Tuesday, August 19, 2008

Defying Gravity

Zillow came out with some interesting study results this month. Seems most homeowners think that, while home prices are falling in general, their home value is not (as the article points out, its akin to everyone thinking their IQ is above average).

According to ForeclosureRadar, on my street there are:
  • 5 homes in preforeclosure
  • 2 bank owned homes
  • 2 homes slated for auction
  • 7 homes listed on the MLS (3 of which are PS), which includes some of the home listed above.
Luckily, my rental is not one of them.


Jacob said...

Well talk to any owner and their home is special. But when everyone or everything is "special" then nothing is.

I've also heard, "well they have to sell, so they are taking a huge loss" so if you don't have to sell you can continue living in fantasy land all you want.

I saw some homes this past weekend over near sierra college. There was this circle, maybe 30 or so homes, there were about 8 foreclosures (4 of which were having an open house) and another 6 or so regular (or short) homes for sale.

The 4 I saw were all 99% identical, one had a tandam garage, another had an upgrade where that was a room, but basically you typical cookie cutter block.

I would be interested in how some of those owners think their homes are special...

Patient Renter said...

AB - So do you have a foreclosure radar subscription now? I remember that post a while back asking about it.

Buying Time said...

Yup...I do. Feel free to send my your address (or just street name) if you want me to check on your rental from time to time.

Cmyst said...

It's sure been my experience, and I talk to a lot of people every day, that the consensus seems to be that the value of houses will zoom up again any day now and that their own house is worth a lot more than the median.
The most shocking bubble story that I know of personally involves friends who are very intelligent and educated. They purchased for less than 200K about 9 years ago and took out over 250K in MEW (which I found out from my agent, not from them). Just 2 months ago, the comment was made to me that they were thinking about selling their house and were estimating a 100K profit.
The house is now on the market for 280K, and is officially a short sale, but is going to be a foreclosure quite rapidly. The most recent comment from my friend was a bitter and puzzled,"I just don't understand it. I've never lost money on real estate in my life."
And that is pretty much the story of the average FB. They believe right up to the bitter end that they are sitting on a pile of gold, when in reality they have dug themselves into a pile of quite a different substance. It still floors me that these people that I have so much affection and admiration for could have been so foolish -- but it DOES explain why they seemed to have money for trips, cars and expensive hobbies that I could not afford on less income.

sacramentia said...

my house is actually holding up quite well :)

Buying Time said...

Holy Cow Cymst, shocking is right. 250K in MEW!

Stories like these make me wonder if being fiscally responsible is the wrong way to riches and the good life.

What is the latest scoop on your home purchase?

Cmyst said...

I'm in the process of getting pre-approval on a mortgage. Everything's on hold until then.
I'm not going to fight real hard for this property. The mortgage broker confirmed that a lot of properties are put on the market at what the bank believes to be way below market rates in hopes that there will be a bidding war and people will get carried away. I think that's what is going on with this one, too. The problem is, IMHO and based on the sale price back in 1999 and the limited cosmetic upgrades and many, many unfinished projects, the place is probably worth about 50K less than what they've put it on the market for. IF I get approved, which is a big IF nowadays, my plan is to offer at the low end of my bargaining range. Since it's a short sale, the bank will have to approve or negotiate, and that will take a lot of time I'm sure. When it goes to foreclosure, that will further delay things.