Letting go of your dream price is hard to do

It should be asy to let go of your dream price in this market. The dream is over, housing is crashing hard, get out while you can, for a month from now your sale price will be even lower.

Seriously, who are these buyers that don't think prices are too high? Every time I watch HGTV's House Hunters, it infuriates me to see people buying homes for half the price and double the size compared to what we have here.

Thing is, buyers have options, and can wait. Sellers who sell in this market do not.

It may take a year or two, but prices will adjust towards what the buyers want. Classic economics. The buyers are the ones bringing money to the table. The sellers only choice is to sell there house or not. As long as there are regular forced sales, the price will reset.

I'm a FTHB and have 3 houses that I'd probably be making an offer on right now if they were 15 – 20 percent lower in price. Even when I wait out the seller's to drop their price as im doing right now I know I'm going to lose equity after I purchase. I can't accept over paying on a value losing asset just because seller's have an easy money credit bubble price in there head. The Boston area financial sector is not going to rebuild itself prior to unemployment benefits running out for many laid off people. Show me anything that says over extended homeowners that can’t afford to have a single negative life event without losing there house is a good thing. That is what credit bubble prices have done to the market. Seller’s that bought at peak gambled and lost, accept it. Don’t get made a me because my eye’s are open and know that gambling on anything is a sucker’s bet.

I think its pretty simple: the income needed to purchase a median-priced house outstrips median household income. Despite falling housing prices, they are still unaffordable in the greater Boston area for the average household income (even with 20% down, which most families won't have). And with frozen wages and reduced benefits becoming more commonplace this year for businesses, it's only going to widen the affordability gap.

We started looking in the Natick area and are getting acquainted with the neighborhoods. We looked at 2 open houses listed at $599k (also known as $600k). One was a 3 story 3200 sq ft immaculate house with an additional 700 sq ft of finished basement. The other house was a typical 1600 sq ft split ranch which we veiwed just for ideas on what things we want and don't want, etc. The current owners paid $550 for it at the top of the market in 2006.
The fact is, the 2nd house really isn't for sale. In fact, most of the listings i see are not for sale. I think the realtors who list them are just mining for buyers.

People always think think their house is worth more then it really is regardless of which way the market is going.

I love it, poll the people who make $$$ off selling houses. Why should sellers just lower their price? The market will determine the price if the sellers are motivated. If you "buyers" don't like the price, move on. You are not entitled to a discount just because the economy is not so hot. Please, buyers, get a grip. I will not sell my house for 30% less than I paid.

Sellers unite, there are more buyers than sellers right now, just go to an open house and see for yourself!

Letting go of your dream price is hard for many homeowners because it's their break even for not having to bring money to the closing.

I saw a 7-figure home for sale yesterday in a highly prestigious town where the seller, who bought in 2006, is already underwater because of their HELOCs. But the home "owner's" price is way above market, even though they've "lowered" the price 20% since its market appearance nearly a year ago. In the meantime, they've rented it out for a fraction of the mortgage and tax carrying costs.

Maybe another sucker will come along and relieve this home "owner" of their debt and tax burdens, but most likely they will just never sell it because they are in an impossible situation: they just don't have the money needed to cover the losses at closing. So it just sits there as the market spirals down, until either a greater sucker comes along or the bank takes it. "Low" balling can't help because the seller doesn't have the option of accepting an offer below their bankruptcy level.

I suspect that home "owners" debt burdens are the biggest cause of seller inflexibility. Anecdotally, that this is the case with "owners" from 2006, rather than 2002 or earlier, indicates to me that the area is a long way from the bottom.

If the purpose of a real-estate transaction is to transfer a house from one person to another, then there are two "deluded" groups of individuals: the people who want to sell, but also the people who want to buy. We keep focusing on the "deluded" sellers, but if you are a buyer and cannot buy what you want for your price, then you are just as "deluded" IMHO.

NOW IS A GREAT TIME TO BUY! - Home prices are down 10% to 50% across the country since the peak of the bubble and still falling. You too can catch a falling knife. NOW IS A GREAT TIME TO BUY! Your 401K is now a 201K, soon to be a 101K. At a time when your retirement nest egg is evaporating, you too can take on $100's of thousands of dollars in debt to buy a depreciating asset. NOW IS A GREAT TIME TO BUY! - The unemployment rate is over 8%, soon to be over 10%. You too could lose your job tomorrow. NOW IS A GREAT TIME TO BUY! Home prices always go up.....except for 1990 to 1998; 1978 to 1983; 1955 to 1965...... NOW IS A GREAT TIME TO BUY!

