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Post by Deleted on Jun 30, 2011 10:41:34 GMT -5
We sold our house and we close next week. I'm confident that everything will go through ok, but still a little nervous. Despite the housing market appearing to pickup this year in some areas, I feel like it really is falling like CRAZY around the area I'm moving out of.
Not sure what the reason is, possible people finally came to the realization that prices weren't going up anytime soon so they just all started piling onto the market. And unlike in years past, they are doing so at competitive pricing. We just ended up getting REALLY lucky.
I do feel bad for the people around there that have their house on the market. This community was definitely a bedroom community that probably had promise to be built up. It was by a major highway that could get you anywhere and was really a nice area. The houses were nice too. But there were SO MANY of them. I felt like a random buyer could've picked 100 houses within $100K and been happy.
I remembered back in 2008 I heard someone say that housing could take another 7 years to fully recover and, at the time, I thought that was kind of pessimistic. Now that seems very realistic. Especially for bedroom communities. And for those people that built 3800 SF mcmansions, those houses seem like it'll take a LONG TIME to recover. They just scream mid-2000's with way more space than anyone would ever need.
How are prices doing in your area?
PS. I think it's interesting. Because I usually hear people say things like "Prices in my area seemed to have held up pretty well". Only to be SHOCKED when they actually go to list their house. And then on top of that, it's usually 2x as bad when it comes down to it.
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yogiii
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Post by yogiii on Jun 30, 2011 11:14:52 GMT -5
We bought in 2007 and paid 20% less than the person next door with an almost identical house he bought in 2005. We refi-ed last month and the appraisal came in 10% less than what we paid in 2007. It's probably about right. We're in the Northeast and in it for the long haul (I hope).
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haapai
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Post by haapai on Jun 30, 2011 11:24:20 GMT -5
I'm seeing places listed at 35% to 55% of the tax valuation languishing on the market for months. I'm afraid to ask if they've been damaged while vacant or whether the market is just that bad.
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tskeeter
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Post by tskeeter on Jun 30, 2011 11:25:58 GMT -5
Dave, I think there are a number of factors at play in the housing market these days.
First, there is a massive supply of homes available in many cities. It will take several years to consume this supply.
Second, there is quite a bit of pent up selling demand. Many homeowners would like to sell their house, but are delaying listing their home for sale due to the housing market conditions. To these potential sellers, you must add the lender owned properties that will be trickled into the market for the next few years. The pent up selling demand will keep the supply of homes for sale high for an extended period of time, maybe creating the most extended buyer's market in history.
Third, buyers are very price sensitive these days. Buyers saw the value of homes drop like a rock over the past several years, so they are very cautious about paying too much for a home. Those who are buying are negotiating very aggressively.
Fourth, many potential buyers are sitting on the sidelines waiting for someone to tell them that housing prices are not going to drop further. Since the message that the media and "experts", such as Robert Shiller, are presenting is that home prices will drop another 10% - 20%, potential buyers are waiting for the market bottom to appear before they enter the market.
Fifth, the general economic crisis we have experienced has created a generation of "recession veterans". These people will respond with the type of financial conservatism that has been the hallmark of people who lived during the great depression of the 1930's. This conservatism will result in slower than normal economic growth in the consumer sector for the next decade or two. Since housing is a consumer purchase, as opposed to a business or commercial purchase, the housing market will be impacted by consumer conservatism for a fairly extended period of time.
Based on these conclusions, I did some math to see what is likely to happen to the value of my home. Considering that my home's value has dropped by 49% from what we had invested in it (purchased in 2006). And assuming that the value will drop another 10% from where it is today, and that from the bottom, home values will appreciate at an average of about 3% a year. It will take 27 years for the value of my home to equal what I have invested in the house.
Will the housing market fully recover in 7 years? It depends on how you define "fully recovered". I think it is likely to be a few decades before home prices return to their 2006 levels.
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Post by Deleted on Jun 30, 2011 11:48:37 GMT -5
27 years to recover? That's REALLY pessimistic. For certain communities, I think houses will get back to peak levels within the next 5 years. The area we're moving into is a great location, great shops, great schools, and there are no houses being built. Those houses sell quick if they are priced ok.
