I don't want to lose money on my house by Bill Roberts
I think I may be in over my head. Where is the bottom? What's that? Nobody knows? 
Well, just how do you figure what the price should be for my house? What? The price is what a ready, willing, and able buyer will pay for it?
Give me a break! I paid $500,000 for this place just one year ago. Now you want me to sell it for $400,000? How can you expect me to take a loss like that? This is real estate, not the stock market. What do you mean, ALL markets behave the same way? But I don't want to lose money on my house.
If you don't want to lose money on your house then you must wait for the market to go back up. As a matter-of-fact, if more sellers would "decide" to wait there would be less houses for sale, and the prices would go back up sooner. Pricing for houses is a function of the supply and demand for housing. Less supply and more demand will cause an increase in home values, but...
Ultimately PRICE has to be a function of replacement cost. When the supply of housing becomes less than the demand for housing new construction will be necessary. Existing houses will have to "relate" in some way to the cost of new houses. If "existing" houses are too cheap, nobody would buy newly constructed houses. An equilibrium of supply and demand in the housing market will benefit home sellers. Prices will go up.
There are a couple more factors to consider in evaluating the value of a home:
Since "governments" keep upping the cost of obtaining building permits (zoning and use changes, water connections, sewer connections, EIRs, and everything else they "mandate") and the actual cost of construction keeps going up (labor and materials) then there will be a new wave of price increases in housing.
Because the "Dollar" is worth less every year, housing must get more expensive just to stay even. This current market is nothing more than a "correction."
Demand for housing increases as population increases. There is no relief in sight on this one! Next year we will have more people living here than this year.
If you are a buyer you should jump in NOW!
If you are a seller, you should "sit it out."
If you need help in buying, selling, or financing real estate give me a call. Bill Roberts 619-244-4610.
I have been a real estate broker since 1975. I specialize in commercial real estate, business opportunities, and finance. I coach real estate investors and teach retirement strategies. DRE #00527512
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Great post,
I would advise anyone to NOT listen to industry talking points which have consistently said buy now, and watch the economics
Price lags volume,
Wait for two months of rising sales volume. Prices will follow shortly
Dan, I appreciate your commenting on this post, but I'm sorry to say you got it wrong. A buyer's negotiating advantage disappears once the actual bottom is reached or activity increases.
To get the best price, buy now and negotiate "tough."
Bill Roberts
This post is a nice succinct statement. Your response to Dan is also right. I hope he Gets it. If a few more would Get it, things will greatly improve for everyone.
I fear that about half the advise given today is a knee jerk response and the other half is not correct. I fear that many in our profession, meaning well, actually exacerbate the problem by getting it only half right.
Three cheers for you, Bill!
Supply + Demand = Price
More homes on the market, less buyers, prices are LOW NOW!!!!
Hi William, Thank you. It seems that this issue, even though basic to our business is not fully understood. Too bad. All we can do is keep on keeping on.
Nancy, In that case we need more buyers and less inventory. All in favor say "aye." Thank you.
Bill Roberts
Bill
I missed this post, after one of my last posts. My firm belief I have held onto, and always practiced, is to buy when I feel comfortable. I may not be comfortable in all parts of the country, but I put my money where my mouth is, and I have done my homework, and will buy in any market right now that has EXCESS INVENTORY, probably because I like the effect of lower prices as a result of healthy competition.
I'm not going to sit around and wait for rates to drop further, so that everyone can jump back in to the market, and start counteroffering on homes that I want to buy NOW!
Bill, I don't know enough about Florida to make a judgment call there, but I would heartily recommend Las Vegas right now. Parts of Riverside county look good to me as well.
We're thinking about buying a house in Oceanside.
It is definitely the time to buy. Waiting could be very costly.
Bill Roberts
Bill- That is why Tracey's post with the V shape showing the market down, bottom and up is such a great visual for this market. Buyers should buy now, they can get a great price now, offering even 50 cents to 70 cents on the dollar for many properties. Sellers who do not NEED to sell, ie: divorce, short sale, financial loss, death, etc NEED to sell. All others stay put unless they are selling their house to take advantage of the buying side of the market which we have some smart customers doing right now. Katerina
But people tend to start buying when the market starts going up, creating inflated prices, bidding wars, etc. When will they ever learn? Katerina
Funny how buyers are falling into the same trap that sellers did a couple of years ago, Bill. The big boom in the AZ market was 2005. Many would-be sellers opted to sit on the sidelines so they could wring every last drop of appreciation out of the market. When they finally decided to move, they had missed it. There is no shortage of sellers currently on the market who would give their eyeteeth to roll back the clocks. They would sell when the market was afire and not be so consumed with greed. Now it's the buyer's turn to play this game of chicken with the market. If buyers aren't careful, the great buying conditions will change while they are waiting for the "perfect" moment to buy. This was an exceptional post, Bill.
Katerina, As all stock brokers know, MARKET TIMERS always miss the best time to buy or sell and consequently don't make nearly as much money as their less greedy counter-parts who buy near the bottom and sell near the top but don't worry about getting it exactly right. Because they are more right than wrong they WIN.
Real estate is the same. Nobody can exactly time the market. It is much better to buy while you have a negotiating advantage.
I saw Tracey's post but it took me a while to figure out that the "V" was supposed to represent a graph. The message was correct however. Now is the time to buy. It is NOT just "talking points" as some have said.
Thanks for contributing.
Bill Roberts
Paul, thank you for your very kind words.
As I commented to Katerina (above) MARKET TIMERS always get it wrong. It is the nature of the beast. By the time you realize that we've had a "bottom" we are already going up the other side. All negotiating advantage they may have had is gone. It's that old saying; "pigs get fat, but hogs get slaughtered."
Bill Roberts