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Every home in your market is fairly priced? You seriously believe this?
And for someone so up on the price trends for your market, I'm surprised you don't even know when the peak of the bubble was there.
Finally, other than just asserting it why don't you expect prices to fall any more?
What happens when you don't have enough buyers for all of the $500K houses? I guess the ones that don't sell will be "fairly priced" and yet will still sit on the market forever. All those unsold "fairly priced" houses explain why inventory in your area is up double digit percentages compared to last year.
Yep, that's what I think!!!! And the 1/2mil in our area? yep, they will eventually sell or go off the market. Homes don't stay on the markt forever, no matter what their price range and that's in ANY type of market. Price is only one very SMALL percentage of why a home doesn't sell! Right now, it's because their just arent' enough buyers out there, period. But there will be, eventually, and those homes (all 26 of them in a town of 50,000+ thousand population) priced between 500-550K will sell, and not for ROCK bottom, price dropping prices!
While I think prices may continue to fall as the economy continues to weaken, I'm seeing trends that suggest that there is some leveling off, at least in my area.
First; the number of homes on the market has become steady, not necessarily because things are selling at the listed prices, but people have reached a point of capitulation. They are choosing to wait or change what it is that they are doing.
Second; bank-owned properties are dominating the selling. Banks are dealing with real estate as a business and dropping price until they have a contract. The result is that the buyers are beginning to see a sense of urgency. They see a "bargain" but by the time they inquire about the property it's under contract.
Third; the foreclosure landscape is changing, banks are working harder to re-work the mortgage, so short sales of owner occupied homes are starting to come off the market.
Finally; As prices have returned to 2000-2002 levels in my area, there is a bit of cherry picking going on. So the really special properties have sold or will be selling. So what you have to choose from in the lowered price of homes in the future will not be the same quality of property. When comparing median sales values you really won't be comparing the same properties.
I believe prices are still dropping in Chicago area.
I just found a 2-flat brick with finished basement and garage at 2113 w cortland in Chicago listed for 495K. It is not a foreclosure or short sale with 7K annual property taxes. I would not have been able to find such a property six months ago for such a price. My guess is it sells quickly but you know as well as I do that this is a good price for a place in a great neighborhood. I am thinking of putting in an offer for this place even though I think prices will continue to drop because I think it is such a good deal.
Your thoughts? I think you know that area of bucktown, near armitage and damen.
I know the neigborhood, given my husband grew up there. I do not however,work the area.
It was originally listed for $598 at the end of August.
Did you notice what the owners paid in 1988 which says all that can be said for how this neighborhood appreciatd in 20 years.
( I shoulda/woulda/coulda).
I have no idea if it could cash flow in its current condition, given there are only 2 units.
I am curious about the longer term potential to convert this to a single family home, ala 2060 N. Oakley. SF is hot stuff in BT.
What happens when you don't have enough buyers for all of the $500K houses? I guess the ones that don't sell will be "fairly priced" and yet will still sit on the market forever. All those unsold "fairly priced" houses explain why inventory in your area is up double digit percentages compared to last year.
And after soaking in this particular comment (above): to reiterate, I'm thinking this might be the most absurd comment you've made yet! So I assume that if there aren't enough buyers for the $500,000 houses or for that matter, any price above that, we should all expect them to go down to a price that you (and the rest who think homes are still "too high") have decided is what everyone should afford; ie median affordability? Hence, the other part of the article you clearly missed, given home "values" altered by amount of down payment, affording the same 28% income to value ratio where interest rates and monthly mortgages are considered. LOAN amount is what the affordability one can afford to pay for a house. If a house is $500,000 and someone has 150,000 they want to put into it, hence leaving them with a mtg. of $350,000, then that's the choice they make rather than buying a home priced at $350,000, which by the way, will be MUCH less home in our area, and not putting any money down. So your comment makes even less sense than when I originally read it. Hope you read my post to Humboldt too. I explain much about OUR AREA, one you clearly DO NOT understand! And if you still insist you didn't "forcast" your Raleigh/triangle area going down, then I assume you think your area is ammune from all the "data" you do post about ours and the rest of the nation? I am somewhat curious, at this point, what your interest is in the hope that our area goes down. Why so passionate about argueing with me over my Chicago suburb? Are you wishing to move here and mad that prices are still "too high" for your standards? You call me desperate in my claims but I envision you desperately seeking any and all data you can find to support your "aspirations". We can all find articles to support our cause, I just don't and at this point, I don't just to pi$$ you off 'cause you want them so badly! That's hardly desperate. At this point, We sold our $550,000 dollar home, a few moths ago, and have no "vested interest" in being right. And after owning both previous and new for 11 months simaltaneously, I'm glad we "held out" for the right price. In acctuality, we only listed in March of this year and had a contract by June, closed in August. I guess we were priced "aggressively" (NOT!!- priced at market value based on recent comps!) We're not at all worried about the new one as we are more than able to pay for it, have only a 55% LTV on it, and are staying for a long time. Unless, of course, we decide to move to the Raleigh area, where clearly you can get quite a bit more home for the same money. Maybe I should start "job hunting". No wait, I own my own company- no reason to risk our firm because I want to "buy a home" for less money! We'll stay in the Chicago area. I'ts all relative and always has been. The home we built would probably still cost double(or more) in the better parts of California but 1/2 in the better parts of Raleigh, yet probably about the same in places like Pinehurst in your state of NC. I guess we're right in the middle (no pun intended!)
