May

31

Real Estate Market: Home Values - “Yikes!”

Filed Under Sellers |

Three words describe the housing market (and economy in general), “This is nuts!” The downturn of the housing market continues on and doesn’t appear to be coming to an end anytime soon. According to Chief Executive Officer of JP Morgan Chase & Co., Jamie Dimon, home prices will drop as much as 9 percent this year. In Suffolk/Nassau County, the expectations are worse, with declines of 12.7% in 2008. This trend is expected to continue through 2009 at a rate of 8.9% according to the Long Island Board Of Realtors.
The chief U.S. economist for Goldman Sachs, Jan Hatzius, projects prices to fall another 10% before stabilizing in late 2009.
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One of the dark horses throughout all of this is the effect foreclosures will have on the market. We have not seen the full impact of foreclosures on the market (the average immediate loss of equity for a neighboring home of a foreclosure is approximately $8000). The Long Island Board of Realtors hasn’t run numbers yet, but with all the short sales (homeowners negotiating with respective lenders to sell their property for less than what is owed) creeping into the market and not selling, one can only guess at what is going to happen to a good portion of these homes and unfortunately, the families caught in the middle.
I realize for any homeowner reading this right now, especially ones that would like to sell, this news isn’t good. It’s not good for me as a real estate agent either. I don’t like lowering the prices of homes! I always want to get the most money for my clients. But, there is hope.
Right now, there is a price that a buyer will rush out of their closet to sell. I see it everyday. Many homeowners think there are “no buyers”. On the contrary, there are numerous buyers - they just wait to see the price adjust to the right price, then they buy. The problem is, homeowners, even ones that are in a great equity position who stand to walk with over $100,000 in their pocket after all is said and done, think the price to sell at is like “giving it away.” This is the new mantra of homeowners across Long Island. “I don’t want to give it away.”
In the next 30 days, if I price your home correctly, I will sell it. If not, take the price I give you, as the value of your home and minus 20%. Yesterday I priced a homeowners property at $370,000. I told him if I priced it at $370,000, using the power of Coldwell Banker marketing services (yes, there’s still a value in the brand buyers trust!), I could sell his property within 30 days. I know this based on what I know a about values in the area and what buyers are paying. I don’t base my offering prices on what a homeowner wants - that’s useless.
The homeowner in this case had his home priced at $419,000. Unbelievably over priced. He had expired off the market and hated real estate agents - blaming his last agent for “doing nothing”. I pointed out the fact that his previous agent probably cost him $40,000 because they overpriced him in 2007. Of course, all the agent did was price the home at the price the homeowner wanted. No good. In this market, you simply can’t afford to “go with your gut.”
Numbers are simple, emotions are not.
So where does this leave my homeowner? I tried desparately to tell him that by 2009, his home will be worth $300,000. And then I told him that most likely, the market will level out and begin a steady national average incline in home appreciation (we’re not going to get 2003, 2004, 2005 repeat with 30% appreciation annually). And how did I come up with $300,000? I simply took what Goldman Sachs, National Association of Realtors, Yahoo Finance, CNNmoney.com, Business Week, and various CEO’s of major companies are saying about the housing market and applied it to his current value. I could sell his home now for $370,000. I then took that number and deducted 20% roughly.
Yeah, ouch!
Now for buyers who read this article, please note that the time to buy is now. Do you plan on buying and selling next year? If so, yes, don’t buy. But if you plan to buy and live in the home or manage the investment property for years to come, then now is definitely, without any doubt, the time to buy. Low interest rates of around 6% cannot be looked at lightly. I will be posting about interest rates again, and discussing their true value.
In closing I’d like to leave my selling readers with this article on my website about what’s positive about selling now. Don’t forget, when you sell, you also buy! Don’t let fear dictate your life or your decisions. If the quality of your life would be better if you sold, then move on. You don’t take money with you after this life is gone, so live it. Just call me first and let me help you price your home correctly, market it successfully and help close the deal to put the most money in your pocket now!
7 days a week - 1-877-SOLD-123, ext. 51.

(c) Copyright 2008, wwwtommcgiveron.com

By Tom McGiveron


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  1. Tom McGiveron | LI Real Estate | Suffolk Homes on June 6, 2008 1:27 pm

    […] Please feel free to read my latest article on real estate market values. […]