Doom and gloom continues to be the news surrounding the real estate market, and many places still continue to see steep declines in property values. Even so, some areas have been hit worse than others, and some areas have actually seen increases in value over the past few years. For people who are trying to sell in these areas, they are faced with a harsh reality that the only way to unload the house might be to take a 20-50% loss. This is especially true for people who purchased just a few years ago.
This is actually where we bought in. We bought our house at the end of 2005, which in terms of this real estate bubble, was almost at the very top. The good news is that we’re not trying to sell, but I can only imagine what it would be like for others who are put in a situation where this might be an only option due to a life event.
But what is more surprising is that we seem to be in one of the only areas in the entire state that have real estate values holding up. Looking at the homes for sale in our area, we’re not seeing any steep cuts in price as long as they are priced fairly. But what I found interesting was this map:
To put this in perspective, we’re in the very far southwest corner of Michigan, which has been one of the hardest hit states in recent years due to the decline in the auto industry. But, we seem to be in one of the few bright spots in the whole state as far as real estate is concerned. It still isn’t great, with an annual average increase of 1.75-4.17% in 2007, but I’d be content with almost keeping pace with inflation.
So, what have you seen in your neighborhood? Are prices falling through the floor, hanging in there, or increasing? I think it would be interesting to see what others are experiencing across the country.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.
The map looks a bit misleading, in my opinion. If it is trying to show where areas are losing value, it should break the no change and losing value into two separate colors.
Probably even, or up marginally. Hard to say. The outcomes are more volatile than in 2005. Some houses sell for more than they did a few years ago. Some sell on the first day. But others that start out high or maybe are not fixed up, can sit on the market for a long time. So whether we have an increase or a decrease in my "lightest orange" region might vary among sellers, depending on their situation.
I also live in Southwest MI, in the Gull Lake area, and out house value has gone up despite the fact that we purchased right before the bubble burst like you did. I have to admit we got a wonderful deal on the house, during the time we were looking houses like the one we got were about $20,000 out of our price range. I was checking for any houses as they came on the market daily and made an offer on this house within two weeks of it being on the market. Now it's worth about $40,000 more than we paid for it with only minor improvements and some landscaping.
Home prices are stabilizing in some parts of the San Francisco Bay area, but we continue to see neighborhoods that have short sales and foreclosures. These homes can decimate an area, not just bring down values, but crush them. It can take a few months, but once that short sale or foreclosure gets sold, housing bounces back. We've seen it several times in our neighborhood. Banks just want to unload properties and will take a $50k-$100k in a solid neighborhood. Doesn't make sense, but it's happening. Once that home is gone, prices seem to pick-up again.
Right now we have a short sale in our neighborhood and we all want it gone. The realty company doesn't market the house, nor do they put any money fixing easy items like landscaping. Just frustrating!
Our home's value, according to perfunctory research on local RE sites, has kept up with inflation, or a little under, which is OK. The only negative is that we've put in $10k+ in renovations in (new roof, all new windows and sliding doors), so in a sense it's gone down from a total cost perspective.
We paid $125,000 for our home in 2002. In 2006 we were offered $350,000 for it even though it wasn't for sale. We passed. Today it is worth just over $200,000. It's still not for sale, but sometimes I just kick myself for not selling back than.
We live in Switzerland and it is odd that the credit cruch seems to have passed us by, for now. The value of our house hasn't moved in the last year... Guess that is beacause most people rent here and buying a house is not really the norm.
I'm a pink patch in a green state. We're lucky to be holding steady. I wouldn't be surprised if we drop off a bit before things get better. Putting in fantastic landscaping helped; since we did the work ourselves, the value we gained far exceeded the money we put in.
I thought values had come down to 2004-2005 values in my neighborhood, but I found a house down the street that is going for 25 percent less than what we paid for our house at the end of 2004! It's the same floorplan, but previous owners upgraded the kitchen and added a bathroom.
I do believe it's a distress sell (my guess is it's part of a divorce), but it's been on the market several months and still hasn't sold. So, it may have to be marked down another 10 (20?) percent to sell.
By the way, we're in the East Bay Area of California, one of the hardest hit areas in the country. Lucky us.
We couldn't sell now without taking a huge loss. I guess our 5 year plan will have to be pushed out a few years.
Im thinking about my current situation and I had just read an article by Grant Cardone on Huffington post. Click here
My home's dropped about $20K since I bought it in 2006. It could have been worse, but because I live near the subway I think it's held more value than it would have otherwise. With gas prices soaring homes near public transporation are looking much more attractive than the McMansion that are out in the more remote 'burbs.