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If they are selling, they are not overpriced. Period. What *you* feel about the price is irrelevant to the market.
You need to move on from Westfield - go west.
I could not agree with you more on this point! The buyer is very educated these days because they have witnessed this economic downturn first hand and even if they aren't, the appraisers sure are! Appraisers today are now regulated by the state and they are not allowing purchasers to overpay because if they do, they simply can loose their license. This appraisal "game" as I like to call it is killing deals left and right, and I am witnessing it first hand, so I must agree, if they are selling they are definately not overpriced.
The whole reason for these thoughts are because everyone now expects to get a steal and it is just not happening like they imagine in their dreams so they get upset. You can still get a great deal on a home today through several avenues (standard sale, short sale, foreclosure), and with interest rates on homes being at record lows, I would buy now (and I did), because the 5-10% I could "possibly" save in the next year will be negated by the interest rate possibly going up by then. Come on lets think about it, when in history could you purchase a home at less than a 5% interest rate? It is free money; well not quite free, but pretty darn close!
Appraisers today are now regulated by the state and they are not allowing purchasers to overpay because if they do, they simply can loose their license. This appraisal "game" as I like to call it is killing deals left and right, and I am witnessing it first hand, so I must agree, if they are selling they are definately not overpriced.
So if its killing deals left and right, then the buyer is overpaying based on what the appraiser's report says. So again, it again comes to perceived value. Buyers may have the tools, but dont have the will power and are losing patience for potentially losing out on a house or missing the bottom. So its a fear driven market for some, not all.
The appraiser is out to protect the interest of their clients as well as their livelihood. Because the bank still owns the house if you are in mortgage and taking on another asset that has not been thoroughly valued is a problem. I have seen lenders asking for 2nd and 3rd appraisals because the underwriter or processor was not satisfied with the comps.
In a declining market, comps have a tough time trying to navigate distressed sale values. Its all local right now.
I am fighting it! I think if buyers are more educated about the process, and do not get carried away, or pushed by, realtors, we can affect a pricing correction. Even in Westfield! Or, maybe not. Then I may go West indeed.
Seems like you are just upset at what the current market value is for these houses and are trying to pin "blame" on someone. Perhaps this area is just too expensive for you and you should look elswhere.
actually, that's exactly what makes something valuable. BMW's have been deemed "luxury" vehicles. but are they? they are mostly sport-performance vehicles, with poor quality, and not very luxurious interiors. but slightly more luxurious than some other vehicles. yet, an image has been sold to people, so people grossly overpay for a BMW. don't get me wrong, I like them. but they are not worth anywhere near what their price tag is. that's why they had to introduce "free maintenance" to win customers back.
as for houses in westfield, if more people value houses in westfield at higher prices than you do...and it's enough people to purchase the inventory of houses in westfield...well then...you're SOL.
I totally agree with what you said. Now replace every reference to BMW above, with reference to certain hot areas in NJ, such as WF, Millburn and such, and you will know exactly what I mean. I am not really debating the merits of a free market economy, I just think when masses deem something good or valuable, doesn't mean it is. I think someone else in this thread keeps making the argument that if someone is willing to pay X for car or house, then that car or house is worth X. I guess I disagree with that viewpoint.
I think someone else in this thread keeps making the argument that if someone is willing to pay X for car or house, then that car or house is worth X. I guess I disagree with that viewpoint.
I also agree.
Its a short cut way to not make a statement behind the reasons why said purchase was made, just that it is what it is.....after the fact as to how a buyer values an asset.
Its not wrong, but about as useful as a sports commentator saying "The reason team X won that game was because team Y didnt score enough points".
Yeah, thanks for "info" Monday morning QB.
I totally agree with what you said. Now replace every reference to BMW above, with reference to certain hot areas in NJ, such as WF, Millburn and such, and you will know exactly what I mean. I am not really debating the merits of a free market economy, I just think when masses deem something good or valuable, doesn't mean it is. I think someone else in this thread keeps making the argument that if someone is willing to pay X for car or house, then that car or house is worth X. I guess I disagree with that viewpoint.
If you don't accept that a home's value can only be determined by what someone is willing to pay, please then explain how you think the value of a home should be determined.
If you don't accept that a home's value can only be determined by what someone is willing to pay, please then explain how you think the value of a home should be determined.
