Real Estate Whine and Cheese Party (St. Paul, Monticello: for sale, refinance, credit card)

[yellowsnow]

California started this. But the Midwest ends up the biggest loser! As usual!

http://money.cnn.com/2007/02/15/real...ex.htm?cnn=yes

Follow the links and read up on different areas of the country.

I feel really sorry for anyone trying to sell a home(myself included). And what about all those people who now owe more than their homes are worth? What's their incentive to stick it out? And how much worse is it going to get?

We get to lose money AND freeze.

[Robert P Stewart]

I would like to offer another perspective.

In the last couple of years we've seen double digit increases in home prices (in the Twin Cities, 13-16%). This is in no way sustainable - but it is also nowhere near as bad as the boom experienced on either coast.

What the article is referring to is a decrease in the rate of appreciation. Properties are still appreciating, but have returned to a more normal 2-3% per year.

Those people who now owe more than the home is worth (largely) dug themselves into a pit by buying more house than they could afford and not being mindful of their financing. For all the people who like to blame predatory lenders - I think the problem is predatory borrowing and the profligate use of credit cards.

So, as for you losing money - are you losing money, or are you just not making as much as you had hoped? There's a difference.

For the last several months when I meet with clients who wish to sell their home, I show them what their home is worth under the boom that we recently experienced. I then adjust those percentages to more realistic figures and explain that these adjusted numbers reflect reality - and are a better indicator of what the home should sell for.

I turn down listings all the time because the homeowner wants (or worse yet, needs) too much for their home. I know it won't sell and I'm just going to end up wasting my client's time.

And showing clients what their home is actually worth is different than asking them to give it away. My homes are still on the market for 45-90 days. But in 2006, every listed home sold for an average 101.8% of list price. I had a "give-away" case when a family had a home to sell and just wanted to get rid of it. They told me what they wanted it listed for. I actually protested, explaining that they could get much more - but they insisted.

The home was priced in the high $400K's in an area where the cheapest homes were in the low $600K's. The house sold before I got a chance to put a sign in the yard (or the MLS). I did what was asked of me, and my clients felt like they won.

This is quite possibly the longest post I've ever left. Congrats! And as for the freezing, take heart - it is suppose to warm up into to +20's this week!

[yellowsnow]

I wish that was the case for me! I had my home appraised in 2000....just for a refi, I wasn't taking anything out of it. I can't sell the darn thing for what it appraised for 7 years ago. That's a lot more serious than just rates of appreciation falling! So that gives me negative appreciation for 7 years or more. My home is losing money!

[Robert P Stewart]

One of my real beefs with the real estate industry as a whole is the appraisal system. I have a hillside that I'm selling just outside of St. Paul - it will probably go for around 1.6 mil, but I needed an appraisal done to satisfy some of the interested parties.

The appraiser asked me if the land was for sale or being refinanced. I asked, "What does it matter?" - its an appraisal - appraise the @$%*(& thing!

Chances are, your refinance appraisal was viciously inflated. Keep that in mind. I've sold a few homes this past year for exactly what the refinance appraisal stated 2-3 years ago.

If I may ask (and please don't construe this as solicitation, because it most certainly is not) - where's your home located?

Robert

[yellowsnow]

Yes, I know those appraisals can be a game. That's why I stressed it was just a refi. I wasn't trying to 'qualify' for anything. How does one get a real appraisal? I was told a bank appraisal is usually more realistic and that's what I got. I knew I was going to sell in 2006 so I only got a short term mortgage. So now I get to refinance too!

I'm seriously sorry I improved my house. I wasn't too worried about it because it was waterfront and in an area of more expensive homes. I was wrong!

My house is on the Mississippi in Big Lake Township. If you could chunk a rock far enough from the Monticello Hospital, you could hit my house. There's 1 other house for sale on the river and it started at 589 and is now down to 549. But it's been for sale for 2 years now. It is over priced and I was hoping it would sell mine! No luck. Now the house across the street is going on the market. Sigh! It should be a lot less than mine though. I'll be checking it out on the MLS.

[midwest456]

//www.city-data.com/forum/minne...ese-party.html

I followed the article's link to the prices by city. It said -1% for Twin Cities vis a vis same time a year ago, almost as low as the national average of 2% given. Sounds like a slight depreciation to me :/

[golfgal]

I do know some people that are loosing their shirts on their homes but it is their own doing, not the market. 5 years ago or so people were so hot to buy houses in the Twin Cities that they were offering $10, 20, 100K more then the house was worth thinking they would actually make money on the house, well, now the market is more 'normal' and they are trying to recoup that extra $100K they paid, not going to happen. It was almost like people were running around with their heads chopped off, "I gotta buy a new house because everyone else is" and being not so smart about it. I know the people down the street from us have had their house on the market for a year, they built a new house, can't sell this one because they are asking way too much for it because they paid way too much for it. That isn't the fault of any market conditions.

[Robert P Stewart]

Considering that houses were getting completely unrealistic prices a couple of years ago, a drop in price by 1-2% this year means an average appreciation of 8-10% rather than 10-12% (over the same time period). The trend is more important for homeowners (and stock holders) than the actual numbers for any given time point.

Take the stock market for instance. True, it can be down 150 pts in one day. But if you look at the trend since the exchange was formed, and included all the depressions and recessions - it has done about 11.5% per year. REALLY GOOD. Me? I make money with my real estate investments and that gets shuffled over into the stock market (where I completely trash the 11.5% average).

I've got flippers coming out of the woodwork who are buying properties, investing a little money, and selling them (relatively quickly) for big profit. Its still happening.

If you would like to see a huge turnaround in the housing market, have the media stop paying attention to it. We had a blip of MAJOR activity last fall around the time of the elections. I think it was partially due to the fact that people were not constantly hearing about how terrible the market is (which it isn't).

Hope this helps,

Robert

[Ben Around]

Originally Posted by Robert P Stewart

Considering that houses were getting completely unrealistic prices a couple of years ago, a drop in price by 1-2% this year means an average appreciation of 8-10% rather than 10-12% (over the same time period). The trend is more important for homeowners (and stock holders) than the actual numbers for any given time point.

Take the stock market for instance. True, it can be down 150 pts in one day. But if you look at the trend since the exchange was formed, and included all the depressions and recessions - it has done about 11.5% per year. REALLY GOOD. Me? I make money with my real estate investments and that gets shuffled over into the stock market (where I completely trash the 11.5% average).

I've got flippers coming out of the woodwork who are buying properties, investing a little money, and selling them (relatively quickly) for big profit. Its still happening.

If you would like to see a huge turnaround in the housing market, have the media stop paying attention to it. We had a blip of MAJOR activity last fall around the time of the elections. I think it was partially due to the fact that people were not constantly hearing about how terrible the market is (which it isn't).

Hope this helps,

Robert

BINGO! (They won't let me post just BINGO because it is less than 20 characters, so I'll say it again: BINGO!)

Also, Robert's earlier post, "So, as for you losing money - are you losing money, or are you just not making as much as you had hoped? There's a difference. " couldn't be more true!

[Robert P Stewart]

Thanks Ben! I'm known for my peculiar views on things!

Take care,

Robert