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It all depends on your area, it might never sell until 4 years later depending on how much overinflated the price is from the housing bubble. If its not really affected, then you just have to wade through the housing problems right now. I think CNN has a good website about expected housing depreciation in 5 years. However, its actually appreciation because it is sloughing off the temporary housing bubble gains (which by the way you are paying property taxes on) and increasing its actual worth as it goes to 5 years. Personally, I would bid about 20-50k below the 5 year projections because thats what the home is actually worth right now.
EDIT: I thought I would mention some cities with heavily over-inflated prices (more than 100k over actual price): Boston, Honolulu, San Francisco, Hartford, Atlanta (also has a major water crisis right now too), San Antonio, New York City, Raleigh, San Jose, Milwaukee, Inland Empire, North/Central NJ, Portland, Seattle, Philadelphia, Orange County, Richmond, Salt Lake City, Norfolk, Charlotte, Phoenix, Long Island, San Diego, Jacksonville, Los Angeles, D.C., Sacramento, Las Vegas, Palm Beach County, Fort Lauderdale, Baltimore, Tampa, East Bay, Miami, Orlando... NOW... As with ANY real estate, this all is dependent on LOCAL market conditions, meaning if there are a lot of buyers they may be willing to way overpay what a home is really worth (like Manhattan). So take everything with a grain of salt. I found it weird that Dallas and Houston were not really overpriced by much, someone did a good job to control market conditions there.
Last edited by evilnewbie; 11-08-2007 at 03:30 PM..
Okay, so I was there in the Last Great Downturn, back in the early 1990s. I was very young and very scared, because I bought at the top in 1989-- I mean, the very top; I actually had the highest comp in the neighborhood, a very nice neighborhood in Old Town Alexandria, right outside D.C. So it was a desirable property in a desirable neighborhood, renovated to the nines and priced below the comps.
Here's what happened. My house wouldn't sell for the entire 18 months I had it on the market. I dropped the price below what I bought it for, sacrificed all my equity and was going to bring my life savings to the table to bail myself out. I was also going to throw in custom window coverings, appliances, furniture and anything else the buyer wanted. If potential buyers had wanted my clothes, I would have had them dry cleaned and thrown those in, too. But there were no buyers... no prospects... no lookers. The market got so bad that I had no showings at all for something like six months. And I had the best real estate agent I've ever had and the house was designer-perfect. Just no buyers.
So I rented the house for a year at a loss. I had to, because I was moving out of state. Then, a funny thing happened. The rental market picked up a bit. People weren't buying, and builders weren't building, so everybody wanted to rent. So I raised my rent to market value... then higher... then higher. I was making money, more money than I had lost. Then my renters wanted to-- shock!-- buy my house. But I now had an income-producing property and the market was starting to find its way back up. Soon, realtors were calling and offers were being floated, but I no longer wanted to sell. Buyers were back, financing was available and the market was rising. So I held the property for a few more years and ended up selling it for much, much, MUCH more than I paid for it. A devastating financial experience turned into a windfall. The house that I had sworn would be my last financed another house, plus two more rental properties.
So the point is, things are bleak. And they're probably going to get bleaker. Maybe a lot bleaker, depending on where you live. But real estate, like any asset, is cyclical. Good times are replaced by bad times, then good times return. It may take 5-7 years, maybe ten, maybe three. There are ways to hang on and mitigate your losses until the market turns around. People say it's worse this time and maybe it is. But we thought it was as bad as it could ever get then, too, with a recession, no jobs and S&Ls going under right and left. And look what happened.
Hey goodbyehollywood... you probably sold your home during the housing bubble right? The chances of a housing bubble happening again would be extremely rare in my lifetime, but as you know, home prices ALWAYS appreciates regardless if the housing bubble was there or not. Its so predictable you can draw a straight line and know what it is at least worth in so-so number of years. Again, I don't think a housing bubble will happen again, given what it did to the economy when it burst. I wouldn't be expecting any real estate windfalls in near or distant future.
Hey goodbyehollywood... you probably sold your home during the housing bubble right? The chances of a housing bubble happening again would be extremely rare in my lifetime, but as you know, home prices ALWAYS appreciates regardless if the housing bubble was there or not. Its so predictable you can draw a straight line and know what it is at least worth in so-so number of years. Again, I don't think a housing bubble will happen again, given what it did to the economy when it burst. I wouldn't be expecting any real estate windfalls in near or distant future.
Well, then, you shouldn't buy or sell. You should be a lifelong renter and keep all the money you've saved in a shoebox under your bed.
Location: Halfway between Number 4 Privet Drive and Forks, WA
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Wow, thanks for the post Goodbyehollywood...it was very insightful and encouraging to hear someone's experience that has been where we are before, and to know that all is not lost. Thanks for taking the time to post that for us :-)
ps I tried to give you a rep point for it, but since I gave you one on the other post, I have to "spread it around" first...
Goodbyehollywood, great post. I guess I'm one of the few buyers out there because I've decided to not let fear get the best of me. The market is going to stay sub-par until the media stops the obsession on how terrible things are with housing. It's like decision paralysis for the buyer. Should I buy now or do I wait to see if the price will fall even lower and what if it falls below this, etc. As a result, the buying decision just keeps getting delayed and sellers are frustrated. The housing bubble/bust story will get old and buyers will start to slowly return as their fear of "pending world disaster" starts to subside. The market always corrects itself and things will normalize. I'm already seeing some homes that had been sitting for over 6 months start to sell in my area.
I do better than that. I plan to build my own home on a 1 acre tract from all the money I saved while I was renting... getting close to the 2 M mark now thank you...
Yeah, right next to that big red bridge you own in San Francisco, right?
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