[bls5555]

Looking over numbers, it seems that places in Michigan are having some major drop offs in housing prices and will continue to. Well, I am looking at moving to Michigan. So I am trying to get some info on buying a house.

Obviously a stupid strategy would be to go in and NOT lowball on houses. Some numbers to back this up:

Detroit-Livonia-Dearborn MI 05Q3 09Q1 -21.3% (peak to bottom decline)

Lansing-East Lansing MI 05Q3 09Q1 -15.7

Warren-Farmington Hills-Troy MI 05Q4 09Q1 -15.4

Grand Rapids-Wyoming MI 05Q4 07Q3 -5.3

Double digit* home price drops coming - Sep. 19, 2007

This to me appears to mean that Grand Rapids home prices have probably bottomed out so you would be getting most at market value or perhaps lowball a little bit and you will still find a deal where you won't end up eating money if you go to sell it later on.

Would the best strategy for Lansing be to immediately take 7 % to 10% off asking price and then go even a bit lower?

Thanks for the help and I would love the input.

[Cato the Elder]

Much depends on the specific market and what type of house you are looking for. Here in metro Detroit, declining prices are in large part due to the end of the Big 3 as we know it. It's also heavily obscured by what's going on in Detroit proper as has been the case for 40 years. So the houses going to foreclosure and hitting the market in droves are those owned by former employees of the Big 3, Delphi, etc. and those in the distressed parts of Detroit proper. In this sense, it's deceiving just to look at a percentage number. Generalizing, if you want a cookie-cutter 3br, 1200 sq. ft. bungalow in the burbs or a house in Detroit, low ball and you have a good chance of getting it - even then you'll be surprised how little people budge - many were locked into terrible refi's and ARMs several years ago and are under water. Now if you waltz into a place like Birmingham, Bloomfield Hills, Grosse Pointe, and even Royal Oak expecting 20% off the list price, I think you'll be sorely disappointed, especially if the house has been updated at all. Supply and demand - doesn't matter how many houses there are on the market if the highly desirable houses are still far and few between. This was our experience last year when the few nice houses that everyone who can get a job in MI these days (read: white collar) is looking for went in several weeks. I don't think the RE landscape has changed that much since.

[and the]

Decide what area you want to live in and drive around. Take your laptop with a GPS receiver to plug into it so you can keep track of where you've already been. It will save you lots of time.

[michiganbob]

Two things to keep in mind about buying a house in Michigan right now:

1) With a few exceptions as noted in an earlier post, in most areas house prices will continue to fall for the next year or so in my opinion, so if you buy now, expect that's going to happen. It also means you will likely owe more than the home is worth (unless you put more than 10% down) for some time, making it difficult to refinance should the need arise.

2) Expect to have to live in your house for 8 to 10 years before you see any appreciation in some of the markets you listed. Even then, you may have trouble selling it should you need to. But, if you expect to live there forever, then that shouldn't be a problem.

I'm sure others can add to this list, but these are the big ones as far as I am concerned.

[jimdhen]

Just keep in mind you are describing (and logically) in very broad brush-strokes. Individual home prices in top-shelf neighboorhoods aren't necessarily going to mirror those price declines. The old addage is that location and quality sell at a firm price. My observation is that there is a lot of price and mortgage sensitivity below $300k. When you start moving above that price, it becomes a hunt for a well-maintained home where you want to live geographically. We moved here in March and weren't overly impressed with the selection of homes even though prices were very soft - and out of looking at 50 homes we found a couple where we said let's do an offer. One of those two is the one we ended up closing on. The other wouldn't budge on his price and that home is still for sale.

[magellan]

If you're buying in an area that you are not totally familiar with, I'd look at working with a buyer's agent (realtor). They can research any particular areas you are looking at and run comps for you, tell you what pricing is doing, and help you stay out of trouble. Generally, their commission comes out of the commission paid on the listing (they split it with the listing agent at closing), so you don't have to normally pay any upfront costs to hire one.

Articles written by national media outlets need to be taken with a grain of salt. You need information from the trenches of the neighborhoods you are researching.

[Adieoz]

I think that your statistics are very interesting...it is no question that you will be able to get a home for less money in Michigan than if you were buying last year. I would be very careful about using a "knock 7-10% off" strategy. You need to work with your buyer's agent to look at sold comps. It is possible that even in this market a seller will price their house to sell now. Basically I am saying that the amount you get off the list price is not a good indication of what kind of deal you are getting.

[Frankawitz]

I have a RE agent who sends me a list of foreclosed houses every day I got a e mail this morning that showed 110 houses ranging in price fromm 54k to 110k and these houses are localed in Southfield, Oak Park, St Claire Shores, Warren, Clinton Twps, Roseville, Eastpoint. and I have been told you can make offers at 30 to 40% below market. Also you need to watch the Property TAXES, These are outragest in some locals, Another thing is your Income Taxes will be going up if the Democrats and the Governor has her way, Cause who's going to pay for her New State Police Head Quarters she wants her Friend to build, But the Bill wont come due intil 2009 when Jenny is getting ready to leave Office Oh !how nice can this woman be to the Residents of Michigan You Go Girl!

[Dr.Jim]

As everyone says...depends on the property.

Alot of people that "must" move and are selling their houses might be able to take a large hit. But, the majority of people will simply not lose 50K on a house, especially if they dont have much equity.

The law of supply and demand does help dictate houses,....but when sellers simply "cant" lower their price, there isnt much a buyer can do. I think the "bottom" of the market will not be what these statistics predict, but will instead be based on the stats of what sellers will consider the "no go below" point.

Assess each house individually, and as mentioned look at comps, previous sales, see what the average difference in asking price to sales price is in the area you are looking.

Good luck!
btw - Where ya moving? I've got a house for sale ;-)

[trmaoy]

Originally Posted by Dr.Jim

As everyone says...depends on the property.

Alot of people that "must" move and are selling their houses might be able to take a large hit. But, the majority of people will simply not lose 50K on a house, especially if they dont have much equity.

The law of supply and demand does help dictate houses,....but when sellers simply "cant" lower their price, there isnt much a buyer can do. I think the "bottom" of the market will not be what these statistics predict, but will instead be based on the stats of what sellers will consider the "no go below" point.

Assess each house individually, and as mentioned look at comps, previous sales, see what the average difference in asking price to sales price is in the area you are looking.

Good luck!
btw - Where ya moving? I've got a house for sale ;-)

This makes sense because if everyone was able to stick to the price that they wanted (within market reason), buyers would have no choice. In essence, sellers would dictate the market price. There is a family in my neighborhood asking for almost $300k more than what everyone else in the sub. is asking for. Yes, it sounds crazy, and I think they may be trying to make a point which is: sellers take a stand and stop giving your houses away.

But the reality is, people need to sell and will keep lowering their price. However, for buyers, prices for a good home in a good neighborhood WILL NOT drop down to rock bottom prices.