Unless the buyer can put a large downpayment, it will be more and more difficult to finance a home at this price. Even if it’s a move-up buyer with lots of equity, it’s still contingent on selling their current house in order to use that equity as downpayment. It will be interesting to see what this house sells for in today’s market. They probably won’t get the asking price, but I agree that some knife-catcher will pick it up.

A few of the people there seemed highly interested. I overheard a couple of people inquiring about when to make offers and the timeline for everything. I even heard one lady talking to her husband about what she could do with the landscaping and such.

The rooms were a lot bigger than I had imagined, mainly because the fisheye camera lens threw things out of proportion. The place was actually pretty cool in temperature, given the fact there is no central A/C and it was 100deg outside. All the trees around the place help block out the sun and keep the heat off of the house.

I personally wouldn’t pay over $900k for the place because it was bought way too high last year. There’s also some old features of the house that still stand out. The air vents, the attic access and the garage still really show how old the place is. Overall, the place was very nice. I don’t expect it to be on the market long because I am sure some knife-catcher will fork out the money to live here.

Look for a community profile about the Highlands soon.

So, If you can rent at $3000-$3750/month, why pay anything more than $700k while it is still losing value (or equity) 10% or so a year?

From what I remember, 4bed/3bath homes of similar size in this area were going for around $500k in the late 90s. Applying +4% compounded annually would put a home at about $740k right now (or $832k in 2011). Since this home was completely remodeled, I would tack on another say $85k premium which bumps it up to $917k.

A GRM of 200 sounds about right for the Highlands. If we assume it rents for 3,750 and apply a 200 GRM the house would be valued at $750k right now.

As stated in my Data Does Not Lie post, I’m actually expecting a drop of 35-50% over the course of a few years. I’m just not sure if the market would over correct and result in 50%+ price declines in this area. That would be great for buyers on the sideline like me.

Can someone find out how much this very nice area home sold for in 1996, or near the last cycle low? And then let’s apply 4% compounded annually to 2011. That will be pretty reasonable estimate how much this property will be three years from now.