The areas that might take 10 years to recover are the areas that we're leaving now. Lots of houses keep pushing the price down. Plus, the demand to live in the community is not there.
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brdsl
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Post by brdsl on Jun 30, 2011 11:51:24 GMT -5
27 years to recover? That's REALLY pessimistic. For certain communities, I think houses will get back to peak levels within the next 5 years. The area we're moving into is a great location, great shops, great schools, and there are no houses being built. Those houses sell quick if they are priced ok. If the above is actually true, houses will be built. It will be a matter of time.
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brdsl
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Post by brdsl on Jun 30, 2011 11:57:22 GMT -5
Based on these conclusions, I did some math to see what is likely to happen to the value of my home. Considering that my home's value has dropped by 49% from what we had invested in it (purchased in 2006). And assuming that the value will drop another 10% from where it is today, and that from the bottom, home values will appreciate at an average of about 3% a year. It will take 27 years for the value of my home to equal what I have invested in the house. If you take the largest drop, and the lowest appreciation, the number of years is going to be huge. I would wonder what your inflation numbers are in your calculation?
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Post by Deleted on Jun 30, 2011 11:57:35 GMT -5
Our new community started construction about 4 years ago and houses of my type sold around the "ring" (we are on a mountain) for $560-580 in the first phases. Then the worst of it hit and new construction on inner lots sold $460-480k. Now the lot phases for sale are again ring lots going 490-515k. We paid $513k for one of the biggest/best lots in the development. We are the smallest home plan in the development at 2400 sq ft, so we have neighbors closing in the mid to upper 500's for bigger houses.
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dancinmama
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Post by dancinmama on Jun 30, 2011 12:12:08 GMT -5
Interesting because I JUST got my county property value appraisal that will be reflected in our upcoming property tax bill. According to the appraisal, the value of our home increased by $100K in 2010. They based it on a couple of random sales that were high. One of them is already in foreclosure. The home right across the street sold for less than the appraisal on our. It is a larger home on a smaller lot.
So it looks like I'll be paying $1000 more in property taxes in 2011 than I did last year, but I think it will drop again next year.
According to the appraisal, the value of our home has dropped 53% from when we bought at the peak in 2005. Thank goodness we bought it with retirement in mind and will have no need/desire to sell for at least a decade.
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tskeeter
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Post by tskeeter on Jun 30, 2011 13:27:25 GMT -5
brdsl, I assumed 3%. The long term appreciation (inflation) rate in home values across most of the country has been in the 3% - 4% range. I used the low end of the range because I think that we have many years of soft home markets ahead of us in many areas of the country. Even if the general inflation rate is in the high single digits, I think the number of homes that will come onto the market over the next 10 years, coupled with people's new perspective on the value of owning a home will keep the appreciation in home prices much lower than the general inflation rate. A high general inflation rate will also limit the amount of money people have, or can save, to buy homes. This will keep the size of the buyer pool smaller, keeping home prices from increasing as rapidly.
I hope my estimate is overly pessimistic. I'd like to have the value our home lost in the last five years available to help fund retirement. But I ain't planning on it at this point.
Call me in 30 years and you can tell me how far off I was.
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tskeeter
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Post by tskeeter on Jun 30, 2011 13:31:46 GMT -5
Dancin, I'd say it looks like you have a pretty good case for challenging your property tax assessment. Check with your local assessor's office, or the local treasurer's office for details on how to do it. Why give them more money than your fair share? They are just going to spend it anyway.
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midjd
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Post by midjd on Jun 30, 2011 13:39:39 GMT -5
I suspect that Tskeeter is right. The shadow inventory around here is huge - according to one of our local experts, even if zero foreclosure cases were filed after today, it would take 7-8 years to clear out the current properties to get inventories back down to 2002 levels (and Indiana has historically had very high foreclosure rates - the only reason we're not at the top anymore is because of California, Arizona, Nevada, etc.)
