Why aren't Real Estate values going down in proportion to when they were booming?

Question

I don't understand. Up until the last year or so, Real Estate values were skyrocketing, now that it is a so called "buyers market," Why aren't prices dropping that fast? I want to purchase a home, yet the prices overall havn't dropped that much.
I live in a mid-sized community in the Midwest. Anybody got any ideas?

Answer 1

While it may be a buyer's market, this is a relative term in real estate. It is an general assumption that the value of property will go up over time due to increasing demand. This can be offset by several factors like high unemployment, a demographic shift of population, a sudden tax increase, or natural disaster. Real property is held over time to increase value without paying capital gains taxes until it is sold, so many people use it to establish or maintain wealth.

The current market in real estate is one of wait and see. Potential sellers know that selling now will cause a loss of one degree or another, and potential buyers believe that the market forces will drive the price downward in the near future. So, if you are selling, your house remains on the market for some time because buyers figure it will go down. If you are buying, the market is not flush with houses yet because potential sellers are hoping things will improve. The real estate market is poised to make a move downward in many markets, but it is not there yet.

Answer 2

In short, wait and be patient. While it may have appeared that prices skyrocketed every second of every day, I believe (and I'm sure there are some exceptions) that for the most part they were just going up much faster. Home SALES have fallen significantly here in Florida. I think the worst is yet to come in terms of price movement. People who must sell, will have to lower their prices, there is no alternative for many of them. Those who don't have to sell for a particular reason may hold out longer.

The ask-buy spread is just too wide right now. It may take another 12-24 months before the best deals are found. Keep an eye out at your local banks that do a lot of lending with their own money. They may end up with a larger number of foreclosed properties during that time.

While you can't yet dictate your price, you are certainly the most valuable piece of the real estate transaction today - you are the buyer.

Best of luck!

Joe...

Answer 3

Supply and demand.

Suppose there are ten widgets, and twelve people that want widgets. Widgets sell for $10 each, and all twelve are willing to pay at least that amount.

Well, if you own a widget you didn't want or need, what would you do? You'd offer to sell your widget. But knowing that there is high demand for widgets, you'll offer to sell yours at a premium. Let's say you offer to sell yours at $15. And all twelve people come running, wanting to buy...

The owners of the other nine widgets put theirs on the market. And the market responds. People desperate for widgets start bidding higher and higher. After all, there are fewer widgets than people who want widgets. You've got to pay a premium if you expect to get one.

But eventually, let's say when widgets reach $22, one of the twelve that wants a widget realizes widget prices have gotten too high for her. She drops out of the bidding. Now there are ten widgets for eleven people. The price still goes up because there is more demand than supply, but then gets to a point where another person drops out of the bidding. Let's suppose this price is $30. Now there are ten widgets, ten people left that want one, and everyone is happy.

Now, suppose one of the ten with a widget decides he no longer needs his and wants to sell it. Could he get $30? No. There are only two people left that want widgets, and both dropped out of the market before this price. To sell the widget, he would have to drop his price to where the second person dropped out. That is the market value - the highest price at which he could willingly sell and find a buyer. The second person knows if the price drops lower, the first dropout will purchase. And the second person is okay paying the less than $30 but more than $22 price.

And this is what is happening in the real estate market. Home prices are easing down to see what is the least amount they need to lower in order to induce the last group of purchasers that dropped out before the highest prices were reached to change their minds and purchase. A house that was on the market for $300,000 but not selling will lower to $280,000 and see if there are any takers. If not, then the owner might try $260,000. The prices will ease down slowly to see where this breaking point is as opposed to dropping down to where they began.

Hope this explains it!

Answer 4

verify your assets appraisal date - maximum tax value determinations are executed as quickly as each and every 3 years and the upward thrust is phased in over those 3 years. subsequently, together as marketplace fee may be lowering, if your place grew to become into appraised for tax purposes for the period of an upswing, the section in makes it seem as though teh appraisal remains going up. additionally, verify along with your tax appraisal place of work. in many circumstances, if homestead values have declined a lot, you're able to request a re-appraisal. i'm unsure how oit is on your neck of the woods, yet in Maryland, maximum tax value determinations tend to return in below the quite assets fee (on the time the appraisal is finished), so a re-appraisal would not continually help.