Buying and Selling During a Decline

Buying and Selling During a Decline

During the bubble price rally, sellers and realtors, the agents of sellers, had everything going their way. It was easy to price and sell a house. A realtor would look at recent comparable sales, and set an asking price 5% to 10% higher and wait for multiple bids on the property–some of which would come in over asking. The quality of the property did not matter, and the techniques used to market and sell the property did not matter either. As far as buyers and sellers were concerned house prices always went up, so the sellers were thought to be giving away free money; obviously, the product was in high demand. As the financial mania ran its course, buyers became scarcer; all the ones who could buy did buy. The buyer pool was seriously depleted leaving prices at artificially high levels. When the abundance of sellers became greater than the number of available buyers qualifying for financing, prices began to fall.

Residential real estate markets generally move very slowly and trend in a single direction for long periods of time. Once these markets reach an inflection point, the direction of price movement changes, and the balance of negotiating power shifts from an advantage to one side to an advantage for the other. However, most market participants do not recognize this change for some time. Sellers continue to price and attempt to sell using tactics that worked during the rally, and they find they are unable to sell their properties. It often takes two years or more before sellers accept the reality of the new market and adjust their attitudes and behaviors to the new dynamics of a buyer’s market.

IHB News 5-22-2010

Fake auction today on the featured property. Ignore the asking price, there is a $648,000 first mortgage on the property, and I rather doubt the bank has pre-approved a short sale at $400,000. 

Irvine Home Address ... 41 BAMBOO Irvine, CA 92620
Resale Home Price ...... $400,000

Nearly 500 Properties Are Currently Scheduled for Foreclosure Auction In Irvine

The MLS inventory is growing. The pre-foreclosure inventory is growing. And shadow inventory is growing. Will our spring rally fizzle out? 

Irvine Home Address ... 24 ROSE TRELLIS Irvine, CA 92603
Resale Home Price ...... $1,900,000

Elitist Bank Economists Blame Housing Bubble on Subprime Borrower’s Poor Math Skills

Bankers are trying to blame borrowers for the deflation of the housing bubble. The geniuses who came up with the toxic Option ARM are lecturing the rest of us on the need for math proficiency. 

Irvine Home Address ... 4 MONTGOMERY Irvine, CA 92604
Resale Home Price ...... $280,000

How Gaming Interests Could Save the Las Vegas Housing Market, and Why They Should

Today, I am going to show in great detail how gaming interests in Las Vegas can save their local housing market and why they should do it. 

Irvine Home Address ... 5 LA SERENA #21 Irvine, CA 92612
Resale Home Price ...... $439,900

Government Sponsored Loan Modifications are the New Liar Loans

The taxpayers are absorbing bad bank debt through the TARP loan modification program. It is a direct transfer of wealth from Main Street to Wall Street.  

Irvine Home Address ... 5212 SKINNER Ave Irvine, CA 92604
Resale Home Price ...... $699,000

Foreclosure Is a Superior Form of Principal Reduction

The lingering problem from the Great Housing Bubble is excessive debt. Foreclosure, which has long been identified as the problem, is really the cure. People simply are not ready to accept that fact, and in their denial, they suffer. 

Irvine Home Address ... 146 West YALE Loop Irvine, CA 92604
Resale Home Price ...... $645,000