homes are still overpriced, or not? (RE agent, 2011, foreclosure, 2%)

[stuckindenial]

i have been house-hunting for more than 1.5 years. in the beginning, at the start of 08, homes were overpriced in my area about 200k. now, in sept. 2009, they are still overpriced about 100k. i have surmised this because the homes that are priced fairly sell immediately (plus the short sales/REOs sell quick). the average homes that are overpriced by 50-100k sit for months (unless they are in impeccable shape w/ brazilian hardwoods and quartz etc.).

or maybe i am in denial about the prices in my neighborhood of choice?

nearly every new listing that i get is about 100k overpriced; the only ones that are priced fairly are the REOs/short sales and the few regular sellers who price to sell. i am starting to notice this trend that every time i get a new regular (non distressed) listing, most of the time i think to myself "that house is not worth 499k, maybe 399k, sure."

where i am looking is hard to comp because it's old parts of town with 70-year-old shacks that are un-renovated next to million-dollar new-builds.

am i in denial about home prices? are many areas still 10-20% overpriced? or should i be looking in cheaper parts of town?

i'd especially like to hear from buyers who have gone through this dilemma.

[chet everett]

You need to change your shopping habits. I have dealt with shoppers who thought nothing of looking at homes that spanned a multi-hundred thousand dollar price range -- sorry, the difference even with super low rates is going to be HUGE month-in-month-out, add in property taxes and other expenses and there is no real reason to shop such a wide range unless you can afford the upper end stuff and are considering the lower price stuff to renovate.

You really will have a much better experience if you stick to a fairly narrow price range and try to find the homes in that price range that best serve your needs. If you cannot find anything in your price range that serves your needs I would suggest you stay put. Some people are better off renting for a period.

Good Luck!

[homeowner35]

Originally Posted by stuckindenial

i have been house-hunting for more than 1.5 years. in the beginning, at the start of 08, homes were overpriced in my area about 200k. now, in sept. 2009, they are still overpriced about 100k. i have surmised this because the homes that are priced fairly sell immediately (plus the short sales/REOs sell quick). the average homes that are overpriced by 50-100k sit for months (unless they are in impeccable shape w/ brazilian hardwoods and quartz etc.).

or maybe i am in denial about the prices in my neighborhood of choice?

nearly every new listing that i get is about 100k overpriced; the only ones that are priced fairly are the REOs/short sales and the few regular sellers who price to sell. i am starting to notice this trend that every time i get a new regular (non distressed) listing, most of the time i think to myself "that house is not worth 499k, maybe 399k, sure."

where i am looking is hard to comp because it's old parts of town with 70-year-old shacks that are un-renovated next to million-dollar new-builds.

am i in denial about home prices? are many areas still 10-20% overpriced? or should i be looking in cheaper parts of town?

i'd especially like to hear from buyers who have gone through this dilemma.

Homes are worth what people will pay for them. If people are starting to buy then the homes are priced appropriately. Why should a person with a nicely updated home give it away? Home updates are expensive. Personally, I think people should not sell their homes unless they have too. Let the buyers fight over the foreclosures. Happy shopping!

[tworent]

If they are selling immediately they are under priced most people would be willing to wait a few months for 50-100k

[lovesMountains]

Originally Posted by stuckindenial

i have been house-hunting for more than 1.5 years. in the beginning, at the start of 08, homes were overpriced in my area about 200k. now, in sept. 2009, they are still overpriced about 100k. i have surmised this because the homes that are priced fairly sell immediately (plus the short sales/REOs sell quick). the average homes that are overpriced by 50-100k sit for months (unless they are in impeccable shape w/ brazilian hardwoods and quartz etc.).

or maybe i am in denial about the prices in my neighborhood of choice?

nearly every new listing that i get is about 100k overpriced; the only ones that are priced fairly are the REOs/short sales and the few regular sellers who price to sell. i am starting to notice this trend that every time i get a new regular (non distressed) listing, most of the time i think to myself "that house is not worth 499k, maybe 399k, sure."

where i am looking is hard to comp because it's old parts of town with 70-year-old shacks that are un-renovated next to million-dollar new-builds.

am i in denial about home prices? are many areas still 10-20% overpriced? or should i be looking in cheaper parts of town?

i'd especially like to hear from buyers who have gone through this dilemma.

Wondering what criteria you are using to determine these homes are overpriced, especially by so much?

If the homes in that neighborhood are selling THOSE prices will tell you what the neighborhood price point is. Are you saying NO homes in this neighborhood are selling?

[cohdane]

We started looking in January '08. Coincidentally, a home out here that went on in February '08 took it's latest price reduction today. It's at $930k. It originally listed at $1.6 million. Brand new construction, top everything, decent street, etc. A more modest house originally priced in '08 at $450k also took a price cut today-- currently $250k.

Since we're headed into fall when prices will cliff dive again (here) I'm content to wait.

It REALLY depends on your market. Some are leveling out (maybe). Mine has record high inventory and record low sales. Plus the rate of foreclosure notices has really spiked in the last few months, so my bet is it's going to get waaaaay uglier before things even out. That's not even factoring in the Option ARM mess that's about to unfold.

