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It is rather ugly out there
Old 07-21-2008, 11:58 AM   #21
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It is rather ugly out there

We will probably have to see prices fall below cash flow because so many have no cash and now have bad credit and couldn't buy if they wanted to. Prices still aren't there yet. I think lenders are both overwhelmed and capital short leading to significant lags. Many are resorting to rentals which may make sense when they have access to funds at much lower rates than individuals. It may only delay their reckoning, but also allow inflation to absorb some of their losses. Meanwhile, the market remains largely dead, waiting for time to ease conditions.
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Old 07-21-2008, 12:23 PM   #22
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How well do you know the neighbor? If it's a case of bad management of their finances, and an ARM, you could buy the house, and keep THEM as renters to you. I am sure you could get a fixed rate mortgage, you get to keep them as neighbors, etc.

Somewhat of a risk but you would need renters anyways, right??
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Old 07-21-2008, 01:03 PM   #23
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Originally Posted by Notmuchlonger View Post
Zillow is wildly inaccurate from my experience.
If you look closely, you can find some that use the data from 'recent sale'. Those are from the public records, and seem accurate on the few I've checked.

Beyond that, it does seem pretty random. - ERD50
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Old 07-21-2008, 01:11 PM   #24
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If you look closely, you can find some that use the data from 'recent sale'. Those are from the public records, and seem accurate on the few I've checked.
Around my neighborhood, there has been no recent sales, nor houses on the market. I suspect most of my neighbors have paid off their mortgages, and intend to either stay put for a while, or to die in their house. In such illiquid markets, no one knows what a house is worth. A friend of mine left his job in AZ, and wanted to sell. Two realtors he contacted gave widely different estimates, from mid $300K to high $200K. His house would have been worth in the high $400K two years ago.
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Old 07-21-2008, 01:13 PM   #25
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I don't know them well enough to ask that, I can only speculate that they pulled money out of the house for living expenses, because their newest vehicle is the result of getting sideswiped. I have never seen any conspicuous consumption on their part. House is furnished in a moderate manner from the glimpses I've seen on Halloween etc. Maybe bad investment scheme, he did try to start his own business. That may have been it.

As far as Zillow goes, I laugh at the "Zestimates" for my 'hood. One street will have 20 houses in a row, the middle one for sale for 60-80k less than all the "Zestimates" around it. Zillow was more accurate before the bottom dropped out, now it can't keep up with the free fall.

I hear what you're saying, but I still can't understand any scenario (short of already borrowing against the equity) where selling a house with $150k equity isn't better than giving it back to the bank.
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Old 07-21-2008, 01:13 PM   #26
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Re: Zillow

The funny thing is that if you check out the Zillow discussion boards, most of the talk in the "Zestimates" section is from sellers crying that their Zestimates are too low ... whereas here most of the comments seem to indicate that most people think the Zestimates are still too high.
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Old 07-21-2008, 02:27 PM   #27
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I hear what you're saying, but I still can't understand any scenario (short of already borrowing against the equity) where selling a house with $150k equity isn't better than giving it back to the bank.
Yeah, I have to imagine they tapped it for something. I'm sure they wouldn't walk away from equity.
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Old 07-21-2008, 03:08 PM   #28
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Re: Zillow

The funny thing is that if you check out the Zillow discussion boards, most of the talk in the "Zestimates" section is from sellers crying that their Zestimates are too low ... whereas here most of the comments seem to indicate that most people think the Zestimates are still too high.
That's understandable. My two brothers who have larger and more expensive homes than mine used to look at home prices weekly to estimate their net worth. I am sure they now feel Zillow underestimates the price. Compared to actual sales prices 2 years ago, houses for sales in their neighborhood have asking prices at 25% below the top, and there's no taker.

The price of anything is simply determined by what the buyer is willing to pay. Right now, buyers are scarce and far in between. At some point, the price will be ridiculously low. But unlike stocks, it takes too much work to make money in real estate, and I am basically lazy.

PS. Having much more of my networth in equities than real estate, I have to remind myself that I look at stock prices DAILY to estimate my networth. So, no different than my brothers! These stocks are way underpriced by WallSt.

Well, I forgot a BIG difference. I paid CASH for my stocks, and they pay some dividends, no matter how little. But most home owners buy their houses on MARGIN. They face the same peril as some stock buyers facing margin calls. No, not me. I own everything outright, stocks, cars, houses...
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Old 07-21-2008, 03:39 PM   #29
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I went back and looked at Zillow for our neighborhood. It was interesting the wide range per square foot that people were asking. From 117 for an empty house to 164 for someone who bought at the top (June 2006).

That house was bought at 455, they are asking 450 but even Zillow estimates it at 430. Good luck is all I can say. Actually, Zillow estimates are significantly below what most of the people are asking.

