10 Comments

1. 

   enplaned on August 22, 2010 at 10:32 pm

   OK, so other than the 5% of sellers who either get realistic (or desperate, or both) this is going to be stalemate.

   So how does the stalemate resolve itself? If you figure the economy is going sideways at best, it’s hard to see buyers suddenly becoming willing to pony up more $$$.

   Though, if you believe the NYTimes article, delusions about the evolution of house prices haven’t yet been punctured.

   http://www.nytimes.com/2010/08/23/business/economy/23decline.html

2. 

   CA Refugee on August 22, 2010 at 10:57 pm

   I’m seeing the 100k gap here in Phoenix also.

   I have a question – what do you think is the ratio of banks that get in touch with reality? Is it also 1/20?

3. 

   CA renter on August 23, 2010 at 1:48 am

   A quote from enplaned’s link:

   “The notion of housing as an investment first began to blossom after World War II, when the nesting urges of returning soldiers created a construction boom. Demand was stoked as their bumper crop of children grew up and bought places of their own. The inflation of the 1970s, which increased the value of hard assets, and liberal tax policies both helped make housing a good bet. So did the long decline in mortgage rates from the early 1980s.”
   ——————-

   It’s instructive to ask ourselves if these decades-long trends are going to remain in place, or if they’re about to reverse.

   That “long decline in mortgage rates” is the credit bubble that went ballistic in the 2001-2007 period. They are still trying to prop it up, but there is a point where it becomes unsustainable (because the debt can no longer be paid off without “printing” money), and the only way to repair it is to allow it to collapse. The soon we allow this to happen, the sooner we get a real, sustainable recovery.

4. 

   CA renter on August 23, 2010 at 1:48 am

   Jim,

   You’re spot on WRT the $100K gap.

5. 

   Troubled Loner on August 23, 2010 at 2:30 am

   And thus begins the long, slow descent. My guess is that today’s limited buying pool has been paying attention to the housing market, will not overpay for a house, and is able and willing to wait. In other words, a seller’s worst nightmare. Those who don’t have to sell will pull their homes off the market, thinking they’ll wait a year or two, believing that by then, the housing market will have recovered and will be back to “normal”.

   But what is “normal”? Unfortunately, I think too many sellers believe that the ~2005 era housing market was normal, and believe that homes really were worth the ridiculously inflated prices people were paying back then. That psychology is strongly entrenched, and will take time to change.

6. 

   shadash on August 23, 2010 at 6:03 am

   Why be realistic on price when you know if you stopped paying the mortgage it would take at least a year for foreclosure to occur. Even then you could play the loan mod / short sale game and potentially extend out another 6 months to 1+ years. Finally throw in a foreclosure for an extra 6 months.

   I’m starting to think I’ll be able to pay cash for a house when all the deadbeats are finally evicted.

7. 

   ewhac on August 23, 2010 at 2:36 pm

   I think a mere $100K gap is low-balling it, based on some of the insanity I’m seeing up here. Here’s the one on the San Francisco Peninsula I’m currently snarking on:

   http://www.redfin.com/CA/San-Carlos/436-Laurel-St-94070/home/1306377

   I saw the inside of this the last time it was on sale for about $690K (don’t know what it actually sold for). Now, less than two years later, it’s on the market again at $750K, and is overpriced, IMHO, by at least $200K. Just like last time.

8. 

   tj & the bear on August 23, 2010 at 6:44 pm

   Some go the other way.

   And here I thought this was a real estate blog! 😉

   Those 1 in 20 that price realistically are going to set the comps, much to the dismay of the other 19.

9. 

   JRB on August 23, 2010 at 7:54 pm

   Jim – $100K is the right about gap I’m seeing between listing prices and what I’m willing to pay. I’ll continue renting while this stand-off grinds on.

10. 

    Geotpf on August 24, 2010 at 8:19 am

    ewhac-Your link says it sold for $675k. The auto-comps there also seem to indicate that the current price is justified (or almost). Is it typical up there for prices to have gone up since 2005 (when the house sold for $600k)?