More on Buying and Selling a Home in This Market

Since we're home shopping, these next pieces really caught my attention.

The first is from MSNBC and asks how low can housing go. The piece is about opportunistic buyers who are looking over the price declines in search of a great deal. A few thoughts:

“Somebody else’s misfortune could be my happy ending,” said Montufar, 27, a resident of suburban Los Angeles.

“At this point, I’ve got no choice but to wait and see ... how low they get so that it gets to a point where I can afford it,” he said.

Those numbers have left many people trying to “time” the market to take advantage of the slump. But experts said that can be risky because there is little consensus on how long the current doldrums might last.

Ah, yes. Just where is the bottom? That's a GREAT question. Wish I had an answer for it. It would make my home-buying experience much, much better. Not to mention easier and more profitable. ;-)

On the other hand, Yahoo thinks that home prices won't go that low. Here are their eight reasons why:

1. The Sky isn't falling. The real estate market always fluctuates.
2. Real estate is unique.
3. There is no bubble.
4. Value is a complicated cocktail.
5. There is always a baseline of demand.
6. There is always a baseline of mortgage defaults.
7. There is no risk.
8. Real estate is a great way to build wealth.

They make a compelling argument. And certainly there is a bottom. But just where that bottom is is yet to be determined.

And finally, a piece from my local paper telling us how to sell a home in this market. Their thoughts:

Lesson No. 1 is finding the bottom in the bottom line. Home prices are dropping across the United States, and the Grand Rapids area is no exception.

Lots of insight from our local paper, huh? ;-)

But look at what's happening with prices:

In Kentwood, the Das family put their four-bedroom colonial at 2265 Old Dominion Court SE on the market for $245,000. Since then, they have slashed the price. "At $215,000, it's a good bargain," said Salila Das, whose family moved to Connecticut.

They are not alone. Kentwood saw an average 6.3 percent drop in prices since 2005, when the Das house first went on the market.

Yikes! Down $30,000 and on the market for two years.

Now that doesn't mean that $245k was a realistic price in the first place. But still, if it was even close, that's quite a hit.

And buyers are smelling blood -- but may be getting too confident:

Buyers can lose out if they are too picky.

Starner recounted a recent listing that sold above the asking price after a bidding war.

"I've heard buyers say, 'We'll offer 25 percent less, and they'll take it because what choice do they have?'" he said. "The choice is they can keep it."

"There is an attitude out there that is getting out of touch with reality."

Getting out of touch with reality is the first sign of 1) a deep drop coming or 2) a turn in the market. But which is it? ;-)

Comments

[Livingalmostlarge]

It really depends on location. Friends in AL paid full asking price because the market they were in demands it. There wasn't a huge run in during these past boom years, just a solid appreciation rate. Their house also sold for almost full asking price. So are prices dropping? Nope, they've been waiting a year and no dropping of prices. Because their location isn't inflated. How can it come down?

Some locations are falling, but to paint everyone with the same brush is wrong. So what's the reality? That RE is only location based. One market is way different from other locations. Just because your friend's market is still hot doesn't mean yours is. And just because prices in your area are dropping, doesn't mean you should tell others who live elsewhere not to buy.

[Drew]

Is it possible to get a working link to the Yahoo article? I'd love to read the whole thing and this link doesn't seem to work.

[Beth]

I totally agree with LivingAlmostLarge. Location has a lot to do with the cost of houses. Although homes dropped rapidly in price in my area two years ago when the BRAC listed the base to be closed, last year when a new mission was found and the announcement was made that the base would stay open prices skyrocketed and new homes started popping out of the ground almost overnight. I'm fairly sure that in areas, especially smaller, more rural places where bases are being closed there's likely to be a good bargain price on a lot of homes.

If we had bought the house that we just purchased two years ago we probably could've gotten it for $30K+ less than we did buying it this past month. It all came down to knowing if the base would remain open or closed for us to make the decision to buy. I'm sure in the next year or so as new personnel move in we'll be seeing another jump in home prices as well.

[SOK]

Great post. I've been thinking about this since I bought my place last year.

We bought an overpriced (but very nice) condo in a hot market (california) a year ago and now everything around is losing value or foreclosing. I've thought about refinancing, selling, moving... every option possible because all along I only palnned on living here for 5 years before moving on with my family. After weeks and weeks of thought, I've come to the realization that I very well may be screwed over when I sell... but if the market dictates that, then at least I'll get a deal in buying. Things usually have a way of working themselves out.

[FMF]

Drew --

It looks like they moved the piece. That happens regularly with Yahoo since they syndicate a lot of stuff -- putting it up for a time and then taking it down. Sorry.

[Dave]

In my seminar - Computerized Tools for Profitable Investing - I cover the the real winning strategy in real estate. I have yet to hear it mentioned on CNBC or in the blogoshpere.

I'll give you a hint - what never depreciates in value?