Yeah, home updates are expensive. That's why people took out HELOCs to pay for them, which they now can't repay since their rates are recasting and their house is worth less than what they put into it. Horrible stuff happening. A pretty remodel out here is the first sign there may be trouble brewing. After all, no sane person out here would list their house right now unless they knew they were screwed if they didn't. I can't tell how many slowly rotting corpses there are in my zipcode, but the prospects terrify me. At this point, I'm wondering what happens to a fancy suburb when its property tax base suddenly implodes. Is it still worth buying here?

Find out: What are the inventory levels in your area. How many months' supply is that. What is the list to sell ratio. This will help you predict/guess where prices are headed. It's a crap shoot no matter how you slice it. By now, I would've figured interest rates would be 8%. I don't see anyway they can stay low till spring, etc, etc, etc, etc.

Good luck to all of us.

[RobE]

If some of the activity over the last month or two in Orange County, CA is any indication, the market still has some ways to fall. The upper income areas are now starting to feel the wetness of an oncoming financial bath while the middle class areas are still a tad soft. Only the lowest income areas seem to be firming up. In other words, if you want to buy in the hood, you will probably have a stable home value.

Of course, there is still shadow inventory that has to come on to the market. One third of all mortgages are underwater right now and FHA's share of the market has gone from 8% to 18%, which means that the banks are still tight on credit. The rate of unemployment growth has slowed, but that only means more folks will be out of work. Underemployment, though, does not get talked as much as it should in the media because that is going to impact everything from cars to housing.

In Washington state, the housing market is very soft (down 10% against last year) and lots of SFRs are now rentals (like in my development). There is a nearly new development (finished early last year) out by the Amtrak station where I live. Only about half the homes there are occupied.

Every market is unique, but I don't think what we are seeing in a couple of areas I am familiar with is exactly rare right now. My advice: hold off until the last quarter of 2010 or early 2011.

[JohnG72]

Originally Posted by chet everett

You really will have a much better experience if you stick to a fairly narrow price range and try to find the homes in that price range that best serve your needs. If you cannot find anything in your price range that serves your needs I would suggest you stay put. Some people are better off renting for a period.

I have never before heard a RE agent make such an honest statement. Most of the RE people on this board(I've been reading since April) are very good and knoweldgable.

Ethical too...wow!

As to OP's question....I think it depends where you live. Where I live, inventory on the low end(SF Valley...low end is $200K-400K) has dried up so much that literally the only properties available are total remodels/teardowns or the ones that are overpriced with sellers who have unrealistic expectations. Most of these are priced $350-550K and 1500 sq ft or so and just aren't going to sell when there are monster houses(2500-3000 sq ft) in very nice areas under foreclosure for $450-600K).

Anyway, with the average household income in the area around $45-55K, you can see that even the nonexistent low end is overpriced. Prices will come down, thinks just need to shake down a bit more.

[rubber_factory]

Originally Posted by stuckindenial

i have been house-hunting for more than 1.5 years. in the beginning, at the start of 08, homes were overpriced in my area about 200k. now, in sept. 2009, they are still overpriced about 100k. i have surmised this because the homes that are priced fairly sell immediately (plus the short sales/REOs sell quick). the average homes that are overpriced by 50-100k sit for months (unless they are in impeccable shape w/ brazilian hardwoods and quartz etc.).

or maybe i am in denial about the prices in my neighborhood of choice?

nearly every new listing that i get is about 100k overpriced; the only ones that are priced fairly are the REOs/short sales and the few regular sellers who price to sell. i am starting to notice this trend that every time i get a new regular (non distressed) listing, most of the time i think to myself "that house is not worth 499k, maybe 399k, sure."

where i am looking is hard to comp because it's old parts of town with 70-year-old shacks that are un-renovated next to million-dollar new-builds.

am i in denial about home prices? are many areas still 10-20% overpriced? or should i be looking in cheaper parts of town?

i'd especially like to hear from buyers who have gone through this dilemma.

Sellers often have a number in mind. That number can be the home's value at peak, or it can be the number they need to pay the mortgage off, or it can be what a house down the street sold for 3 years ago, or it could be totally arbitrary. I've found that sellers will use their tax assessment value as a justification for asking price, which obviously makes no sense.

Real estate agents have a number in mind. That number is the market value, or at least a guesstimate at what a buyer and the seller will agree the house is worth right now. That number contains no attempt whatsoever at predicting future value, it is 100% focused on current value.

In my opinion - As a buyer, these numbers are psychological obstacles. To reach my goal (Not losing my ass), I attempt to predict future prices, although some folks will tell you "Not to try." In the past few years I've saved myself a boatload of money by reseaching property, applying simple arithmetic, looking at every house in terms of annual price appreciation. That is to say, if a house went up in value 2% annually from 1970 - 1995, then it is an abberation for it to have risen in value 5%, or 10% annually from 2003-2008. It will correct from that abberation, and if it doesn't, I won't buy it. Your goals may be different than mine, though.

[Tenzo]

By definition; what people pay for them is what they are worth