In the “good ol’ days” pricing a home wasn’t much more complicated than looking around and adding $x to what seemed reasonable. There seemed to be a buyer just waiting. Those days are gone and now it more important than ever to enter the market priced accurately or even slightly below. In an up market, if a house is overpriced on day one, the market will eventually catch up to it. In a down market, an overpriced house gets more overpriced by the day and price reduction that do not get ahead of the market end up being a correction, not a cause to sell:
A (fictional) house hits the market. There was a buyer for it at $300,000 but when it hit the market, it was listed at $310,000. House and buyer never met. Sixty days later the price is reduced to $300,000. The market has declined a little more. There is buyer out there who is willing to pay $290,000. The house and buyer never meet. This process gets repeated and the house gets the stigma of “being that overpriced house.” It may never been greatly overpriced at a given moment but it never got ahead of the market to become THE house for the prospective buyer. The pricing chased the market down but never caught up.
I’m not saying this is a good or bad time to be a buyer or a seller. Everybody has their own reasons to be in or out of the market at any given moment. What it underscores is the need to enter the market at the right price or if you are currently for sale to get ahead of the market, now. The house would have sold at $300,000 in this purely illustrative example. Now, it is still on the market somewhere below $290,000. We’re not debating whether there shoud have been a buyer at $300,000 or one at $290,000 since whatever their reasons for at the time made them purchase.
At the rate things are going that $310,000 fictional house will sell for around $185,000, what it is probably worth.
And fiction will slowly become fact for Portland real estate.
We call buyers now “Knife catchers” 😉
What we have is a declining market filled with wishing prices and the only sales are happening on the margin – resetting the comps lower.
People will chase this market down for a few years yet rather than bite the bullet now.
If I was selling and had to get out – I’d price it 10% under latest comps and get out.
Portland is going to spend the next few years declining and I bet someone out there chases the last dollar all the way down.
I’m not going to ban Naysayer, I am just asking that you go away. It would be better for everyone. Just go away quietly. I’ve tried to keep this a completely open and uncensored forum but I don’t feel I need to put up with the disrespect any longer.
Gotta hand it to you Charles… Your post here is saying something that’s probably very hard for Real Estate folks to admit: prices are falling and if you’re a seller you’re gonna get left high&dry if you don’t lower the price ahead of the market. That’s the reality or realty in the Fall of 2007. It’s probably going to be the reality for the next 3 to 5 years.
Still, Naysayer’s comment above was actually quite tame compared to some others he’s made.
We can quibble about the numbers, of course (Naysayer’s $185K might be a bit low, but $220K could be about right – hard to say at this point).
Anyway, all of us “Naysayers” need to be sensitive to the fact that there’s a lot of pain out there right now in connection to real estate (whether it’s Agents, Mortgage Brokers, builders, owners facing foreclosure). People are losing their livelyhood and it’s just getting started. Those that aren’t losing their livelyhood are facing a much lower standard of living. Sure a lot of us saw it coming like knowing that Winter follows Fall, but lets not kick people when they’re down.
There is nothing that sucks more than having to tell a client that they are going to have to drop thier price if their property is going to sell. The bus isn’t going to stop if it is in front of you.
Anybody that thinks that real estate is “easy” today needs to pull their head out…
Ok, my last post. Then I’m gone.
Sure was fun chiding people for “missing the boat”. And “better buy now or be a lowlife renter forever!”. Making people who resisted the insanity feel like losers. The real estate industry endlessly cajoling people into bad financial decisions. Perhaps not you specifically but who you represent.
Now that the “Haves” are feeling the discomfort people like me are the bad guys.
If you must take your frustrations out on someone then let it be me. But don’t pretend to want real discussion. Call the site an advertisement and only accept posts that reflect your point of view.
Later
Come on Charles, people need to cut prices more and more and faster and faster…all in an attempt to generate a commission check for yourself. Go get a real job and quit whining about your dead end career. You will not make it till 2010 as a Realtor.
Yeah, go ahead; overprice your home it will make my life much easier because I won’t have your listing. Be a FSBO since there is no point in hiring an agent if all you want is a puppet. You won’t pay a commission but you won’t sell your home either, with our without an agent.
