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Too many sellers are listing too high. This is understandable, since just a few years ago they were told their houses were worth much more. It's hard to just let go of 50k, 100k, (or more?) when you thought at one point that it was money in the bank.
A house in my neighborhood (in Sammamish) has been for sale over a year, not well priced so there it sits. A couple weeks ago, 4 more houses in my neighborhood all listed within a day or 2 of each other. All 4 were priced better (not necessarily lower, just better given the particular house and it's features) and all 4 were pending in less than a week. There are buyers, but they want a fair price, not a 2007 price. And at this point, not a 2005 price either!
Too many sellers are listing too high. This is understandable, since just a few years ago they were told their houses were worth much more. It's hard to just let go of 50k, 100k, (or more?) when you thought at one point that it was money in the bank.
A house in my neighborhood (in Sammamish) has been for sale over a year, not well priced so there it sits. A couple weeks ago, 4 more houses in my neighborhood all listed within a day or 2 of each other. All 4 were priced better (not necessarily lower, just better given the particular house and it's features) and all 4 were pending in less than a week. There are buyers, but they want a fair price, not a 2007 price. And at this point, not a 2005 price either!
I just read somewhere that in the Seattle area, we're now down to June, 2004 prices. A lot of people bought with zero or low down payments in recent years. They owe a lot more on their houses than the house is currently worth. So if they wanted to sell it, they'd have to bring cash( a cashier's check) to the closing table.
If you bought a house four years ago for 500,000 dollars, and you could sell it now for 350 ( around the average Seattle area decline since the peak)and you did a zero down loan, you'd still owe close to 500,000. You got that 150+ thou in cash to cover the gap?
Some people are stuck between a rock and a hard place. They really want out of their houses, but can't afford to, and can't afford not to. Some people are just walking away, or mailing the keys back to the bank. Others work with the bank to do a deed in lieu of foreclosure, which is basically just giving the house back.
I just read somewhere that in the Seattle area, we're now down to June, 2004 prices. A lot of people bought with zero or low down payments in recent years. They owe a lot more on their houses than the house is currently worth. So if they wanted to sell it, they'd have to bring cash( a cashier's check) to the closing table.
If you bought a house four years ago for 500,000 dollars, and you could sell it now for 350 ( around the average Seattle area decline since the peak)and you did a zero down loan, you'd still owe close to 500,000. You got that 150+ thou in cash to cover the gap?
Some people are stuck between a rock and a hard place. They really want out of their houses, but can't afford to, and can't afford not to. Some people are just walking away, or mailing the keys back to the bank. Others work with the bank to do a deed in lieu of foreclosure, which is basically just giving the house back.
There are some people who seem to be panic selling as if the house was a stock, instead of continuing to pay on their house and treating it as a basic necessity (shelter).
It reflects the change in ideology in last seven-eight years, where the house is now viewed less as a long term investment and more like a piggy bank and short term investment (home equity loans).
There are some people who seem to be panic selling as if the house was a stock, instead of continuing to pay on their house and treating it as a basic necessity (shelter).
It reflects the change in ideology in last seven-eight years, where the house is now viewed less as a long term investment and more like a piggy bank and short term investment (home equity loans).
It's funny, four or five years ago a lot of real estate agents were hawking houses as if they were stocks. touting how much they'd gone up, how they were a great investment, how they're going to keep going up,how Seattle was immune from price drops ( hah!) and that if you didn't buy now you'd be priced out forever.
Fast forward four or five years:
Houses still might not be a good investment, but they're certainly better than they were four years ago.
But many agents are now suggesting that houses should not be seen as investments, but as a basic necessity, a shelter, security, a nest...oh, and how you need to buy now because interest rates are going to go up. Like they know. Like they knew four years ago.
What's a house worth? Whatever someone is willing to pay for it.
When I bought the house I'm presently in, I did so knowing full well the value would continue to go down through 2011 (and, to the best of my knowledge, it has - though admittedly I haven't bothered to look to see what a price per square foot average the area has at present). But, the house had a story and belonged to someone I found interesting, I wanted it, so I paid. I don't really care, because I *live* in it. In this regard, the real estate agents trying to hawk houses as domiciles instead of investments have it right. Anyone who purchases a house as an ATM machine is doing it for the wrong reasons, and is just asking for trouble. Property values are a very fluid concept that can't be easily tracked or trended for investment purposes and, unlike a stock equity, you can't easily extract yourself at the push of a button if things start to turn sour. Leave the gambling to your E*Trade accounts (and btw, Woohoo, go CSTR and SWKS today!)
It's funny, four or five years ago a lot of real estate agents were hawking houses as if they were stocks. touting how much they'd gone up, how they were a great investment, how they're going to keep going up,how Seattle was immune from price drops ( hah!) and that if you didn't buy now you'd be priced out forever.
Fast forward four or five years:
Houses still might not be a good investment, but they're certainly better than they were four years ago.
But many agents are now suggesting that houses should not be seen as investments, but as a basic necessity, a shelter, security, a nest...oh, and how you need to buy now because interest rates are going to go up. Like they know. Like they knew four years ago.
There was a whole cottage industry devoted to "flipping" places. I let a lot of that stuff flow by without paying much attention to it, but I was shocked to learn how the lending standards had eroded.
I kept seeing this number: 40%. During the last two years of the market runup, that percentage of loans were for 2nd homes. My comment: "This country isn't wealthy enough that 40% of the population can afford a 2nd home"...
Xanathos said:
"In this regard, the real estate agents trying to hawk houses as domiciles instead of investments have it right."
Absolutely, but these same agents only a few years ago were bleeting about the investment wisdom of buying a house...
Speaking of investing, I used to own CSTR, about 10-12 years ago. Bought it at 8 something a share, it immediately shot up to 35 and then crashed. I sold mine at 11, not a horrible return for a couple of years of ownership, but considering that I could have sold it at it's high, or held on until it went back up to 60 something...doesn't exactly make me look like Einstein.
It is not such a bad concept to consider a Single Family Residence (SFR) as the liability it is, rather than the asset it is presumed to be. I have advise my kids to consider using their real estate investments as financial tools rather than piggy banks. Thus I would prefer to own positive cash flowing multi-family residences (MFR) which will provide enough cash to rent wherever I can afford.
It's hard knowing some people who bought the hype and got a tiny abode in a marginal neighborhood when today they'd have awesome houses in more desirable neighborhoods. I keep telling a few of them to simply walk away especially since they have 30 years left to "repair" their credit rating.
Some have lost 50% of their value.
I simply point to traditional trends of income vs. home price in the Seattle area. The Microsoft rush barely put a dent in it and it's survived WWII, Boeing, the cold war and the bad years and love and peace, the dotcom boom, and then suddenly, loose money unleashed in 2002. It got ridiculous in 2008 then ... CRASH.
I fully expect prices to go down further, though I do think the light is at the end of the tunnel.
I'm considering buying some property for rentals, but I don't know anyone with enough time to manage it or upkeep it ... a shame, since I think I could probably get in on the apartment / rental property crunch going on right now.
... on that note, anyone willing to manage and maintain rental properties and anyone know some people able to kick some butt to keep the rabble that typically rents in line?
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