Comments on: Tips for a buyer’s market. Part 1

By: TheArcadian

TheArcadian — Tue, 27 May 2008 07:09:45 +0000

You are dead-on regarding these 4 points. Although I feel that a 77% decline is an extreme number, the property I currently live in “appreciated” 300%+ in less than 10 years. Therefore, seeing it lose all that equity during an over-corrected market is a very plausible scenario.

By: Bought in 1981 & Still Stingy

Bought in 1981 & Still Stingy — Mon, 26 May 2008 23:10:34 +0000

Counterbalancing the Need to Buy Now should be these points:

1) The market is ‘paying’ you to sit on your hands. (The Bay area is paying $11,750 per month based upon its median’s annual decline, $13,400 monthly from its peak median price in June ‘07. If you project that to a year from now, that market’s median will be $160,800 lower. Working out your own market’s pay out is left as an execise for the reader. For instance, in SF itself they’re still drinking the kool aid.)

2) The market is always lowest in December than now. What’s different now is that the following April is lower than the preceding December.

3) The lows of 1996 and 1987 were provoked by much lower levels of default and over-construction. In other words, this market will likely bottom lower than both. My personal guess is 77% below the high generally. Some markets will collapse further depending up their economics.

4) Interest rates will inevitably go up, making any savings towards a downpayment worth much more. And the falling market will make the eventual downpayment much less. And rents will be depressed by failed condos and vacant houses. And finally, whatever stupid reactions by taxing authorities will take a while to filter down on renters. Plus you retain the flexibility to get away from the real stupid.

By: Anon

Anon — Mon, 26 May 2008 22:49:22 +0000

Realtors and halfway sane sellers are only acting the part when they act offended and/or criticizing what are deemed to be lowball offers. They do this because it often works and a lot of buyers do give in to a certain level. So if the sellers and their representatives are acting their parts, so should you, buyers!

By: Arcadia Lost

Arcadia Lost — Mon, 26 May 2008 17:00:33 +0000

I would add that offering price should also consider comp sales and then some in a falling market rather than a discount from what I see are still wishing prices. The RE ad prices are still waaay overpriced although I don’t fault anyone for asking anything; the respect and understanding should just be returned — buyers shouldn’t be criticized for what appear (based on market highs) “lowball” offers either.

By: Ellie

Ellie — Mon, 26 May 2008 16:57:57 +0000

Thank you whoever you are for a wonderful RE site. One of the top 10 out there and probably top 3 for SoCa!

I’m casually in the market but have no plans to but anytime soon given the still lofty prices some sellers are asking.

What floors me is why do realtors let sellers list at absurd prices they KNOW have zero chance of selling and just disappointing sellers 6 mos down the road. In this market waiting 6 mos with an overpriced listing means have to accept maybe another cut of 10%.

I recall 1992-93 prices were dropping 1.5% in the beach towns of LA and OC. Sellers need realtors with guts to price for sale not fantasy!

By: george8

george8 — Mon, 26 May 2008 14:55:55 +0000

Great tips.

This one is an apartment. Its value definitely should be valued from GRM basis.

The owner has been chasing the market down over a year only to fall behind. Where is the market for it today? Let the market speak for itself.

In 2010-2011, this one will be around $320k ($2000 rent at GRM160).