I could make it cashflow by living in the basement and renting out the other units. I am doing this now where I am at. This would just be in a better area. I would of course have to inspect the place. I would buy it for $400K if I could, but I suspect it fetches $450K, and fairly quickly. We will see.
Everything in that area of Bucktown skyrocketed in value over the past 20 years. I wish I were 10 years older and had bought real estate in 1994 instead of 2004, but such is life.
I will let you guys know what it ends up going for. This is a reasonable price and I don't expect it to sit on the market long unless there are some problems with the building.
I could make it cashflow by living in the basement and renting out the other units. I am doing this now where I am at. This would just be in a better area. I would of course have to inspect the place. I would buy it for $400K if I could, but I suspect it fetches $450K, and fairly quickly. We will see.
Everything in that area of Bucktown skyrocketed in value over the past 20 years. I wish I were 10 years older and had bought real estate in 1994 instead of 2004, but such is life.
I will let you guys know what it ends up going for. This is a reasonable price and I don't expect it to sit on the market long unless there are some problems with the building.
Thanks for the Aug 08 list price.
Humboldt,
Did you see my previous response to you? Just curious what you think. Also, this place was listed originally, just 2 short months ago, for nearly $600,000- am I reading that correctly? If so, why the drastic slash in price after only 2 months time (there must be something we're all missing here)? And you'd pay $400 but think it will bring $450? That's another nearly 30% off of the August price, assuming it would have been even higher 2 years ago or even last year or from "peak"? What's your guess at it's value at peak? I would guess that at $498,000 they are not willing to go much lower since they already reduced it 17% since August, unless, of course their is a missing piece of this puzzle.
What happens when you don't have enough buyers for all of the $500K houses? I guess the ones that don't sell will be "fairly priced" and yet will still sit on the market forever. All those unsold "fairly priced" houses explain why inventory in your area is up double digit percentages compared to last year.
I think KCfromNC may be smarter than some think he/she is. Here is an article by one of Barack Obama's economic advisors that describes what he/she is talking about.
Cheers, cubsfan
September 23, 2007 Economic View A Reality Check for Home Sellers By
AUSTAN GOOLSBEE
ECONOMISTS and other humans don’t always see eye to eye. “Economists
tend to think people are crazy because they won’t sell their houses for
less than they paid for them — and people think economists are crazy for
thinking things exactly like that,” said Professor Christopher Mayer,
director of the Paul Milstein Center for Real Estate at Columbia
Business School and an authority on real estate economics.
Moderator cut: please, provide links instead of copying entire articles
After reading and re-reading the post by cubsfan, then reading and re-reading Ben Engebreth article, I felt a great deal of angst relative to the extent and duration of the current housing market.
However, I think you can make a argument that there has been a de-coupling from median housing prices and median wage as a result of the changing age demographic and the tax laws that have been in place for decades.
With an aging population, most families have bought and sold a number of homes. Until the 90's the tax laws encouraged buying up in order to defer capital gains. Using me as an example; during the 70's and 80's I purchased and sold 5 houses. Each time I purchased a more expensive home while maintaining 25% ratio of housing costs to income. The proceeds of each sale became my down payment on the next house. The result was that each time my loan to value ratio went down and the ratio of my house value to my income went up.
I can't believe that my situation is so unique. Over time an aging population has had the ability to purchase more house or more desirable location because they were able to build wealth over time. The result is that median house prices appear to be overvalued relative to the median income of an area.
I think that the most important thing to identifying a healthy housing market, is are there affordable homes for entry level families.
While many homes in my area are not a option for the typical working family, there is a sufficient number of homes available for the affordability ratio needed by first time buyers. Homes in nice, safe neighborhoods with good schools.
This is a really insightful post. It parallels the thinking of many economists with respect to changing demographics and housing.
Think the current housing downturn and the subprime mortgage mess is the worst of the housing market’s problems? Not so, according to a report published this month in the Journal of the American Planning Association.
I will let you guys know what it ends up going for. This is a reasonable price and I don't expect it to sit on the market long unless there are some problems with the building.
Why don't you go into this place. It might be a total gut job and $400 is too much.
I am actually thinking of seeing it this weekend and contacted my city realtor to set up a showing. There may be some issue with the place that both you and FMV noted. I am not in the business of buying gut jobs. I want a place that is either filled or nearly ready to move in condition.
FMV,
I would snap it up for 450K if I had to move but I can afford to wait, especially with prices continuing to drop, especially in 2-4 flats in Chicago. I will have to see the inside to know whether or not it is even worth 400K.
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Middle Aged Mom
