02-06-2008, 09:27 AM
A good real estate agent friend said that there is absolutely no real estate slump. The real estate market is still strong. There are still buyers for all homes being sold. Mortgages are readily available and at great rates. Real estate is still appreciating at a constant rate over the last 20 years. She said what's causing all this talk of doom and despair is the events from 2004-2006 where prices ran up so far above what anyone would ever consider reasonable (and people who were otherwise unqualified for a mortgage was getting them) that the current correction back to the normal is a hard pill for some to swallow. So instead of saying I overpaid for what I bought, I got into a debt I couldn't afford, my property wasn’t really worth those high prices, or I can't get the ridiculous prices of a few years ago, they look for something to blame it on but their own foolishness and greed.
There is a house for sale in my neighborhood. It sold in 1999 by the developer for $200,000. My agent friend said she can put it on the market today for $400,000 and get a buyer by weeks end or for $500,000 and wait for a long time. But it's still on the market for over 6 months because the owner can't accept that it's not worth the $550,000 he refinanced it for during the greedy run up. The house is still appreciating 10% or more each year, but because the owner appreciated their debt on the house in a single year more than the house appreciation, they are the cause of their own problems, not the real estate market.
She said she has just as many buyers as sellers, just not enough sellers willing to price what buyers are willing to pay. They are using the high prices of 2005 & 2006 as what they really think its worth, not what it would have been if the ridiculous events of 2005 & 2006 did not occur.
There is a house for sale in my neighborhood. It sold in 1999 by the developer for $200,000. My agent friend said she can put it on the market today for $400,000 and get a buyer by weeks end or for $500,000 and wait for a long time. But it's still on the market for over 6 months because the owner can't accept that it's not worth the $550,000 he refinanced it for during the greedy run up. The house is still appreciating 10% or more each year, but because the owner appreciated their debt on the house in a single year more than the house appreciation, they are the cause of their own problems, not the real estate market.
She said she has just as many buyers as sellers, just not enough sellers willing to price what buyers are willing to pay. They are using the high prices of 2005 & 2006 as what they really think its worth, not what it would have been if the ridiculous events of 2005 & 2006 did not occur.