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I guess that's what I mean. If it's been on for 3-6 months and isn't under contract, it wasn't priced at "current market value" to begin with.
We were very lucky when we sold our last house because our agent used the same logic you do-- she said not to even look at comps from 6 months ago. She said 90 day. And then laughed wryly and muttered, "30 really."
The problem in my area is there aren't even enough homes selling to get a sense of what the prices should be currently. And every noodle head "seller" who lists too high casts the rest of the market in doubt. If the majority of homes that list have to take multiple price reductions before going under contract, why in the world would anyone trust the majority of listing prices as being in touch with reality?
Inaccurate pricing breeds distrust of the market. And distrust of the market means buyers keep money in the bank until they see a price that's undeniably good.
FMV thinks people who sell too cheap hurt the market (we'd probably disagree on what "too cheap" is). I'd agree that selling really too cheap hurts the market but add that people who list too high hurt the market as well, since they slow it down and ultimately sell for less than they would have if they had priced it right from day one.
Just wondering...does paying too much (regardless of time period) hurt the market as well?
Just wondering...does paying too much (regardless of time period) hurt the market as well?
I think we only need to look out our windows to answer that one.
If only one buyer paid too much (because they were independently wealthy and felt like it), it wouldn't be an issue.
The problem is, the banks used low or zero down, no documentation, interest only, etc, etc, etc. to get all kinds of people into levels of debt they could never afford. Which allowed hundreds of thousands of buyers to pay too much.
And we know what happened next.
On a large enough scale, paying too much is definitely a problem.
Just saw this: In Wake of US Housing Crisis, What Lessons Learned? - Economy * US * News * Story - CNBC.com (http://www.cnbc.com/id/33345675/ - broken link)
See what happens to the housing market, "hurt, current, of whatever" when and if the job market increases. That is what has to happen before the housing market can change exponentially.
See what happens to the housing market, "hurt, current, of whatever" when and if the job market increases. That is what has to happen before the housing market can change exponentially.
Before it can change exponentially (for the better)? Hell, before it can actually stabilize and "bottom" for real at all. All that "hope to homeowners" bull ****, all the artificially and criminally low rates, all the tax credits and incentives, and yet foreclosures jump at least 25% YoY for this past quarter. All that and it was barely a BLIP uptick in home sales YoY. All that nonsense and we barely managed to kick the can down the road a few months, spread it out over a few more years, and cause it to grow worse by not addressing the problem properly and head on.
The major banks and financial institutions are for all intents and purposes still insolvent, they've simply been semi-transitioned to the government (mainly by having any and all burden of their future liabilities and losses shifted to the taxpayers). "But not really". Practically the only people that can get loans, are the ones that don't need them.
Effective unemployment, i.e. "real world" unemployment is running at 16-18% AT LEAST. In Cali and LA, it's over 20%. And the jobs that are "coming back" are continually lower paying. Lesser jobs. 90% of the country, if not more, will have a lower quality of life the further we go into this century. Absolutely no doubt about it.
90% of the country, if not more, will have a lower quality of life the further we go into this century. Absolutely no doubt about it.
Compared to what/who/when?
Compared to Paris Hilton?
Compared to life within the bubble?
Compared to some people's parents?
Compared to the neighbors?
Compared to one's grandparents?
Compared to life in da old country?
How much is too much? Who determines this? What's it relative to?
Bubbles are a cultural phenomina, a perfect storm.
I think "too much" is anything that deviates substantially from an inflation-rate-based trend line for the home (assuming normal upkeep and no major additions).
As far as "hurting" markets, I've come to consider a healthy market one in which median home prices are not out of line with median incomes and median rents.
To me a "recovery" in the housing market now means a stable market where the home prices have some relationship to local incomes, and people don't have to go into indentured servitude with a bank to buy a home.
At this point, I'd settle for stable with 8-10 months of inventory. I won't hold my breath.
We sold in FL in April of 2008. We listed slightly under what the most recent sold comp was. Our neighbors all fussed that we listed too low. One even said that "our house was a steal and we would regret it when prices bounced back in a year". But we ignored and listed. First offer came in at 80% of list. We negotiated with them and came to a sticking point at about 93% of list. At which point the buyers stated they were cash buyers. Negotiations done - house sold.
Neighbors were all astonished that we didn't hold out for more! But you know what, we needed to sell, they needed to buy and we knew there would be little hassle in the transaction.
That was BEFORE the "credit crisis", but when the FL market was already tanking. Now that same home would sell for about 68% of what we listed for.
Now I am sitting on the buying side. I have time on my side because I am happy in my rental. The more I can watch the market, the better I can spot a home at "fair market value". This I can say - very few homes come on the market at "fair market value" and I know this is so because I have the luxury of also watching the price decreases as the home does not sell. And when I say they don't come on at "fair market value" I mean they are listed for 10% or more of what the market will pay.
Now I do have to say that I am close to the Philadelphia and this area has not seen the drop that other areas have. But the drop is happening, just not a plummet. Sellers are slow to realize that fact.
The most interesting thing I have found, is that when I see a home that I feel is close the the market value, generally it is listed by one of two realtors in the area. And you know what - they generally go under contract within 6 weeks. Funny how that works!
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