Before we bought our current house, coming up on five years ago, we looked at another slightly larger house that's literally just around the corner. It hadn't officially been listed yet, but our agent (who, weirdly, lives right next door) showed it to us, and we thought very hard about it. Unfortunately, it was about $20K more than the bank was willing to lend us, so we couldn't make an offer.
We looked at it on a Sunday, and talked to the bank on Monday. By Friday, it had sold, and for $10K more than the original asking price.
It was bought by a young couple, a professional contractor and his wife, and they've done a ton of work on the place-- new siding, new roof, a bunch of internal work. It looks really nice. They put it on the market again back in late July (at least, that's when the "For Sale" sign went up).
It's still on the market.
Now, it might be that they're asking a completely ridiculous amount of money for it-- I don't know, though it was hard to resist the temptation to go to one of the open houses they've had. They've changed real estate agents, too (the current sign is from a different agency than the one that went up in July), which might indicate that they're being unreasonable in some way.
But, really, if you want a clear and dramatic indication of the change in the housing market, this is it. And it's not just this one house-- other houses in the neighborhood have been staying on the market for much longer than they used to (at least based on the half-life for real estate signs sighted on walks with the dog).
It's probably a Good Thing that we're happy with our current house...
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I have a friend who's in a real bind: she thought she wanted to move from the Washington, DC, area to live near Charleston, SC, and bought a house down there. After six months or so, she decided that was a mistake, but she can't sell the house in South Carolina nor can she afford what the houses in this area are going for now.
The housing market around here (touristy, small mountain town near a large lake in NE California) has been insane for years. Houses going for 600K when they'd get 400K anywhere else, empty lakefront lots going for 500K+ (at about a half-acre on average). And they were selling, too.
Now ... lots and lots of signs, very very little movement.
Personally, I'm fine with this bubble bursting, as there's been enough development the past seven years - a sickening amount, actually. We've gone from three real estate agencies to five, and from about 2100 people to probably 2600. Whatever kills that growth is OK by me.
Two months on the market is nothing these days; I've heard via blogs that focus on the housing bubble that many markets have two years, if not more, of inventory on the market.
Two things have happened lately: the easy credit that was available in 2005-06 is now gone (this hit the news in a big way in late July and August), and people are now realizing that real estate prices in much of the country bore no relation to fundamentals like the ability of locals to afford houses. It probably wasn't as bad in Albany as other places like Florida or Las Vegas, but it was there.
I bought in 1998 in a college town 65 miles north of Boston (close enough to feel the effects of Boston's bubble). Prices doubled (or more) between then and 2005, to the point that an assistant professor could not afford to buy a house in this town. Correcting that imbalance will likely involve a 30-40% drop from current asking prices in my neighborhood, and my town is better off than most.
I moved from the southeast suburbs of Baltimore to the northeast suburbs of Baltimore in March (single-family house to single-family house). The house we bought had been on the market for 6 months and reduced in price 3 times. There are three other houses in our immediate area (literally within a baseball's throw of our back deck) that are currently on the market. Every one of them has been on the market at least the 6 months since we moved in, and two of them have been on the market for at least a year. Those two that have been on the market for a year have dropped their asking prices almost $100K. Their initial offering prices were absurd to start with, but that's still an amazing amount (we're talking $500Ks dropping to low $400Ks and almost high $300Ks in one instance). I'm not sure if I even have 20% equity in my house anymore with the way the bubble has burst around here.
What is throwing me is that demand for these houses is going down so much, yet prices are not from what I'm seeing falling to adjust to demand. Instead, stuff's just going unused.
Am I just not paying attention?
What is throwing me is that demand for these houses is going down so much, yet prices are not from what I'm seeing falling to adjust to demand
If they bought during the hot market, they paid so much they can't afford to drop the prices much. Says a veteran of CA real estate wars.
We were lucky(*this* time). Bought at just the right time. Sold at just the right time and got a great house in Seattle when we moved. I'm told the bubble still hasn't burst here and I'm wondering if/when it will... And if we should be selling this house now and sitting tight in a rental until things stabilize.