You can hate me and you can hate the industry but the fact remains that people have their own reasons to get in and out of the real estate market at any given point regardless of the health of the market. An overpriced home is overpriced in any market and an accurately priced one should sell.
It’s a pretty bold and ignorant statement to say that I won’t be a Realtor in 2010 but maybe you should give me some ideas of what a real job is just in case.
BTW, only fair to point out that Clint8200 runs the Portland Housing Blog. I’m already getting slammed on the
Open Forum Thread for asking Naysayer to leave.
clint: Not sure why you’re being so hard on Charles for admitting the unadmittable. This latest post of his validates your thesis that prices are falling, correct?
Yes, there are some that predict that housing prices will fall by 50% but they are as extreme as those who claim we are special, our RE will not fall at all.
Housing is a pure supply and demand market place. If it is selling for less than replacement cost housing construction effectively slows down until demand and cost are in balance.
A lot of demand was driven by mortgages that buyers thought were cheap. The mortgage game has changed. Unfortunately those who purchased in the last 4 years may receive offers approx their purchase price. They should count their lucky stars if they aren’t upside down on their mortgage.
I have no special knowledge but after wasting a lot of time on the net I conclude that a 20% drop, adjusted for inflation, in the next 5 years is not unrealistic.
I feel sorry for the sellers. The Realtor(R) business needs to change its business model. I don’t feel sorry a bit for the lenders, thank you very much!
I agree with TiP. Lighten up people.
I pointed out months ago (July) that people are going to start looking for someone to blame and that Charles is nice enough to share his thoughts. I knew he was going to start to take a beating, and it is unfortunate.
On topic, I’m watching my neighbor chase the market down and it is sad. First it was FSBO, next two different Realtors, now FSBO again. Quickly approaching 12 months on the market. It seems greed got the best of people on the way up and it is getting them on the way down.
Best wishes Charles, honestly….thanks.
Nell: On one level I don’t feel sorry for anyone in the REIC (Real Estate Industrial Complex). Everyone was complicit in this debacle; there was even a lot of fraud amoung buyers (overstating incomes). Lenders bear a lot of the blame, but not all. The incentives were all wrong, of course. Mortgage brokers had absolutely no incentive to make sure that the borrower could actually repay – they were incentivized by their commissions and YSP. And as for real estate agents – well, let’s just say there was an abundance of cheerleading and FUD (“buy now or be priced out forever”). And of course there was easy Al at the Fed who helped create all this mess by keeping interest rates too low too long and by saying (when interest rates were at historic lows) that people should consider ARMs.
Still, a lot of these people (Al not included) were just like actors in a play playing the role they were given. Most of them only saw their own small part of the picture and from their limited perspective their actions made sense.
I still vividly recall the tech bubble crash (being a techie) and how it put so many people out of work. Yeah, looking back it was stupid to think that just being on the internet should give a startup some sort of guarantee of money. In the aftermath a lot of us were out of work (many of us weren’t even working for internet companies at all). So maybe that’s why I can have a little bit of sympathy for the players in this new bubble-play-tragedy.
Yes, there was also a lot of fraud to go around in this tragedy as well. And that should not be something that we just overlook. Some people need to go to jail. But a lot of people were innocent bystanders who got caught up in a frenzy.
I think the issue with Naysayer is that many of his posts are personal attacks on the site owner.
IMO, Naysayer is just a troll, and I really hope that was his last post.
FWIW – my post on the other forum was the one saying Charles is basically a straight up guy – and I’ll certainly be considering him when it’s time for me to get into the market – compared to other Realtors here I’ve read he’s been exceptionally open about the state of the market.
He earns his living from selling real estate – it’d be cutting his own throat to say “Don’t buy a house now” – an no poster should expect him to say that.
Sure we may disagree with the stats and the methodology used in collecting them – an in particular the cherry picking of stats by the the Realtor associations (ever notice it’s month to month in the spring and “YOY is the only thing that matters” when that’s the lesser of the two evils ?)
At the end of the day as someone who earns a living selling real estate Charles has been exceptionally even handed here.
Personal attacks are absolutely unwarranted.