This widespread problem, where sellers think they "deserve" a price because that's what a neighbor got last year, or that they're at their "rock-bottom" price because that's their break-even number, well, got some bad news.
Pricing is a function of what the market will bear at any given time folks. Not what you "deserve", not what you "need to get". Here's a report from in-full-meltdown-mode Chicago:
It's pretty amazing how fast the reversal has occurred since last year," said David Stiff, chief economist at Fiserv CSW, a property-data analysis firm in Boston."There has never been such a quick deceleration in price appreciation," Stiff said. "I was looking at data from 1969 forward, and it's unprecedented."
Not so, said Tommy Gentile, who has been trying to sell his five-bedroom home in west suburban Montgomery for about six months. He has reduced the price by $20,000, to about $380,000, leaving little wiggle room.
"That price is pretty close to rock-bottom, as far as money we've put into it," he said of the house, bought two years ago. "We have to get our money back because we've bought another house, and we're remodeling that one. We have two mortgages.
"Few people are coming to take a look" Gentile said. Between competition from home builders offering incentives to close out developments and about 10 neighbors who also have their homes for sale, it's a struggle to attract interest.
September 30, 2006
Ah, the financial stupidity of home sellers: Thinking their price has anything to do with what they paid or what they need
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24 comments:
Poor Tommy Gentile is nothing more than a victim.
A victim of the mindset that tens of millions of sheeple have that:
1. Real estate only goes up, forever and ever, amen.
and
2. Stocks only go up forever andever, amen.
To be fair, the sheeps got to this point by witnessing decades of fraudulent monetary practices by the U.S. government and their lackeys, the central banks/banking system/Wall Street (although some would argue that it's governemnt that is the lackey here!).
Now, we are reaching an inflection point where the Ponzi scheme is beginning to breakdown. However, the sheeps--who have NEVER studied monetary history--are trapped, totally clueless as to why.
Yet, this game is far, far from over my friends. Indeed, once we reach a tipping point where five million "Tommys" are out there, defaulting on their loans, threatening to bring down the world's financial system, look for the responses by the Fed/feds to begin, including (sorry for the redundancy, but it is important the we HPers know what we will be up against):
1. Debt "moratoriums" for the sheeps.
2. Bailouts by the Fed of Fannie/Freddie/FHLB/private mortgage MBS issuers, banks.
3. The creation of "RTC II The Sequel" to create an orderly liquidation (if that will even be possible) of the millions and millions of homes dumped back on the market.
Depending on the level of response and how late in the game the Fed/feds step in, you can expect either runaway inflation as the REIC is "monetized", ultimately leading to a deflationary depression or an outright depression right away if the Fed/feds wait too long.
The upside?
Millions of "Tommys" will get an education in "Modern-Day Economics".
Not so, said Tommy Gentile, who has been trying to sell his five-bedroom home in west suburban Montgomery for about six months. He has reduced the price by $20,000, to about $380,000, leaving little wiggle room.
Er, that's an awfully big house... I trust he's got the large family to go with it.
I remember seeing an article about McMansions in the NY Times a couple of years ago, with retired couples living in zillion-square-foot houses. Absolutely obscene.
you are living in the past
You clowns remind me of a stock message board where all the losers lost half their money and they unite together to proclaim how smart they were.
You sold you house
You bought gold.
You lost.
Now come on over to my blog. I will show you how to get some of that money back by buying home builders.
With some hard work, maybe I can get you inot a row house down the street from the public housing project. Then after a few years of paying the mortgage, I bet you can buy back your house.
Nobody goes to your blog dogcrap, Which is why your here all the time. We all know what's gonna happen soon, real soon. you can smell it in the air, it kinda smells like dogcrap.
I look out my window at the development across the street. Two years ago they were building 50 houses at the same time, last year they were building 25 houses at the same time. today there is'nt one house getting built at all. The infastructure is all their for hundreds more houses (roads, sewer, elect.) but not one house being built. So dogcrap your telling me I,m wrong for not buying and sittin on my money and gold? I still wonder what happened to all the carpenters that were building all those houses at the same time. Not just the carpenters but the electricians, plumbers, concrete guys, carpet layers. Are they all sittin at home right now thinking its just a temporary thing or are they all startin to panic? I'll buy my next house when I look out my window and see everybody working and building and selling once again. Dogcrap, you remind me of the devil when you try to sway people over to the dark side.