I did see one house from foreclosure.com but they don't say which. Also there are two on there at the make me move (tm) price of $600.000.
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Old 07-21-2008, 05:25 PM   #30
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I just looked up my house on Zillow. Their value is at least 30 percent too high.

My neighbor has his house for sale by owner. He is probably expecting to get the inflated price....
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Old 07-22-2008, 01:10 AM   #31
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Before you gasp, these are small town, rural, long commute to work Idaho figures. I had been watching a house for sale. The list was $129,000, and it sat on the market for 5 months. It went back to the bank for 92K at foreclosure. It sold last week for 60K. It had a fabulous view and sat on just under 2 acres, but the house itself was small and half remodeled when the divorce that forced the attempted sale and subsequent foreclosure took place.

A working person would have about a 25 mile commute and probably earn about $10ph in that area.
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Old 07-22-2008, 08:17 AM   #32
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Looking at Zillow for my block, they have my home at almost exactly 100k less than what I paid 2 years ago. 506k, I paid 605. My neighbor paid 651 for his a bit after me, they list him at 563.

However, the "value range" for my home is $399,740 - $627,440

A huge spread. I would guess I bought at the upper end, but I dont know how I would determine if my local market has gone up, down or stayed flat.

EDIT: Well also according to Zillow, the 1 year "value trends" are up 10% and 5 year is up 21%. Up 8% since last sale. But this is all based on their Zestimates so I dont know how that applies to real world pricing.
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Old 07-22-2008, 08:24 AM   #33
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zillow has the latest sales as well. check them out and see the prices paid per square foot. compare that to your home. should give you a rough estimate
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Old 07-22-2008, 08:24 AM   #34
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i tried to convince a family member to give his house back to the bank, but he won't listen to reason
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Old 07-22-2008, 08:59 AM   #35
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Originally Posted by limpid lizard View Post
Before you gasp, these are small town, rural, long commute to work Idaho figures. I had been watching a house for sale. The list was $129,000, and it sat on the market for 5 months. It went back to the bank for 92K at foreclosure. It sold last week for 60K. It had a fabulous view and sat on just under 2 acres, but the house itself was small and half remodeled when the divorce that forced the attempted sale and subsequent foreclosure took place.

A working person would have about a 25 mile commute and probably earn about $10ph in that area.
Stop, you are killing me. Let me guess: property taxes would be under $1k a year?
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Old 07-22-2008, 09:57 AM   #36
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Taxes would most likely be under $500 for the year. The house sits on a hill side above the Clearwater River with a view that would be heaven to wake up to each day. This is in what we refer to as the banana belt due to the very mild micro climate. The growing season is quite long compared to other areas within 35 miles and when I have 6 inches of snow overnight at my house 50 miles away, this area gets a skiff.

If I can unload my house, I'm heading that way. I have my eye on a 5 acre piece closer to the river and lower down the hill. There is even less snow at this level and the summers are a tich cooler due to the hillside sheltering the property from the afternoon sun. So far, there has been no interest in my house. Nada, none, zip, but then within about a 200 mile radius nothing over 200K is moving.
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Old 07-22-2008, 11:07 AM   #37
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Taxes would most likely be under $500 for the year. The house sits on a hill side above the Clearwater River with a view that would be heaven to wake up to each day. This is in what we refer to as the banana belt due to the very mild micro climate. The growing season is quite long compared to other areas within 35 miles and when I have 6 inches of snow overnight at my house 50 miles away, this area gets a skiff.

If I can unload my house, I'm heading that way. I have my eye on a 5 acre piece closer to the river and lower down the hill. There is even less snow at this level and the summers are a tich cooler due to the hillside sheltering the property from the afternoon sun. So far, there has been no interest in my house. Nada, none, zip, but then within about a 200 mile radius nothing over 200K is moving.
Sounds nice. Someone who is FI could choose to live there for a few years, and then move on to somewhere else when the view became boring. It's amazing what possibilities are available if you have the cash....
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Old 07-22-2008, 12:27 PM   #38
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I was thinking the same thing Jay ... the possibilities of dramatically lowering your cost of living really open up once you no longer have to rely on a j*b.
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Old 07-22-2008, 01:19 PM   #39
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Depending on your hobbies, it could take quite sometime to become bored in this area. The Clearwater is lauded as one of the greatest steelhead fisheries.
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Old 07-22-2008, 09:19 PM   #40
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The house sits on a hill side above the Clearwater River with a view that would be heaven to wake up to each day. This is in what we refer to as the banana belt due to the very mild micro climate.
I remember the term "banana belt" used to describe a retirement haven in a financial magazine, perhaps in Montana. I am racking my brain, yet cannot recall the state. What I remember was the aerial photo showing a nice lake, a river with boat docks and surrounding green hills. House prices as I remember were not exceptionally low, but quite reasonable for such scenic locale.
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