And of course foreclosures are still being filed every day, so this 7-8 year period could easily be doubled. I would imagine in other states the backlog is even bigger.
So while I don't think it will take quite that long for prices to recover, it is going to be at least a decade or two before things begin to resemble "normal".
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Post by Deleted on Jun 30, 2011 13:40:26 GMT -5
Interesting because I JUST got my county property value appraisal that will be reflected in our upcoming property tax bill. According to the appraisal, the value of our home increased by $100K in 2010. They based it on a couple of random sales that were high. One of them is already in foreclosure. The home right across the street sold for less than the appraisal on our. It is a larger home on a smaller lot. So it looks like I'll be paying $1000 more in property taxes in 2011 than I did last year, but I think it will drop again next year. According to the appraisal, the value of our home has dropped 53% from when we bought at the peak in 2005. Thank goodness we bought it with retirement in mind and will have no need/desire to sell for at least a decade. Interesting. People in my area have been complaining about rising property taxes for the last few years. Each year the county sends out the pre-emptive letter saying that assessments are based on the prior 3 years...not just 1 year. So this year, they actually lowered our taxes....a total of $12. To me, that was more of a symbolic lowering just to appease people.
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midjd
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Post by midjd on Jun 30, 2011 13:44:35 GMT -5
As far as prices in my area... we never really had a bubble, but have high foreclosure rates because of unemployment (the auto industry tanking really hurt us). DH and I did some "just for the fun of it" house-hunting around 2006-2007 when we were living out of state, and the houses we were looking at were in the $250K range. We ended up getting a very similar house for about $185K in January. So I'd say prices have gone down about 20%, probably more for the bigger houses, less for the smaller ones.
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Post by Deleted on Jun 30, 2011 13:46:19 GMT -5
27 years to recover? That's REALLY pessimistic. For certain communities, I think houses will get back to peak levels within the next 5 years. The area we're moving into is a great location, great shops, great schools, and there are no houses being built. Those houses sell quick if they are priced ok. If the above is actually true, houses will be built. It will be a matter of time. Houses don't get built when the town is land-locked. There's no available space to build unless you buy/tear down. But even to buy a tear-down, it's a minimum $300K. The only available land in the area was a golf course that sold at the peak for some obscene amount of money.
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dancinmama
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Post by dancinmama on Jun 30, 2011 13:49:38 GMT -5
Dancin, I'd say it looks like you have a pretty good case for challenging your property tax assessment. Check with your local assessor's office, or the local treasurer's office for details on how to do it. Why give them more money than your fair share? They are just going to spend it anyway. tskeeter: I put in for a Prop 8 property tax adjustment back in 2008. Last year I paid a little over $6K for the year as opposed to the over $14K I paid in 2006. I do have some time to challenge it and am starting to pull together data. One thing is that our home is 3/3 and none of the comps are, but I guess that's because a 3/3 is pretty hard to find in our neighborhood or even adjoining neighborhoods. Two of the homes they used are 4/3 and one is even a 5/3. I might call a realtor guy I know who said he'd help me a couple of years ago when I first filed for the adjustment if I needed it (which I didn't). He may have some suggestions.
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Post by Deleted on Jun 30, 2011 13:50:40 GMT -5
As far as prices in my area... we never really had a bubble, but have high foreclosure rates because of unemployment (the auto industry tanking really hurt us). DH and I did some "just for the fun of it" house-hunting around 2006-2007 when we were living out of state, and the houses we were looking at were in the $250K range. We ended up getting a very similar house for about $185K in January. So I'd say prices have gone down about 20%, probably more for the bigger houses, less for the smaller ones. We didn't have a CA-style RE bubble either in IL. Matter of fact, I thought the prices were not TOO bad throughout even the peak. Friends were buying condos in the city for $275K and that seemed kind of reasonable. We bought in 2004 and paid $275K and sold for $244K. So I considered ourselves lucky that we only lost around 12%. We have some friends that bought at peak in the $450K range and they are getting no activity at $399K. Based on comps, they're looking at probably $325K-$350K.
