Penny wise and dollar foolish

Globalization played a major role in causing the housing bubble as Alan Greenspan notes in his recent book. He points to lots of excess worldwide capital chasing after high-risk investment opportunities. Hence the creation of more sub-prime loans than sound lending practice should have allowed.

That being said, we're seeing a housing market correcting back to, at minimum, 2004 price levels - or about 9-10% less than peak. This still isn't quite enough of a decline to draw in large numbers of first-time buyers, one of at least three groups waiting on the real estate sidelines.

'Realty Times' estimates that there are some 600,000 new households that are not being formed - most likely due to affordability of rents and home purchases.

Another group to reckon with are 3 million baby boomers a year appoaching retirement age. Developers in warmer climates clearly had their eyes (and investment dollars), on this population. You couldn't ask for a better time to buy in Florida. The whole state may be for sale.

The third group waiting in the wings are folks who are, in effect, trying to time the market. Price declines fuel the anticipation of future price declines. Trying to guess where the bottom of the market may be is almost impossible to do with any certainty.

So in a nutshell, we have a growing population that needs housing, a huge number of boomers who might be looking to relocate, and a couple of years worth of pent-up demand for second homes.

It's no wonder the real estate industry is struggling to wrap their arms around this market. All you can do is price it well and hope to get someone off the bench and into the action.

I have also seen lots of houses where "updates" have been added as cheaply as possible. Jobs were done poorly with poor quality material but yet they are expecting top dollar. Just because it is updated with bottom of the line materials does not mean it qualifies for top dollar.

I think I would rather the house be priced right with no updates then be asked to pay for updates that are terrible.

I think sellers are reluctant to listen to their agent or even think the old standards like price and condition of the property don't apply to them.

JustMe said - "I think I would rather the house be priced right with no updates then be asked to pay for updates that are terrible. "

Wow, I thought I was the only person who thought that way. I hope you are reading this sellers and RE agents, and never forget that many home buyers feel this way. JustMe, you are now on my favorites list.

favorite "updates" by the listing description: fresh new paint

yep, another one here who would rather not pay a premium for incompetent work by the seller. A little different in my case, since that's one of the ways I make a profit - I know I can get it done cheaper, better, and nicer. So no way I'm paying for home depot crown molding with joints you could stick a credit card into.

A lot of sellers are also confused about improvements - they think they should be paid for the cost of the improvement. In fact, they get paid for the value of the improvement. Amazing how many people don't understand that concept.

Since Feb we'd been looking for a house. We also just sold our house (quickly for this market), so we need to move - fast.

We are having a horrible time. Limited inventory in our price range, so when something nice is up, it goes within a day or two. What is sitting? Bad location, homes cluttered and chaotic, properties that not only may not be clean but have not been kept up or fixed up on the basics for sale (water damage, bugs, peeling wallpaper, etc). This is in homes in the ‘burbs for upper six figures.

If someone moving in would have to put in at least $50K to update or take care of maintenance items and your upper six figure house isn’t moving, you are asking too much. Either do it your self, or drop by $100K. Sounds drastic, but that is how it is going to sell.

There have got to be others out there like us. The way some inventory is moving so fast, makes me think that people out there are really looking to buy (pent up demand). As a recent seller, I understand not wanting to be vulture meat and still get your property’s worth. But, the longer your house sits, the more vultures start to circle until you are desperate. Either be reasonable to the market, or if you can, get out.

Many sellers think that their improvements (either self done or thru contractor) are worthy of top dollar. Not the case at all. Everyone has different tastes and expectations and when factoring in location of house or condo, the values range widely.

Thankfully when it came time to sell our condo in Chelsea, we priced it right, cleaned up, cleaned out & used a great broker. We sold in under a month and managed to make a little, too.

Couldn't agee with JustMe more. Just closed on a small house that a 95 year old woman lived in. It seems people couldn't look beyond old shag carpeting and an old kitchen. I just spent 2 weeks on inexpensive cosmetics (roof, siding, and heating system were all new andn already done) and I think I got a bargain even in this market. I've seen some really, really bad kitchen renovations. If you have to buy an Ikea kitchen and install it yourself -- think twice.

Pricing is everything. I can look beyond clutter and dirt.

We have been looking to buy for the last 3 months and have yet to see anything that was advertised as "updated" that we like enough to buy. We may as well stay in our unrenovated apartment. If I'm going to live with a crappy kitchen and bath, I don't want to own it.

Most of what I've seen is cheap and shoddywork and often the "updates" were done 10 years ago. The newly renovated "contractor specials" are the worst; not everyone wants granite and maple and stainless. I'd rather buy something that needs a new kitchen and bath and do it the way I want it. Unfortunately, after a 20% downpayment, there isn't much left to do renovations.

It appears that many sellers still think they're going to get top dollar for a place that hasn't really been updated. So bottom line is that pricing is still the main problem. I'm happy to wait until the buyers who are really hot to buy are all done overpaying for these crappy homes. After that I might buy something if the price is right.