NOVA is not immune (Arlington, Reston: short sales, foreclosed, renting)

[mojo_1979]

Originally Posted by normie

Well, if you don't wish to use the proper terminology, that is your choice. And, if you think that the way to buy a house is to pay the asking price, that is your choice, too.

As I just said, a house is not like an item for sale with a non-negotiable price tag. A house is worth what a buyer is willing to pay for it. Therefore, there is no need to wait to buy a house--just look for a seller who is willing to sell his property now for what it will be worth when it hits bottom.

No need to put words into my mouth. Please show me where I said that "the way to buy a house is to pay the asking price"... funny but somehow I don't recall ever saying that. Maybe you can enlighten me.

Anybody, at any time, within any type of market, can (and should) offer less than listing price.... Having that ability does not imply a buyers or sellers market because the potential buyer has that right at any time. My point is that it is not a buyers market because sellers are still dillusional about what their house is "worth".

[claude henry smoot]

Originally Posted by mojo_1979

...sellers are still dillusional about what their house is "worth".

I agree that many sellers are still delusional as to what their home should sell for. For those who don't follow housing/mortgage news - they don't understand what's happening. They don't understand why their home price rose so quickly in the first place, and they certainly don't understand why prices are falling. It'll sink in eventually - but slowly.

That being said - it's important to realize many of these sellers who aren't coming down on prices simply may have NO CHOICE. I work with quite a few people who bought in the middle of the boom - they have little/no equity in their homes - homes which have all lost ~$100,000 in value over the past year. These folks are upside down in their mortgages and are trapped. If they can't sell their at their asking price, they are in serious trouble. So some folks may be delusional, but there are others who are flat-out desperate.

[normie]

Originally Posted by mojo_1979

No need to put words into my mouth. Please show me where I said that "the way to buy a house is to pay the asking price"... funny but somehow I don't recall ever saying that. Maybe you can enlighten me.

In your previous post, you tried to compare buying a house from an individual (a highly negotiable item) to buying a car from a manufacturer (an item with a fixed price tag. You might be able to get away with not paying extra charges added by a dealer, but you are obligated to pay the pre-determined price tag.)

People who think buying a house is like buying a car tend to be people who pay the seller's original asking price (or very close to it). That's becuase they think it is a "price tag." Also, people who obsess over "waiting for the price to drop" have the same tendencies. You have more power than you think, it's not like waiting for Honda to drop the price of the newest sedan.

Originally Posted by mojo_1979

Anybody, at any time, within any type of market, can (and should) offer less than listing price.... Having that ability does not imply a buyers or sellers market because the potential buyer has that right at any time.

Yes, anyone can make an offer at any time. However, it is the realistic expectation that a seller will accept such an offer that makes it a buyer's market.

You can argue about a definition all you want, it doesn't change it. Whether you think it's logical or not, we are in a buyer's market. What you are waiting for is the optimal, penultimate moment. And what's wrong with that? Nothing, of course! I was just trying to explain the definition since you said hearing the term made you want to puke.

Warning: long semantics discussion about to follow

Let me try to explain this using a different sort of example. I am a woman. I have all the female organs, so by definition I am a woman. But... I am also a retiree in my 60's.

If you and your buddies went out "looking for women" and someone pointed me out in a bar, you might say you weren't interested because I am "not a woman." That's because you created a "personal definition" that "looking for women" meant "looking for attractive women." (And you also created your own personal definition of what "attractive" should mean.)

Your buddies would probably understand what you meant. That would not change the fact that, by biological definition I am a woman.

Anyway, it's just semantics. You are entitled to have your own opinion as to what a word "should" mean, but if the term "buyers market" offends you be prepared to do a lot of puking because it is the correct term and you'll be hearing it a lot.

Originally Posted by mojo_1979

My point is that it is not a buyers market because sellers are still dillusional about what their house is "worth".

OK, this is a good point. As the year goes by an increasing number of people will be willing to lower what price they will accept for their house. People who have no choice, and people who don't know better, anyway. The smart ones will ride it out because the market will bounce back. Just an observation from having watched real estate over the years.

I still think the smartest buyers are the ones who look for sellers willing to negotiate now rather than wait for a "bottom". Because everyone is waiting for the bottom... If you can get the price now, you don't have to deal with any competition.

That's my financial strategy... but I'm a "pioneer" personality, the type of person who goes first. It's a strategy that works for me, but I have a lot of discipline and a lot of experience. Right now I own a number of properties, so I know what I'm doing and I know how to spot a good deal. There's nothing wrong with being a cautious player--in fact, it's a smart move to be cautious. Remember, whenever you make an investment you need to be able to kiss that money goodbye if it all goes wrong.