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haapai
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Post by haapai on Jun 30, 2011 13:51:24 GMT -5
I agree with others that the shadow inventory is huge. On the other hand, you may not be accounting for how quickly properties decay when they are not occupied. Even when nobody acts maliciously, the damage can be staggering. Really cute places can go from jewels to tear-downs in as little as three years. If property is continuously leaving the housing inventory because it is no longer habitable or worth rehabilitating, prices should adjust somewhat faster.
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brdsl
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Post by brdsl on Jun 30, 2011 15:27:59 GMT -5
If the above is actually true, houses will be built. It will be a matter of time. Houses don't get built when the town is land-locked. There's no available space to build unless you buy/tear down. But even to buy a tear-down, it's a minimum $300K. The only available land in the area was a golf course that sold at the peak for some obscene amount of money. What is the borders that are "land locking this area"?
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brdsl
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Post by brdsl on Jun 30, 2011 15:43:57 GMT -5
tskeet,
I think 3% is low for inflation. I am not soothsayer, but I would venture to say inflation will be higher in our next recovery. That alone will push up the cost of housing, making your "recovery" quicker.
I could be wrong, but I hope your calculations are wrong...for all of us.
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tskeeter
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Post by tskeeter on Jun 30, 2011 16:14:20 GMT -5
For an interesting perspective on current home values/sales prices, get this. A home that I bought as new construction in 1988 is for sale for $1,000 less than I paid for the house in 1988. And it doesn't appear to be in bad shape. The photos show a clean, intact, apparently well maintained home.
By the way, this home is near Atlanta, not in really hard hit CA, NV, or AZ.
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brdsl
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Post by brdsl on Jun 30, 2011 16:35:09 GMT -5
For an interesting perspective on current home values/sales prices, get this. A home that I bought as new construction in 1988 is for sale for $1,000 less than I paid for the house in 1988. And it doesn't appear to be in bad shape. The photos show a clean, intact, apparently well maintained home. By the way, this home is near Atlanta, not in really hard hit CA, NV, or AZ. Is the neighborhood still the same quality? 1988 my friend lived in a flourishing suburb, by 1998 the area had changed with drugs, etc. At the peak, in 06, the area had not recovered...probably won't. It isn't a good way to value home prices though.
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❤ mollymouser ❤
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Post by ❤ mollymouser ❤ on Jun 30, 2011 17:12:32 GMT -5
We're in central California. A recent news article stated that current home prices (2011) are lower than 2000 prices.
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constanz22
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Post by constanz22 on Jul 1, 2011 6:44:49 GMT -5
I'm in a rural area of PA and we never had had any housing bubble here either. I live in a beautiful area, 1 mile from a main interstate where you can drive to one larger city 20 miles north and an even larger city 40 miles south. Both are very easy commutes due to the interstate. Most people commute to one of these 2 cities for work. Most homes here stay in families for years and years. I live in the house my parents built and I grew up in. Neighbors on one side is the grandchild of original owners and neighbors on the other are the original owners. I've looked at houses for sale here frequently, in my little town and a few close by. There are never more than a handful of houses for sale at any given time. Houses have really held their value here for these reasons. Housing is still pretty inexpensive here, but values have not dropped and there are very few foreclosures. You can buy a nice home, (most are older homes, very little new construction in this area), for under 150K.
I sold my starter house 3 years ago in the city to the north of here. I bought it in 2001 and paid 55K for it. It was a lovely little home, perfect for one person or young family. I sold it in 2008, when most markets had "crashed" for 78K.
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seriousthistime
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Post by seriousthistime on Jul 1, 2011 9:00:58 GMT -5
It is helpful to know the location of the real estate markets that everyone is talking about.
I am considering a move from downstate IL to the CA capital area. My real estate market here in downstate IL never had the big run-up in prices but there is a college here so there is some demand for houses. A house on my street, functionally obsolete in just about every way, just sold in a matter of days. I don't know how someone could even gut it and do a decent job of updating it. Other houses with less work needed are sitting on the market, but for good reason (also functionally obsolete floor plans, backyard taken up entirely by a pool, etc.). If I sold now, I think I could get what I paid in 2006. Never mind the $20K I put into it for a new roof, updated bathrooms, and privacy fence. (I figure this is offset by what I'd have paid to rent an equivalent place for 5 years.) I'd probably not be able to sell it as fast as I would need to if I move, but could rent it pretty easily for what it costs me to keep it.
