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Saturday, August 09, 2008

Delusional AND Idiotic
Posted by Jill | 12:22 PM
I know that during the Bush years, it's become fashionable to believe what we WANT to be true, rather than what IS true; things like that Iraq really DID have weapons of mass destruction, and that America still IS the greatest country in the world, and that we still ARE #1, and our health care system IS the best in the world.

And that while the value of our neighbors' homes may be dropping, OUR home is holding its value.

Every now and then I receive an e-mail blast from MarketWatch. This was in today's:

The housing downturn has been under way for a while now, so it's hard to
believe that many homeowners could still think their homes are appreciating these days.

Yet a recent survey from Zillow.com found that 62% of homeowners believe their home's value has increased or stayed the same in the past year. They can't all be right: According to Zillow, 77% of homes in the United States actually declined in value during the same time.

"Our survey reveals a wide gap between the perception homeowners have about their own home's value and the realities of a market in which three-quarters of homes declined in value in the past year," said Dr. Stan Humphries, Zillow vice president of data and analytics, in a statement. "We attribute this gap to a combination of inattention and a fair bit of denial that causes people to believe their home is insulated from the woes of the market that affect others, but not them."

In the survey of 1,361 homeowners, three out of four expect their home value will increase or stay the same in the next six months, yet 42% expect values in their neighborhood to drop. Four out of five homeowners expect the amount of foreclosures will increase or stay the same in the next six months, compared with the last six months.

Read more real-estate news in this week's pages, including why it's a good idea to negotiate on commission with your real-estate agent as well as the latest pending home-sales numbers.

A year ago, it might have been understandable for people to be in denial about housing-market realities. These days, to assume your home is somehow immune isn't very realistic -- and potentially problematic if you're planning on selling soon.

-- Amy Hoak, real-estate writer


My house was (accurately, I think) assessed for taxes at a market value of over $450,000 in 2007, based on late 2006 prices. Right now, there about four of the slightly smaller version of my house on the market in my neighborhood. One of them has had nothing done to update it whatsoever and is sitting at $418K, because the owner seems to think that a 100' wide lot on a main street somehow mitigates a house where nothing has been updated and the concrete steps and patio in the back are crumbling. The others are in various states of updating and all are sitting, unsold, at $399K. In the twelve years we've lived in this house, we've replaced the furnace, upgraded the electric service, replaced all but the basement windows, put on a new roof with improved ventilation, new gutters, and new siding. We just had the front steps repaired. Last year we put new carpet in the basement after a flood. We put in a new toilet, vanity, and floor in the upstairs bathroom. But the back steps are starting to go, the kitchen still needs updating, and we're still living with the previous owners' red carpeting in the living room. If I were sitting here thinking that while all these houses are sitting, MINE is somehow special and I could still get over $450,000 for it, it would make sense to cart me off to the nearest psych ward. And yet, all over the country, homeowners who don't want to admit that their homes aren't worth what they were two years ago are thinking that if they really, really, really believe in fairies, they can make Tinkerbell live.

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5 Comments:
Blogger Bob said...
A friend is trying to sell a nothing special cape in Iselin, & she's getting lowball offers, which makes sense to me. No basement, second floor with tiny dormer windows.

A beautiful corner house up the block here with a built in pool has been on the market for many months. But a great old house with a wraparound porch & needing work, on less desirable street sold fast, & the Hispanic owner is restoring it rather than encasing it in brickwork & wrought iron fences.
8/9/08, 4:13 PM  
Anonymous Anonymous said...
Disclaimer upfront:: Our house is NOT on the market and we hope it isn't going to be anytime soon. I'm sure it's worth a lot less than the town assessor says it is! And I never did believe it was worth what he said it was!

But::
"... including why it's a good idea to negotiate on commission with your real-estate agent..."
I assume this comment is supposed to refer to LOWERING the commission being charged.. However, there is an agency in our town now charging a PREMIUM commission rate [8% instead of the more customary 6%]. Their ads tout the "extra service" needed to move properties in this tough market... So just be aware: real estate agents aren't going to take this market lying down. If prices fall, they just increase their percentage. Even less left for the owner! I hope they actually do provide better service for the money. But then, does that mean they weren't providing decent service BEFORE?? Just asking!!

But there are 8 houses [3 McMansions] currently for sale along the routes we normally walk our dog. Several have been on the market a LONG time -- like since last fall!
Based on the prices we've seen listed for the houses that do sell in our neighborhood, and from their listings on the Net, all these are overpriced, several substantially. I assume that is the current mortgage balance, but you never know.. [What ARE granite counters, hardwood floors, and inground pool worth?].

Don't know if they are paying the 8%, but I wonder if the agent actually suggested the prices they are asking. If so, it doesn't say much for the competence of the agent. Something about houses sell if priced right!

Friends of ours just sold -- retired, moved to Florida. They deliberately asked $30,000 less than their agent suggested [wanted to get rid of the thing and knew it would only fall further] and sold almost before the sign went up. The house was the least expensive house then on the market in our town [still over $300,000] but friends were thrilled and still got mucho more than they had paid for it 30 years ago....
8/10/08, 8:50 AM  
Blogger Jill said...
And of course there's all the "advice" about what you "have to do" to your house to get it sold. There's an article in my local paper today about why houses are sitting on the market, and while things like de-cluttering and staging and cleanliness are self-explanatory, the minute I hear that buyers will not look at a house that doesn't have granite counters, I tune it out. Obviously if your laminate counters are 25 years old, as mine are, you have to replace them if you want to sell. But I don't buy that you have to put top-line finishes into what's not-so-affectionately around here called a POS cape.

And the realtors aren't busting their asses either. There is only one realtor in all of Bergen County that seems to hire a professional photographer. Most of them take little Canon digital shots, and they are dark and dingy. They don't even tell their clients to take the photographs off the fridge.

A good realtor (and my sister is one) is worth whatever commission you have to pay. The problem is that too many of them do the bare minimum.
8/10/08, 10:05 AM  
Blogger Melina said...
Cognitive dissonance...Jeanine used to talk about it all the time on the late great Majority Report. Its when you grow so accustomed to the lies that you've told and been told that your reality shifts and you find yourself embracing the lies even harder, because its impossible to admit to yourself that you were wrong...
So why did the entire staff of the Bush White House buy the lies unquestioningly? Because they were so deep in the lies that they couldn't pull themselves back
enough to grasp the hugeness of what they had done.

and yeah, the house across the street from me still hasn't sold...It just wont at the price they have it at. Its a bad time to sell, and unfortunately many people HAVE to sell or lose it to foreclosure. We're only gonna see more of this.

When are Americans going to stop embracing the lies?...its a psychological process, even as you're losing your house and watching people die in a war built on lies.
8/10/08, 10:33 AM  
Blogger Citizen Carrie said...
I wonder about that too. The homeowners either have terrible real estate agents or they're not listening to their advice.

One clue I can throw out is that I've known of several people who wanted to sell their houses for a certain price because they had definite plans for the money after the home sales went through. Or, as Ted says, they just don't want to have to bring a check to closing. It doesn't explain why the owners didn't lower the prices to reasonable levels after their houses sat on the market for several months.

I think those TV shows are evil for telling the world not to buy a house unless it has hardwood floors, stainless steel appliances and granite countertops.
8/10/08, 8:09 PM  
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