunt!

[pythagras]

Yes.

Check out http://www.zillow.com/
Plug in the address of what you're looking at, it uses recent sales to compare. When I plug my house in, I see a drop of 10% of the homes value when compared to Jan 2007. The bottom might be this winter, but that really depends on how terrible foreclosures become and I imagine if the neighborhood you are looking has more or less foreclosures than average. Where we live, most people have owned there homes since before the housing boom with only a few buying in the last 5 years. I'd think that would help some, but I imagine neighborhoods with much newer homes or more sub-prime borrowers might be more at risk. And by "sub prime" I don't just mean poor folks, anyone is a sub prime borrower if they borrow outside their means, thus any neighborhood is at risk.

[Tim Rankin]

Originally Posted by seethelight

I have heard from the news that prices are dropping in Bethesda, but are they really?

This assessment of the Maryland market was put out over 1/2 year ago.

http://www.housingpredictor.com/maryland.html

At some point, we'll reach the bottom, but no one will know that's happened until months later, when we can look back and "see" where the bottom was.

There is also a lot of pent-up demand from buyers "waiting to see what's going to happen", so when prices do start heading back up and people realize that, there will be a rush back into the housing market.

The one good thing about buying now is there is a lot of inventory out there, and you can pursue the property you really want without having to contend with multiple offers.

Most sellers and buyers usually miss the peaks, and the valleys.

[TuborgP]

Originally Posted by Tim Rankin

This assessment of the Maryland market was put out over 1/2 year ago.

http://www.housingpredictor.com/maryland.html

At some point, we'll reach the bottom, but no one will know that's happened until months later, when we can look back and "see" where the bottom was.

There is also a lot of pent-up demand from buyers "waiting to see what's going to happen", so when prices do start heading back up and people realize that, there will be a rush back into the housing market.

The one good thing about buying now is there is a lot of inventory out there, and you can pursue the property you really want without having to contend with multiple offers.

Most sellers and buyers usually miss the peaks, and the valleys.

You only know the peak and the valley after the fact as was said. What you can know is the affordability of houses to the consumer. The more people of affluence want to live there the more stable prices will be. Schools are often the major driver of where affluent people live. That being said Bethesda has always been a hub of affluence and good schools with great private schools available. It has a limited supply of affordable homes and that will usually keep values up. Exclusive is exclusive and people will pay for that.

[ChosenGSR]

Prices are definitely falling. There are more predictions to the downside in 2008 than to the upside, and many of those that are predicting moves to the downside are predicting double digits drops. Fortune Magazine, Goldman Sachs, and many other big names are calling for drops. It's hard to ignore these calls, I'm one of those sitting on the sidelines people who will probably choose to rent for at least another year to see how things will play out. Then we have a possibility of a recession as well as many more ARM resets coming in 08.

It's a scary market to jump into. I look at buying a house like buying a stock on margin, a scary proposition in a falling situation.

[seethelight]

Originally Posted by pythagras

Yes.

Check out http://www.zillow.com/
Plug in the address of what you're looking at, it uses recent sales to compare. When I plug my house in, I see a drop of 10% of the homes value when compared to Jan 2007. The bottom might be this winter, but that really depends on how terrible foreclosures become and I imagine if the neighborhood you are looking has more or less foreclosures than average. Where we live, most people have owned there homes since before the housing boom with only a few buying in the last 5 years. I'd think that would help some, but I imagine neighborhoods with much newer homes or more sub-prime borrowers might be more at risk. And by "sub prime" I don't just mean poor folks, anyone is a sub prime borrower if they borrow outside their means, thus any neighborhood is at risk.

When you mean where you live, is that in the Bethesda area? I know when I plug my house in on Zillow, it's off by about $150k as we have improved our house quite a bit but Zillow doesn't know about the changes we made only the price the house sold for. So that's why I am specifically asking about the Bethesda area as different areas seem to be affected pricewise in various ways. Where I live in Boulder, CO prices in my neighborhood are rising as there is so much tear downs of 7,000 sq. ft. houses !!

[macroy]

Originally Posted by seethelight

When you mean where you live, is that in the Bethesda area? I know when I plug my house in on Zillow, it's off by about $150k as we have improved our house quite a bit but Zillow doesn't know about the changes we made only the price the house sold for. So that's why I am specifically asking about the Bethesda area as different areas seem to be affected pricewise in various ways. Where I live in Boulder, CO prices in my neighborhood are rising as there is so much tear downs of 7,000 sq. ft. houses !!

It may not know about the changes, but it uses the comps around your neighborhood. So that is basically what the market calls for in your area... your improvements may get you a bit more.. but it will never get you 100% of what you put into it. Bottom line, in any neighborhood, there is a range of what houses will go for.... and very seldom will you be able to sell a house for too much above that. This is just my .02 of course. And since I've no clue what your house is worth... it may be moot as a 150K difference means differently when you're talking $2 million dollar home vs a $500K home.

For 700K, you're best bet is to plug that figure in a few local real estate sites. homesdatabase is one I use the most. They go by zip code, so you'll need to find a few first.

[pythagras]

Originally Posted by seethelight

When you mean where you live, is that in the Bethesda area? I know when I plug my house in on Zillow, it's off by about $150k as we have improved our house quite a bit but Zillow doesn't know about the changes we made only the price the house sold for. So that's why I am specifically asking about the Bethesda area as different areas seem to be affected pricewise in various ways. Where I live in Boulder, CO prices in my neighborhood are rising as there is so much tear downs of 7,000 sq. ft. houses !!

No I'm not In Bethesda. I can't speak too much for the value of homes there. I'd also not go on Zillow alone, its pretty good, but a professional appraiser will usually do a better job filtering out the right comparibles.

Too put things in perspective, we bought recently. We looked at easily 40-50 homes and knew we could be very picky. There's just so much inventory. We waited until we found the perfect home (and perfection includes a really good price.) So we found a really good deal, with lots of nice improvements compared to the neighborhood and paid less than what Zillow says our home is worth.

During our hunt we only considered homes that had every base covered, the "nice improvements" were an absolute must. We noticed only the homes priced under the neighborhood with the upgrades seem to be the ones that sell, all the other average (or even above average) homes just sit on the market.

[ChosenGSR]

Originally Posted by pythagras

No I'm not In Bethesda. I can't speak too much for the value of homes there. I'd also not go on Zillow alone, its pretty good, but a professional appraiser will usually do a better job filtering out the right comparibles.

Too put things in perspective, we bought recently. We looked at easily 40-50 homes and knew we could be very picky. There's just so much inventory. We waited until we found the perfect home (and perfection includes a really good price.) So we found a really good deal, with lots of nice improvements compared to the neighborhood and paid less than what Zillow says our home is worth.

During our hunt we only considered homes that had every base covered, the "nice improvements" were an absolute must. We noticed only the homes priced under the neighborhood with the upgrades seem to be the ones that sell, all the other average (or even above average) homes just sit on the market.

And it doesn't look like it'll get any better for sellers any time soon. Everyone is screaming that the market is overvalued, and indeed it is.