On the other hand, the area I'm considering moving to seems to be really depressed and the prices now are appealing. But how do I know they won't continue to drop? I may be better off renting a place for a year and seeing where they go. It would also allow me to see the areas that I want to commit to. But moving is a hassle too. And if I rent a place for a year, the cost might be equivalent to the drop in prices that would occur over the same time.
Houses are not the cash cow they used to be.
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tskeeter
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Post by tskeeter on Jul 1, 2011 10:44:59 GMT -5
Appears to be. In photos that lawns appear to be well maintained, no junk cars (homeowners in this neighborhood park their cars in the garage, so you'd really notice more cars than usual), etc.
If you're curious, look up Lambeth Way in Conyers, GA on Zillow.
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brdsl
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Post by brdsl on Jul 1, 2011 11:55:05 GMT -5
Houses are not the cash cow they used to be. Nothing is a cash cow, if you buy at the peak. I would say they are now. Downstate IL or Southern IL? I would say you are in for a COL shock when you are talking CA. "A house on my street, functionally obsolete in just about every way, just sold in a matter of days." Paul probably picked it up. He was talking about banks packaging houses together to see, and I am just now starting to see it a little here in my area of IL. An investor picked up 10 houses, one or two paid for the package, the other 8 were basically lots (houses were shot).
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Post by Deleted on Jul 5, 2011 9:40:19 GMT -5
Houses don't get built when the town is land-locked. There's no available space to build unless you buy/tear down. But even to buy a tear-down, it's a minimum $300K. The only available land in the area was a golf course that sold at the peak for some obscene amount of money. What is the borders that are "land locking this area"? Other towns. Did you think it was an island or something? Maybe it's not like this in other areas, but around here people move into School Districts more than an area. So if you want to go to ABC High School, you look for houses that feed into that HS. Houses 1 street away that feed into a different HS can go for $100K less. So you are locked by the boundary of certain school districts.
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Post by Deleted on Jul 5, 2011 9:44:56 GMT -5
I'm in a rural area of PA and we never had had any housing bubble here either. I live in a beautiful area, 1 mile from a main interstate where you can drive to one larger city 20 miles north and an even larger city 40 miles south. Both are very easy commutes due to the interstate. Most people commute to one of these 2 cities for work. Most homes here stay in families for years and years. I live in the house my parents built and I grew up in. Neighbors on one side is the grandchild of original owners and neighbors on the other are the original owners. I've looked at houses for sale here frequently, in my little town and a few close by. There are never more than a handful of houses for sale at any given time. Houses have really held their value here for these reasons. Housing is still pretty inexpensive here, but values have not dropped and there are very few foreclosures. You can buy a nice home, (most are older homes, very little new construction in this area), for under 150K. I sold my starter house 3 years ago in the city to the north of here. I bought it in 2001 and paid 55K for it. It was a lovely little home, perfect for one person or young family. I sold it in 2008, when most markets had "crashed" for 78K. 20 miles can be a do-able commute, but 40 miles is far. A 40 mile commute around here would take you probably 1:15 minutes since traffic bottlenecks on the way to a city. I can find a house in chicago that's 40 miles from the city that's under $150K. I just wouldn't want to live there because getting places is such a pain. And buying in 2001, selling in 2008, and making money doesn't really mean that there wasn't a bubble. Housing markets didn't fall off a cliff until 2009-2011. If you bought in 2008, you're losing money in 2011.
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brdsl
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Post by brdsl on Jul 5, 2011 10:19:31 GMT -5
What is the borders that are "land locking this area"? Other towns. Did you think it was an island or something? I didn't know the area, when I think land-locked, I think geographic features...not school districts. School districts can change on the whim of a politician...mountains and swamp land isn't done as easily.
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