Now wait a minute. I thought that the market value of a home was calculated by using one or more of the following criteria:
· The assessed value for tax purposes.
· How much the home cost.
· How much is owed on the home.
· How much has been invested in the home.
· The sales price of a neighbor's home.
· The appraised value of the home when it was refinanced last year.
The concept that a home's value is the amount that a buyer is willing to pay just doesn't seem right.
Dogcrapgreen, Do you think all those people and flippers who cant sell their houses right now are going to go to your website when they finally do sell?
My friend bought 2 bedroom one garage townhome for 238,000 $ in Chicago Suburb.
Mortgage + assesment + tax + ins = 2200 $ a month.
It takes three people to pay that and their finances are stretched to the limits.
Daughter makes 7$ part time job and full time student.
Mother - 10$ an hour temporary job through Manpower.
Father 36000 a year OTR driver.
Prices must come down hard and soon !
oh this one made me laugh. i still remain amazed that sellers think they can set their price. market conditions dictate price, not seller's desire. this twit in montgomery is an idiot for buying another house before selling the first one. he must be desperate to get out of montgomery. don't blame him, since the area is nothing but converted farmland with shitty frame houses as far as the eye can see. traffic is a nightmare, and nearby aurora is infested with gangs. good luck !
LOL,HAHAHAHA
Must check this,classic bubble - 60 miles south of Chicago :
MLS #: 06270074
dogcrap, when you're wrong, just admit it and move on. there is no "upcoming real estate boom". it's over my friend.
admit you have a problem, seek help, move on with your life
Dogcrap, you're right, in 15 to 30 years there will be another housing boom. You might not be here to see it but it will come.
trailer trash,
But none of those criteria applied in the past few "seller's market" years.
I always liked how a little remodeling and some ceiling fans, costing maybe $20,000 somehow translate into multiples of two and three over what the tycoon flipper paid a year earlier. $100,000 for a granite countertop and cabinets I didn't get to choose sure sounds like a deal.
Sellers may ask anything and wait for their price.
I'll buy my next house when I look out my window and see everybody working and building and selling once again
Actually it's better to buy a house which was constructed in a slump, rather than a boom.
During the boom, the workers are sloppy and fast because they want to get paid by piecework instead of by the hour, and there is always more work to do.
During the slump, they take their time and stretch it out (and try to get paid per hr) because they know there aren't many new jobs.
Amen!!!!
I am in construction in SoCal (excavating) and the speed at which a house(s) is/are built bothers the Hell out of me!
There not square, plumb, low grade materials, the phenominal waste of materials, unskilled or very low skilled labor.....and on and on!
I would much rather buy an older home or wait to build one during tougher times!
Wait til the contractors are 'Hungry'!
When they Need work.
When their begging for it!
You'll get a beter product at a better price!
In tougher times in my area. I got an estimate(s) to paint my 1800sqft. stucco home for $1200 to $1400, inclusive.
Jump ahead 5 to 6 years to 2003, same painters, same house, same supplier.....est. $6500 to $10,000
and not inclusive!!!!
Wait til their hungry and have No work....they'll damn near do it for cost + a couple o hundred!
It took some time, did it by myself, got contractors discount on supplies, and did it for less than $500
Let's have a pity party for the FB'ers! Everybody, on three...Awwwww. Poor little FB'ers. Might lose money? Awwww. Buyer's sense of entitlement? Awwww. Rock bottom? Awwww.
"The concept that a home's value is the amount that a buyer is willing to pay just doesn't seem right."
Is he for real?????? Ok. Nevermind. I read your post again -you were joking.
2002 - "Why can't I afford these prices on my income?...Hey its just supply and demand."
2003 - "Why can't I afford these prices on my income?...Hey its just supply and demand."
2004 - "Why can't I afford these prices on my income?...Hey its just supply and demand."
2005 - "Why can't I afford these prices on my income?...Hey its just supply and demand."
2006 - "Why can't I sell this POS to get out from under this ARM I refi'd into?...Hey its just supply and demand."
regarding the quality of work in new homes built in California. There is a saying in the Hartford region of Connecticut that the best quality houses built were the ones built slowly (because not many were being built) in the 1930's during The Depression. Maybe in the next three years or so the quality of all our new homes will improve....somewhat sadly,
AGREED
That's a photo of borka's love life!
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