Let's see - the price of a home is determined by what someone is willing to pay for it. Sixty percent of home buyers think homes are still too high. But somehow prices are going to go up?

We started looking in the Natick area and are getting acquainted with the neighborhoods. We looked at 2 open houses listed at $599k (also known as $600k). One was a 3 story 3200 sq ft immaculate house with an additional 700 sq ft of finished basement. The other house was a typical 1600 sq ft split ranch which we veiwed just for ideas on what things we want and don't want, etc. The current owners paid $550 for it at the top of the market in 2006.
The fact is, the 2nd house really isn't for sale. In fact, most of the listings i see are not for sale. I think the realtors who list them are just mining for buyers.

There is a difference in those trying to sell their home and those trying to get a certain amount. The first understands that what you paid, what you owe, or what your house was apraised for 3 years ago has nothing to do with current market value.

The whole "it is only fair that I get my money back" attitude is backward. Other people are not going to buy your house when there are plenty of others willing to price effectively to meet their objective of selling VS. the obective of a wishful dollar amount.

I posted a similar sentiment, but it seemed to be lost...Oh well...hope it doesn't get posted twice.

For every real-estate transaction there is both a buyer and a seller. If they cannot get together on a price, then aren't both parties "deluded"? It seems unreasonable to point to one party and say they are being unreasonable or are deluded, or whatever. This is especially true if sales are slowing down and you cannot simply pick and chose your dream house at your dream price to buy. On the other hand, if someone is asking $500,000 for a house and there is an identical house across the street for $300,000, then it is clear which party is deluded.

Go figure, Scott? You mean it is strange that some people do not believe that Obama's plan is helpful for the housing market? The plan amounts to a price control. I do not believe that price controls are great way to increase the volume of deals on the market. Realtors want the volume. Obama's plan aims at stopping the prices from falling thereby reducing the number of buyers on the market. Why should realtors be happy?

I am potential FTHB. I am not happy what my money can buy. Leftovers! Homes that are not maintained or updated for decades being sold for top-dollar. Places that many people inherited from their family members and did not invest a dime into it, that are priced sky-high although needing much TLC (read money). I see mostly greed. People around here are complaining about crocked politicians and their greedy ways, but in essence, regular people are not much different given the opportunity. There is something wrong with Eastern MA right now. I do blame RE agents more than sellers because they do push for outrageous prices being addicted to huge commissions for relatively easy work. It is a vicious circle.
I know couple of RE agents, they are located in better towns. They are in total denial as well. It pains me to even talk to them. They are relatively new to the industry 8-10 years now and they do not know better.
Prices will have to drop. When? I do not know. What I do know is that our infrastructure and home stock is very old and is not kept well if at all. It is not as valuable as we would like to think. Lack of maintaince, old age of housing stock and general condition of our infrastructure will come to bite MA very soon. So, something will have to give. Who wants to buy someone "leftovers" for sky high price and then on top of it needs to spend even more to make it half decent? Not to mention sky-high taxes on top of it. I am hoping that this crisis will help eradicate the "entitlement culture" in this area.

addictede

"Just 18 percent think the homes they are looking at are fairly priced"

So 18 percent of potential home buyers have their own house to sell, eh?
Sorry, if you think housing prices in this state are fair, you either have severe brain damage or you're on some seriously potent drugs.

The $330k-$350k they're all asking for a very average house is STILL insane.

Oh, and I'd also say that about 75% of the houses on MLS are overpriced by AT LEAST 20%. The rest are just garbage.

Prime example for what your stats suggest: Single family in East Arlington. Less than 1100 square feet. Needs TONS of work including but not limited to removing sun room that is falling into the earth, foundation, electric, windows, total kitchen rehab, remove carpets and wallpaper, etc. All this for only 349K!!! Give me a break . . .

In response to #5: This discussion is more about people thinking they are going to get top dollar (i.e. 2005 prices) in this market. It's about sellers who think that they can take double digit yearly price appreciation, tack on another $50K and arrive at a price. Those are the delusional sellers. The ones stuck at the peak of the bubble who fail to realize that the economic climate no longer supports inflated prices.

Lou -

Yes, agreed! But there are plenty of alleged buyers who seem to want to predict 2010, 2011, and 2012 prices and want to buy NOW at those prices presuming 10 % DECREASE annually plus take off an extra $50k. They are the same ones saying that just because prices haven't fallen in Wellesley yet, THEY SHOULD HAVE according to their thinking, so maybe they should be able to get a better price than is available. When they can't get the deals they hope to get, they start spouting that the sellers are delusional. I think it is a two way street of delusion! :) If no one wants to sell at the price you think is fair, then maybe your thought of what constitutes a fair price is inaccurate.