[normie]

Originally Posted by claude henry smoot

That being said - it's important to realize many of these sellers who aren't coming down on prices simply may have NO CHOICE. I work with quite a few people who bought in the middle of the boom - they have little/no equity in their homes - homes which have all lost ~$100,000 in value over the past year. These folks are upside down in their mortgages and are trapped. If they can't sell their at their asking price, they are in serious trouble.

I'm very sorry for those people, and I'm also very sad about the effect their problems will have on the general economy for the next year or so. Of course, I'm annoyed with them, too. There were plenty of warnings that there would be a housing bubble. Hundreds and hundreds of warnings in newspapers, magazines, television, radio. Now we have to clean up the mess, and the rich will just keep getting richer. I used to think that was unfair, but the older I get the more I see how people create their own problems by not educating themselves.

Ironically, some of those desparate people will do ok because they can't sell at a lower price. They will have a horribly rough year, but if they can somehow manage to hold onto the house they will come out ok in the end.

[claude henry smoot]

Originally Posted by normie

Ironically, some of those desparate people will do ok because they can't sell at a lower price.

People who don't need to sell "should" be ok, assuming they didn't extract every cent of equity in their home during the bubble. My guess is a lot of folks "did" extract a chunk of equity out, and in hindsight that was probably a bad idea.

The desperate people I was referring to are the ones who "have" to sell. Maybe their spouse has been transferred to California and someone has to stay behind to sell the house. Maybe the seller has realized their ARM loan is going to reset in July 2008 to an unaffordable rate and they need to sell now or face foreclosure. These are the folks that are going to be in trouble - and they are out there - in NOVA.

[normie]

Originally Posted by claude henry smoot

The desperate people I was referring to are the ones who "have" to sell. Maybe their spouse has been transferred to California and someone has to stay behind to sell the house. Maybe the seller has realized their ARM loan is going to reset in July 2008 to an unaffordable rate and they need to sell now or face foreclosure. These are the folks that are going to be in trouble - and they are out there - in NOVA.

Yes, those are tough situations, indeed.

My heart goes out to people who are transferred, and the company doesn't offer a plan to buy the house if it doesn't sell. Most times a company will try to work with an employee who is in a desparate situation (my uncle, for example, turned down a transfer with IBM because he did want to move his daughter from a special medical program).

It is usually in the company's best interest to have employees who are not distracted by desparate situations. But... reality is not all companies are good to their employees, and bad situations can happen.

[claude henry smoot]

Originally Posted by normie

Most times a company will try to work with an employee who is in a desparate situation

Good point - you're right. Let me change that example to "people who have found a new job and need to relocate". That would be different than a company transfer. If a person were to find a new job outside the DC Metro area and make plans to relocate, selling their home in this market would be a tough proposition.

[normie]

Gee, I didn't know there were so many people who haveto take a new job in another city that is not within commuting distance, even though that would mean financial disaster for them. You'd think most people who couldn't sell a house would choose to look for a job in the DC area.

I suppose it is conceivable that a person could be in a situation where they can't sell the house, can't get a tenant, can't afford to keep the house for investment, and on top of that they must move to a new city because for some strange reason that line of work is no longer available in the DC metro area. I do feel sorry for someone in that position.

[ariadel]

Normie:

As someone looking for houses, I am amazed at the numbers of bank owned properties all over the place... when a well-priced property is not owned by a bank, it's often 'subject to third party approval,' a good indicator that the seller may be trying to get the bank to agree to a sale at less than the balance of the loan. The banks seem to be in a very slow and laborious pricing war. One bank owned property with about the same sq ft/bed/bath combo will be reduced to 189, then another will be reduced to 185 the next week, then another to 180, then one to 177. It seems that the one or two lowest priced ones sell every few weeks, and the price reduction continues on the remaining ones, but slowly.

This huge glut of bank-owned properties shows that many people have been in the desperate state described in this thread and, sadly, have been unable to continue making their payments. The banks are now trying to sell their repossessed homes in a market rich with other homes in similar situations, a market that their financial advisors are likely telling them will only get worse.

I know that the banks are required to get the best price possible, or at least prove to their shareholders that they attempted to. However I also think banks are possibly less likely to be actively deluded about the value of the homes they have in their inventories, although they will still continue to attempt to get as much for them as is possible.

[El General]

A relative's house in Manassas is assessed at 468 for 2007. However, no one has even come to look at the bank owned home across the street, listed for 369K. There is some serious hemorrhaging going on.