Comments on: House prices still too high?

By: Ken in Camarillo

Ken in Camarillo — Tue, 30 Dec 2008 09:22:23 +0000

The low interest rate combined with interest only payments to get through the bad times could allow a good percentage of mortgages to survive until some equity returns (might take 7 to 10 years though). At least the mortgage companies wouldn’t have to write off the mortgage, and the books would look better (but the cash flow would take a hit).

Maybe a lot of houses were so overpriced that even interest only payments won’t work.

By: Gregory Hilton

Gregory Hilton — Tue, 30 Dec 2008 04:17:54 +0000

I am not a realtor but I am trying to sell my parents home in Armonk, New York. It is close to Greenwich and the price is under $1 million. It is located within the Windmill Farms area. A link describing the property is above. My blog is located at: http://diplomatdc.wordpress.com/

By: Lou Minatti

Lou Minatti — Tue, 30 Dec 2008 04:14:56 +0000

“What would be your specific advice to a client with a family looking to buy in Greenwich in the $1 million range? Is there anything on the market in a good, family neighborhood that you think is priced to sell?”

And there lies the problem. A house in a “good, family neighborhood” should not cost $1 million. It should not cost $500,000. The fact that some people think $1 million is a reasonable price means that there is still a long way to go. Hint: Nice family houses in good school districts in Fairfield County were going for $90k in 1978.

You people in the northeast with recent mortgages are SO hosed. What were you thinking?

By: christopherfountain

christopherfountain — Tue, 30 Dec 2008 02:26:15 +0000

ACH – I agree completely – I’m working on a post which will probably get up tomorrow, on the failure of banks to assign any talent to property disposal and how that makes it almost impossible to match buyers with houses that need to be sold.

By: Bob Hawkins

Bob Hawkins — Tue, 30 Dec 2008 02:08:42 +0000

I plan to buy my first home in 2009. I attended a seminar for first-timers given by the mortgage specialist at my credit union.

He said that banks don’t clean up foreclosures because they don’t expect to make back the cost of doing so. There are so many foreclosures compared to the number of buyers who will take them.

He also said that banks are seeing a new phenomenon: foreclosures that have been vandalized by the former owners. Apparently this used to almost never happen, now it’s fairly common. The cost of repairing these homes is so great (all the plumbing ripped out, for example) that it’s really not worth it.

By: Dennis Norman

Dennis Norman — Tue, 30 Dec 2008 02:00:40 +0000

Christopher
I agree with your post and your opinion regarding prices…just a few days ago I wrote an article on one of my blogs entitled “Mortgage Interest rates continue to fall…life support for the ailing real estate market but not the cure” ( http://realestateconsumernews.com/financing/home-mortgage-interest-rates-continue-to-falllife-support-for-the-ailing-real-estate-market-but-not-the-cure/ )
My article addressed the 4-point plan being pushed by the National Association of REALTORS(R) to congress which includes the Treasury buying home mortgage rates down to 4.5%. My feeling is interest rates aren’t the problem (we are already at record lows) I think the problem is price…it appears you and I are on the same page.
http://realestateconsumernews.com/financing/home-mortgage-interest-rates-continue-to-falllife-support-for-the-ailing-real-estate-market-but-not-the-cure/

By: Instapundit » Blog Archive » HOUSE PRICES: Still too high? I think so, and I’m surprised at how unrealistic sellers still seem …

Tue, 30 Dec 2008 01:32:08 +0000

[...] PRICES: Still too high? I think so, and I’m surprised at how unrealistic sellers still seem to be. I’m seeing [...]

By: Ach

Ach — Tue, 30 Dec 2008 01:11:39 +0000

Ronald – I don’t think the banks can come close to keeping up with the foreclosures. They’ve never had the personnel to handle the quantity they’re seeing. And the move slowly. This hurts them with appraisals, because 1 month later, the house is worth less due to comparables. Considering it can take 6 months for a bank to work through a short sale… I think they’re a bit overwhelmed. And considering short sales and foreclosures are about the only thing selling, and (slow) banks are the ones selling them, the prices are constantly behind “market price.” And this with banks usually offer foreclosures for 10-15% below what they think is the current market.

Plus there are only 3 types of buyers at the moment, none of which are sufficient to help the market.
1. First time home buyers who are sick of living at home and don’t want to wait anymore. They have a lot of incentive to wait, can’t afford much even under normal circumstances, and the economy is a bit spooky. (I myself fall in this first category: I’ve had an offer in on a house since the end of Aug. Five months and 3 appraisals later, and I’m still waiting)
2. Real Estate speculators who think we’re close to or at the bottom. They’ve been burned already in a couple cases (this summer in California in some places).
3. People who MUST relocate due to employment or marriage or whatever. These are the ones that are really taking it on the chin: they HAVE to price their existing house to sell, which means they take a big hair-cut because they’re competing with foreclosures. And they have the misfortune of buying relatively high (the housing market hasn’t bottomed yet).

As I understand it, move up buyers (sell their current house to buy bigger & better) are the primary drivers of the real estate market. You and Mary pointed out why they aren’t a significant factor, and they won’t be for some time.

I tend to get my information from a few places. One of my favorites is:
http://mrmortgage.ml-implode.com/
Hopefully he is more doom and gloom than is merited, but much of the information and insight he provides is interesting.
The other one I tend to read is:
http://recomments.blogspot.com/
An interesting take on the situation as well.

Just my $0.02

By: Right Brain

Right Brain — Tue, 30 Dec 2008 00:43:07 +0000

And anonymous in Greenwich, find out the major lenders in that area, probably the remnants of Wachovia and WaMu, and contact the “loss mediation department.” They have thousands of foreclosures and would love to do a nice quiet sale with you. This is commonly known as a short sale where you buy the house for less than the loan. Don’t buy retail in a declining market, forget the brokers, they’re unusually clueless in a down market. And yes $1M is plenty.

By: Right Brain

Right Brain — Tue, 30 Dec 2008 00:37:50 +0000

I am a condo builder in Manhattan and presently shopping for a primary residence in the Hamptons. Prices are still ridiculous on both ends: Manhattan prices are holding but volume is down dramatically, I can name five new projects off the top of my head that have stopped due to lack of financing, two after the foundations were put in; there are some builders out there in a world of hurt.

The Hamptons are akin to Alice Wonderland: there are people walking away from $300/sf mortgages and the guy next door has his house listed for $600/sf. Surreal. Dumb. Waste of time. There is nothing that will change a home owners mind about the value of his house other than time, lots of it. So we aren’t even near the bottom yet in the Northeast. Third quarter results for the Hamptons showed an 11.1% third quarter drop from the previous quarter and a 27.5% third quarter drop year over year in Southampton.

Are we there yet. Nope. If you have cash rent for the rest of the year, or pursue short sales, no reason to catch a falling knife.