I certainly agree that many sellers' pricing expectations are far too aggressive -- be it due to self-delusion, necessity (i.e. bubble-buyers), misinformation or some combination thereof. Along the same vein, I read with interest and some amusement the article in this month's Boston Magazine (available at its website) re: towns that have allegedly increased in value and/or "held steady" since 2005 -- just in time for sellers to enter the spring market. They also include a section on towns where buyers can supposedly find bargains to get this group excited as well. The article makes only one slight mention of price skewing, and it doesn't appear to analyze the implication of sales volume at all.

Actually, if a buyer needs a mortgage, it's banks who are determining the price of homes now. Most (maybe all) of banks will only give a mortgage for seventy-five to eighty percent of a house's appraised value. If the house doesn't appraise out--and banks have gotten very conservative in their appraisals--then the deal falls through.

But there are plenty of alleged buyers who seem to want to predict 2010, 2011, and 2012 prices and want to buy NOW at those prices presuming 10 % DECREASE annually plus take off an extra $50k.

If it makes you feel better to call those buyers "delusional," go ahead. But their prediction--a long grinding down of house prices--is pretty much shared by every prominent economist.

Meanwhile, myhouse's comment is like a case study of delusional sellers:

You are not entitled to a discount just because the economy is not so hot. Please, buyers, get a grip. I will not sell my house for 30% less than I paid.
Sellers unite, there are more buyers than sellers right now, just go to an open house and see for yourself!

How do you imagine markets work? You believe that prices don't go down even when the economy is collapsing? Or that your purchase price is somehow important or relevant to buyers? Or that there are more buyers than sellers???

All of these statements are absurd. A bursting bubble, tightening credit and exploding unemployment is absolutely going to lower the price you can get for your house. A buyer is under no obligation to make you whole for the bad bet you made buying your house. And if buyers outnumbered sellers, days on market would be approaching zero and prices would be rising!

There's an old saying, you can't get a man to understand something when his salary depends on his not understanding it. Instead of "salary," you could probably substitute "sale price."

Myhouse's comments made me shoot scotch out my nose (it hurt, a lot!). What he thinks his house is worth is irrelevant, so is what he paid. If the comps are 30% less than he paid, then that's what his place is worth (give or take a few percent). More buyers than sellers?? Huh, where does he live. He's right on one point though. The market will determine the price. Currently here in SoCal the market is determining the price is about 50% of what it was 3 years ago. The problem for most sellers (except banks) is that they still think the market is the same as 3 years ago. Pointless listing litter the MLS. Houses priced at $900k when nearby REO's are listed for $500k. And the sad reality is that even at $500k those are priced above normal pre-bubble levels of income/prices. My house will soon be worth what I paid for it in 1988 at the peak of the last bubble.

To the deluded soul who posted #8. You are absolutely right, you should not list your house at a 30% discount. Try 60 or 70%. Just goes to show how much of a disconnect people have with reality when it comes to their own assets. "There are more buyers than sellers right now" !!! - dude, not sure what you've been smoking, but it sure packs a lot of hallucinogen. Wake up and smell the coffee - the party's over, if you're a seller right now, you've lost already. My advice - foreclose, 'cause nobody's going to pay a dime for your overpriced, crummy house - not for a decade anyway.

One interesting aspect of the HomeGain survey was that only 14% of homeowner clients (10% in the northeast), believed that their home was worth the listing price recommended by their agent. Both Realtors and appraisers access the local database of comparable sales to determine a market value range, or in the case of appraisers - an opinion of value. Experienced agents and appraisers will generally be pretty close to each other's estimates in evaluating a property that has routine characteristics. Assuming that the agent recommends a list price within the market value range, only 14% of homeowner clients believed that value to be an accurate assessment of their home's worth.

Scott - you might consider asking for opinions from the field about this apparent disconnect. Certainly a correcting market plays a big role. I remember three or four years ago when my home was probably worth 15-18% more than it is today. Perhaps I've internalized that previous value and no other professional opinion given today registers in my mind.

For those commenting that buyers are not realistic, why are we having a bailout? If sellers are in anyway right, we wouldn't need a bailout at all. These greedy sellers think that Obama is going to save them. Price will continue to go down to where people can afford. And yes, I do own a home and plan on buying a second one. I think my house is over priced but I don't plan on selling it now.