MKK
Yeah, we bought our house in 2003, and it was a total bubble-fest. The house was listed Friday, we saw it Sunday, put it an offer Monday, and there was already another offer; we ended up paying just above the asking price, and not because we were crazy; that's just how it was done.
If we were to sell it now, the Realtors(tm) have persuasive evidence that we could expect to take somewhere between a 5-10% loss on it. Which would be highly bothersome, except that it's a starter house, and our 5-10% loss translates into getting a massively better house on the buying side.
It'd suck to be somebody who over-leveraged themself into something they couldn't really afford, though.
We bought our house in July 2002, and it almost doubled in expected resale value at the peak, and is only at 160% of original purchase price now, based on comparable recent sales in our neighborhood of this model. We're in the DC metro market though, which tends to be a bit more stable thanks to that hulking behemoth across the Potomac (I'm in Northern VA).
Our 'stalled' market has about a two month selling period currently (when at the peak, you could sell a house in a day, and there'd be a bidding war involved just to make it interesting). I've said these people are insane ever since I moved to this area, and I maintain that it's still true.
@ #8
Yeah, the DC Metro area makes Baltimore metro look pathetic in comparison home-wise. Even as far north as Pasadena, MD, where I used to live, the DC market was causing a disproportionate increase in prices compared to north of Baltimore, where I live now. Damned commuters!
Things seem to still be moving fast here in Austin, Texas. We put our house on the market in May at what I thought was a somewhat inflated price (had to try, after all), and had a full price offer in three days.
Well, Austin is widely reported to be one of the sanest (cheapest) housing markets -- sales and rental -- in the US (Check Business Week)
As for Mary Kay's wondering about Seattle, the history is that Seattle runs about 9 months to a year behind the rest of the country when housing blowouts begin.
The Housing Bubble Pops
Dean Baker
http://www.thenation.com/doc/20071001/baker
The housing market is in its worst downturn since the Great Depression--and it's taking the rest of the economy down with it. Most forecasters insist there won't be a recession, although the August job losses forced even optimists to acknowledge that the meltdown is causing serious economic problems. (When it comes to recessions, the professionals seem to be the last to find out: On the eve of the last downturn, in the fall of 2000, all the Blue Chip 50 forecasters predicted solid growth for the following year.)
[truncated]
The real estate bubble burst in 1926. The stock market bubble came next. The Great Depression didn't start until 1929 when the stock bubble burst. Things bottomed out in 1933, which my dad always said was a great year to invest, if you had money to invest.
We've been noticing the market stalled in our area this year. Of course, special properties are still selling, but commodity housing is not moving. Out here, three hours west of Seattle, this started last year when the MLS was pushing 1,000 listings for our area. The MLS broke the old record this year, but at the start of the season, not at the end. The for sale signs are all over the place.
A lot of the prices we see are ridiculous. We look at actual sales, what realtors call "comps" or comparables, so we know what "priced to sell" means. An awful lot of the houses listed are not priced to sell. We figure that people get emotionally invested in their houses, so even if they can afford to sell for less, they are loath to do so and wind up waiting months to lower their price and close the deal.
We just closed on an investment property sale today, and we made money. You may notice we refer to housing, properties and houses, not homes. Anyone who gets confused and thinks they are buying a home, not a house, is making a metaphysical mistake, and likely to pay for it.
A colleague's mother lives in Coastal City. The house across the street sold for $900,000 two years ago. The house next door just sold for $400,000. They are the same size. It is bad enough when you owe more on a car than it is worth. A house? By a half million dollars? Those people are probably hoping it gets wiped out by a tidal wave so they can use the flood insurance to get out of the loan.
Like was noted above, Time On Market depends entirely on realistic pricing. Our paper has had many articles from Realtors pushing this fact, and I have seen it in action in our neighborhood. Some sit, and some sell, but some might not be able to afford selling it at a realistic price.