Not to defend lina, you are missing the point I think. I would venture to say that a decent percetage of buyers are buying out of fear (getting priced out when market picks up agian, "thinking" renting is throwing money out the window et etc) which indirectly affects "what" they will pay, or what the bank says they can afford. So if Jumbo loans are going bye bye or FHA has loan limit extensiosn ending after the summer, guess what? Those 600k + houses in Westfield will just sit there, IF a the buyers have been buying with FHA or jumbo mortgages until that change. Once that limit is set, will that house still be worth 600k to the buyer that was qualified for 600k back in the jumbo days? Or will the market force to the loan restrictions that target those potential buyers?
Remember that its the availability of credit to a buyer that also plays a factor if you are going to finance the purchase. Availablity of homes in the area as well. if its an area that has no been heavily linked to distressed sales (that arent on the radar yet) it "must be" a better area.
Not to defend lina, you are missing the point I think. I would venture to say that a decent percetage of buyers are buying out of fear (getting priced out when market picks up agian, "thinking" renting is throwing money out the window et etc) which indirectly affects "what" they will pay, or what the bank says they can afford. So if Jumbo loans are going bye bye or FHA has loan limit extensiosn ending after the summer, guess what? Those 600k + houses in Westfield will just sit there, IF a the buyers have been buying with FHA or jumbo mortgages until that change. Once that limit is set, will that house still be worth 600k to the buyer that was qualified for 600k back in the jumbo days? Or will the market force to the loan restrictions that target those potential buyers?
Remember that its the availability of credit to a buyer that also plays a factor if you are going to finance the purchase. Availablity of homes in the area as well. if its an area that has no been heavily linked to distressed sales (that arent on the radar yet) it "must be" a better area.
fear or not, it doesn't matter. homes in Phoenix that sold for $600K back in '05 that would fetch only $150K today sold in 05 for market value.
Hal's question remains - how do you determine market value if not by what people are willing to pay?
If you don't accept that a home's value can only be determined by what someone is willing to pay, please then explain how you think the value of a home should be determined.
Lets put away for a minute the town itself. I think folks here think that I am so in WF that I am upset because of its high prices. Not so, I just want to understand why folks are willing to overspend. I totally understand the value of good schools and a fair commute. But when I look at houses, I tend to look at the basics. Is the foundation solid, or is it leaking like a sieve? Is the roof good? Are there cracks all around the exterior? Is the wiring up to date or is the entire floor on a single braker? Is the central AC my age, and parts are impossible to come by? Is the kitchen functional (not fancy, but functional)? Are the bathrooms functional? Is the layout real or is it an original 2 bedroom converted into 4 bedroom without closets? All these, and many other considerations, play into my calculation of value. I honestly do not understand why or how (unless you just have way more money to spend than I do) would you buy a house for over 800K with serious foundation issues. Not hairline cracks, but serious issues. So my whole discussion about value is trying to get at motivation of the buyer, especially in this economy. Are they afraid that they are missing a deal?
That is why I do not find the position that if someone is willing to pay for it then it is worth it, very helpful. It does not explain why someone is willing to do it. I wish someone who has done it would explain. One of my friends bought a house in Millburn with serious foundation issues, got into a bidding war over it too. He has deep, deep regrets about having bought it. It will cost at least 200K to fix it. When I ask him why he did it, he says that the whole process of wanting to move, wanting to be in Millburn, aggressive realtor, bidding frenzy, deprived him of all common sense. Is that it then? Communal loss of common sense. I am truly curious.
fear or not, it doesn't matter. homes in Phoenix that sold for $600K back in '05 that would fetch only $150K today sold in 05 for market value.
Hal's question remains - how do you determine market value if not by what people are willing to pay?
You just answered the question whether or not you realize it. So the 600k Phoenix house is still not "worth" 600k because it was artificially inflated by loose credit. This only triggered people to not think about the true value under a normal set of lending standards. So that helped push values, because basically there were no rules and sales drove the market and prices, but based on false pretenses.
The housing problem was a credit problem and in some markets, speculation drove sales, plain and simple. People are gonna spend what the bank gives them. No mystery there.
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I am not really debating the merits of a free market economy, I just think when masses deem something good or valuable, doesn't mean it is. I think someone else in this thread keeps making the argument that if someone is willing to pay X for car or house, then that car or house is worth X. I guess I disagree with that viewpoint.
