House prices to drop much lower: Greenspan

[brewer12345]

By way of comparison:

One of the largest and nicest properties in my cul-de-sac was bought in '05 by a would-be flipper. They paid $600+k, and then sunk (guess) $100k into it. Put it on the market in '06 for $850k. Sat for almost a year and was foreclosed this spring. The house has been empty for upwards of a year, and has deteriorated. Now on the market asking $499k. I am tempted to at least look and make a lowball offer.

 

[retire@40]

...I am tempted to at least look and make a lowball offer.

Still today what some [-]sellers and real estate agents [/-]people consider low-ball offers are not low enough.

Prices have gone up so much in some markets that an offer of 40% to 50% of peak selling prices is more like what the fair price should be. I've seen real estate in my area (northeast) that is selling (or trying to be sold) for double what I would ever offer.

 

[Lusitan]

I've seen real estate in my area (northeast) that is selling (or trying to be sold) for double what I would ever offer.

Ditto. I live in the NE and think that prices have a long, long way to fall -- either in nominal dollar value or in real value as inflation chips away over time -- before we hit the bottom of the housing market around here.

Hence, any lowball I'd make today would look more like a "grounder" ...

 

[jazz4cash]

Is the to-the-winner-go-the-spoils segment of the govt workforce really that large that it drives real estate prices in DC? I didn't think it would be large enough to have such an impact. But you know that area way better than I do.

In short, my answer is NO! I'm a born and raised in DC guy currently living in Laurel, MD and those areas mentioned by Jay_Gatsby are sub-markets in my opinion. Many who buy those homes can afford whatever and it has minimal effect on median price range homes. Many appointees and elected officials maintain a family residence back home also. I do agree that homes are sitting for extended periods and sellers are generally asking for '05 market prices (which are 5-10% below '06), so overall the homes that actually sell are in the 10-15% below peak price range, but it's hard to tell about concessions. I believe people are unable to lower prices in many cases because of minimal equity and granite countertops. The pending rate re-adjustments are likely to have more impact than the other factors, IMO. Market for suburban townhomes could be in the 20-25% decline from peak range.

 

[tryan]

Funny thing about a 20-25% decline from the 05 "peak" is that you're only back to the 04 prices. That's why I am still a seller in this market.

 

[jazz4cash]

Funny thing about a 20-25% decline from the 05 "peak" is that you're only back to the 04 prices. That's why I am still a seller in this market.

What's really funny it that I'd be a buyer in THIS (Washington DC) market for the same reason, providing I really needed to make a housing change, but it would influence how much house I bought. This market is super stable job-wise so the housing market is very unlikely to crash due to local economy. A recent unknown wild card is impact of immigrant home owners that could pack up and leave voluntarily or involuntarily.

 

[honobob]

Ha
Are you thinking that a 4% increase in the number of houses listed for sale is HUGE? Seems low to me and probably explainable as the yearly increase that happens each year when the portion of buyers that want to close before school starts stop buying and the unsold listings sit because the realtors signed sellers to terms past August. And what is 4%? And extra 40 homes on the market? Is that really big against all the homes in the area?

A measley 1.2% increase in 18 metro areas with all the Credit/bubble/blah-blah talk seems to indicate that it is all talk. Do you see it differently or did you think the 4% was low also?

 

[macdaddy]

It's ALL about the financing. If people can still get financing to buy a house, they will buy. If not, they won't, and prices will come down proportionally.