Listing price versus market price in Westchester (White Plains, Yorktown: short sale, real estate)

[msamoyedny]

It seems to me that a lot of homes in Westchester are not being listed for market value. Sure, you have your random forclosure here and there that is below market, but otherwise I am seeing listing price for way above market. I have been searching in Thornwood, Hawthorne, Valhalla, PLeasantville, and North White Plains and most people are still listing their homes at 2005/2006 levels. I just can't believe that people think they can make a profit on a home they bought two years ago, when it's market value is $150K less! I saw a tiny house in Valhalla today for $575K, which is zestimated for $422K! The whole neighborhood is in the $300K and $400K, but was worth over $500K a few years ago. Can Zillow not be trusted or are these people just unrealistic? I'm getting frustrated with this area and I'm reconsidering Yorktown even though my commute will be longer to Greenwich.

[halfoffpeak]

You need to wait. Right now sellers insist on bubble prices. This is because there always fools who live in a different planet and may give them what they ask. But nothing is moving and inventory is building up. Prices will go down this spring as some people need to sell and buy, but there will be more price cuts the next couple of years.

There was a huge bubble and the correction will be 50% off the peak prices which is about 1999 pricing. I believe prices will go down more as in 1999 the economy was stronger but today we are in the worst recession since depression. Anyone who buys now risks being under water for life. Try to rent.

[bmwguydc]

Originally Posted by msamoyedny

Can Zillow not be trusted or are these people just unrealistic?

A little bit of both. Zillow's methodology is strange, to put it mildly, placing a low value on some houses and a high value on others. I noticed this with a friend's house, since hers was for some odd reason valued lower than the neighbor's house with a similar layout, though hers had extra features. The zestimate was way off the mark from where she eventually sold, though people came into the open houses with it in hand expecting a bargain.

If you want an accurate method, have your agent pull comps to see what's been selling and for what price in the area, and then evaluate this information in terms of condition and additional features. It's a little more time consuming, but more accurate.

As to the high asking prices, it can be caused by many factors. Some people cannot go much lower or they may not be able to pay back the mortgage, especially if they are upside down. In such cases for a low offer, they have to get permission from the mortgage holder to have a short sale in which they agree to the proceeds satisfying the mortgage, or they have to pay the difference.

Others still think that a 3BR, 1960s split level on a busy road is worth $900k simply because it's Westchester. While this may be true in some towns in very limited cases, and generally then only with acerage as a tear-down, it's just completely unrealistic. But, in such cases, those houses would not sell even when the market was hot.

[havoc315]

First off, you cannot rely on zillow which only represents a rough estimate.

True market price, is simply the price where homes are actually being bought and sold. If every house in the neighborhood is similarly priced, and IF they are actually selling, then they are not overpriced. If they aren't selling, then it is quite possible that everyone overpriced.

The problem right now is multi-facetted. Partially, it is hard to know how much values have actually dropped. Is it sufficient to price 20% under peak value, or do you need to reduce 30%?
With the unfreezing of credit markets, are prices still dropping or have they stabilized? These are questions really only answered in hindsight.
There is also the reality that many sellers are just not ready to accept the realistic drops in value. If their neighbor got 700k 2 years ago, it can be really difficult to grasp the idea that your home is now only worth 550k.

I am in the same boat. We had our home listed in the fall, but declined an offer. We are getting ready to re-list, but how much of a drop in the last 4 months should we account for? 2% less than the fall, or 10%. Not an easy question.

Lastly, I do not believe prices will drop to 1999 levels. I certainly hope not. Such a decline would devestate our economy beyong imagination. It would leave the majority of Americans effectively bankrupt.

[mfenimore]

I think right now houses should be priced are at or slightly above 2002 levels, the housing peak was in 2007 so prices should be significantly lower than then. Although I do think zillow overvalues a lot of houses. I do agree the best way to compare is to look at comps in the area over the last 3 months or so.

[halfoffpeak]

Originally Posted by havoc315

Lastly, I do not believe prices will drop to 1999 levels. I certainly hope not. Such a decline would devestate our economy beyong imagination. It would leave the majority of Americans effectively bankrupt.

I am not sure why you say that. As I mentioned in 1999 the economy was strong which shows that housing is irrelevant. In fact what created this mess is the real estate bubble and if there is no correction there will be no way out of the recession. Housing should become affordable again (3-4 times income). Try to stay out until sellers lower their asking prices.

[havoc315]

I don't understand how you are saying that housing it irrelevant to the economy. A major reason for the depth of the current recession is because of the collapse of the housing market. To the extent that you are suggesing the housing market will collapse significantly further, the economy will then collapse significantly further.

On average, Americans move every 7 years. If house values were to fall to 1999 levels, it means that most Americans would own houses worth less than they purchased it for. If you think the current foreclosure rate is high, your predictions would have the foreclosure market rising even more astronomically-- Imagine if 10-30% of all Americans were losing their homes to foreclosure. That is what would happen if prices were to drop as severely as you are predicting. (Why continue making mortgage payments on a $700,000 mortgage, if the house is only worth $300k?)

If prices were to drop to the 1999 levels, you would possibly see a financial crisis much larger than the Great Depression.

[halfoffpeak]

Originally Posted by havoc315

On average, Americans move every 7 years. If house values were to fall to 1999 levels, it means that most Americans would own houses worth less than they purchased it for.

If prices were to drop to the 1999 levels, you would possibly see a financial crisis much larger than the Great Depression.

Your reasoning works only for the first time home buyers. The rest sold high and bought high. Some might foreclose but this is not necessary. Not everyone is allowed to foreclose--one may afford mortgage payments. Those are the ones who will lose their worth.

I f you haven't noticed the S&P and therefore our 401k is back at 1995 level today. There's nothing strange in losing your value. Japan houses lost their 2/3 of their value in the 90s and they have not gained it back.

Also, you don't seem to get it. It is the high housing prices that got us in this mess. The correction will fix that. Of course there will be pain...

[mfenimore]

I have to agree if housing prices decreased to 1999 levels it would be crazy and houses would be worth about half of what they are worth now-think of a house worth 1 million now-being sold for 500k? I hope that does not happen. You have to remember housing prices were extremely inflated in the mid 2000's and have been coming down since. I recently read an article in the NY times that said housing prices would drop an additional 10% in 2009 in Westchester-that being said-housing prices are nearing a low with a bit to go. I do think that some sellers are still a bit delusional and trying to get what they could 2 or 3 years ago and not budging on their prices-which results in houses being on the market longer but you do tend to see price reductions on these houses after a long time if they need to sell.

[dma1250]

What I know for sure is that Zillow and other such appraisals are worthless. I compared Zillow estimates to houses that had just sold in my neghborhood and the "zestimate" was 50K to 400K below what the houses had just sold for. The zestimate is based on square footage and acreage, and for many houses it does not even have square footage.

My neighbor's house is a bit smaller than mine and has less acreage, so the zestimate is far under that for my house. But in reality their house is amazingly beautiful, totally renovated, has central AC, super-high-end appliances, a wine cellar, a sauna, etc, and is worth at least 1M more than mine.

Finding real comps is the only way to get a sense of the market value of a particular house. And remember--houses vary a lot and in most parts of Westchester house prices on the same road can vary a huge amount. You have to find comps that are truly comparable.