It’s a Strange Real Estate Market

I found this piece from MSNBC to be interesting:

As mortgage defaults and foreclosures continue to rise, the impact is spreading well beyond those who are losing their homes.

In communities across the country, msnbc.com readers report that local governments are coping with shrinking tax rolls, lenders are saddled with more foreclosed homes than they can sell and empty homes in many neighborhoods are being vandalized.

In hard-hit states like California, Arizona and Florida, readers report that some neighborhoods are becoming virtual ghost towns.

In South Lyon, Mich., life is getting lonelier as more houses are abandoned in Jose's neighborhood.

We've had a few impacts from the housing crisis in my neighborhood as follows:

1. A few blocks from us, a friend of ours is moving and having a very difficult even getting someone to look at their house. It seems to be somewhat reasonably priced (maybe a bit on the high side, but not unreasonable) and they've put a TON of money into it to upgrade the look of the place. And with all of that, they've had a handful of lookers in three months on the market.

2. A few blocks the other way, an abandoned house sits on the corner, it's deck collapsed and it looks as if it could have been broken into at one point.

3. Two doors down from us, the old owner moved to a newer place a couple years ago, and couldn't find a buyer for his home. So after a year on the market, he rented it out to a family who lived there for several months. A couple weeks ago, we found out that the family had skipped out in the middle of the night, leaving the owner (presumably) without his full amount of rent and now with an empty house that he needs to do something with.

On the buying end, we're also seeing all sorts of stories -- foreclosures for 60% of what the house was once worth, homes on the market for years with no apparent activity, and the inventory of options building and building.

It certainly is a strange time in the real estate market here.

Comments

[Mark Nelson]

It is a strange time for real estate but also a time for some investors to make some great money. Phoenix is a tough area right now but if you do you due diligence there are going to be some people who become millionaires out of this time period.

[Paul]

And then there are areas (like where I live) where the housing market hasn't changed at all. Houses are still moving as they always have and the prices haven't really changed (or maybe gone up).

[sahm]

Our experiences seems to be similar to FMF. We have a couple of houses on the block that have not sold and are priced right. Then we have a couple (including ours that we bought) that have been foreclosed on and in questionable shape. Fortunately, the neighbors seem to have a lot of pride in their own house, so they keep an eye on each other and mow the yards that need it to prevent the whole neighborhood from going down. We are in the same association as the neighborhood across the street and they are having a really tough time selling houses for some reason. Prices are about 5-10% lower for basically the exact same thing we have...odd.

[Justin]

I have to say that I cashed in on this market. I'm a first time homebuyer and closed on my first place May 30th. I probably saved about $10k. Thanks housing bubble!

[Kevin]

I'm with Paul, our area is pretty consistent with pre-bubble times. There is a little excess inventory probably but things are still selling pretty well. I think new homes have slowed though.

[Vince]

If you have an open mind right now, people are buying houses for screaming deals and fixing them up. If you can wait for awhile to sell, you definitely will get your money out of it!!

[kitty]

My area is OK. It is a buyer's market, there is some decline in some property values, but we haven't been hit much by foreclosures yet. I heard that NYC started experiencing foreclosures, so maybe we in Westchester cty will be hit soon, but so far it hasn't been that bad. Sure I see in our Pennysaver - a weekly publication we get for free that has real estate ads as well as other stuff - that the asking prices for condo complexes I know about is lower, but they are still above the pre-bubble level. I personally think our area is still overpriced because IMHO 300K for a one bedroom condo is ridiculous, even more ridiculous than a median house for 600K-something, so the prices may come down more.

A newsletter from a real estate said that the median price is a little bit up since last year, but I am wondering about the effect of high end properties for seriously rich. Maybe if they foreclose the Clintons' house in Chappaqua ....
I am curious if the prices would show decline if multi-million dollar homes are excluded, but nobody provided that statistics.

[Lord]

The recession has arrived.

[aaktx]

The real estate market is bad news in the midwest. Economic downturn and subprime is eroding home values. In Houston, where I live, it is the exact opposite. I hope oil stays high for a while.

> there are going to be some people who become millionaires out of this time period

So Mark expects inflation to go up at double digit rates? (until homes in Phoenix are worth a million inflated dollars) :)

[George]

Here in Springfield, Illinois, it's still booming along in real estate. My wife and I just purchased our first home, at just below what we would have considered our "maximum price" to pay for it.

It hasn't hit here yet, but you can feel the wave coming. I wonder if we're going to see it hit really hard towards fall, when gas is at $6/gallon, and everyone has been maxing out their credit cards. Not maxing them out with toys, cars, and computers, but simple things like gas and food. Whats going to happen when the credit crunch hits people at the gas pump, rather then the best buy check out line?