I have been looking to buy in Sherborn for several years now. I am seeing houses that are returning for their 3rd and 4th seasons on the market. I think that some of the owners of these properties probably qualify as delusional under the standards discussed above. At some point, owners are no longer "selling dearly" and are simply pricing themselves out of the market.

Interestingly, there have been two properties that have undergone rather sharp price drops in the past 3 months. In each case the seller dropped the price by $100,000 (in one instance from $599,000 to $499,000 and in the other from $699,000 to $599,000). In the first instance, the property sold in a matter of days. In the second, it went off the market, but has recently been re-listed at the lower price.

Also of note is that newer properties to the market (listed for the first time this spring) seem to be priced more rationally than the older properties. IMHO (and I clearly have a bias in favor of buyers) those owners who have "held out" for their price have not done themselves any favors. I do not know whether they got bad advice from their brokers, whether they are reluctant to sell at a loss, or whether they are simply stubborn. But they are now faced with stale listings, lower prices for comparables, and (most recently) a pool of buyers that may be holding out for a dramatic price reduction before they consider making an offer.

bbguitar is right on.

Why is this so hard for some people to understand? House prices must be inline with income! If your communities median income is $60K per household than the median housing price should be about 3 times that - ~$180K.

Additionally, consider that household income is currently dropping and it is easy to see that housing still has to drop 30% to 40% in many areas.

Look out below!

Sellers don't understand the irony at work here: The more they hold out for, the less they will sell for.

The trend in pricing is downwards, so unless you want to wait 10+ years for prices to "come back," take the hit and sell now, today, or sell next month for less, the month after for even less, a year from now for crying-shame prices.

This isn't just about the deflating bubble anymore. Now you've got to factor in a severe recession. Look at the history of home prices in recessions. Double whammy and it's getting worse

Why even bother sending offers on owner occupied properties? Here in Florida it's REO galore! I am first time home buyer and am looking at the empty REO homes, at prices current underwater "owners" would kill themselves over. The bubble is gone. Those underwater should just walk away - prices will never recover, not in our lifetime.

Why would I pay a price that would soon put me in financial difficulty?. Cuz let me see, the choices are to pay rent ($19,ooo year) for a 2300 sq ft home (I'm out of state) or lose that amount in equity each year while paying mortgage interest, taxes, insurance and maintenance on that same property? It also takes away my flexibility in a highly volatile employment environment.

Hmmm.....which makes more fiscal sense? I can wait. Maybe you'll find a buyer who flunked math.

It always baffles me that prices in the Boston area are so high. I don't know one person or family that has moved there. I don't here of much going on with the economy up there. Of the people I know from Boston, most of them seem to want to leave. That doesn't seem like a recipe for maintaining outlandish housing prices.

It always baffles me that prices in the Boston area are so high. I don't know one person or family that has moved there. I don't hear of much going on with the economy up there. Of the people I know from Boston, most of them seem to want to leave. That doesn't seem like a recipe for maintaining outlandish housing prices.

The worth of anything is what a willing buyer will pay. The sellers are regretting that they didn’t sell at the top of the market and are now angry about it. No one called the sellers unrealistic in 2005 around here when they sold houses for 40% more than they were worth. Even if you (sellers) find someone to pay your still inflated price, in today's market the house won’t appraise for the selling price and the bank will not finance it. Period. Moreover, what a perfect world it would be if we could all get back what we put into or paid for an item (namely a house). For instance, we are all putting into social security but most aren’t going to get anything back.

There's a fundamental difference between so-called deluded sellers, who think that the market should pay what they think their house is worth, and deluded buyers, who think they are entitled to discounts based upon where there market is going: The so-called deluded buyers can afford to wait until their expectations become reality. It won't be pleasant or comfortable, and they may have to live in a rental, but that's where the market is going.

This is just a reversal of fortunes compared to only 6 years ago when sellers had deluded visions of their 3 bedroom ranch being worth a half million dollars and the market caught up with their expectations, for a time. When the market sank, they had a good 2 years to get out, more than I had imagined. I would have thought that the top would be short lived, but even now some homes are continuing to move at higher prices provided the sellers undercut their competition.

That makes "myhouse's" call to arms "The British are Coming! The British are Coming!" seem laughable. If he sneers at a 30% off price, then he'll just be left sitting there while another seller will jump at the chance to unload a property he bought for $200K in Y2K for a "mere" $300K today instead of the asking price of $450K like some stubborn sellers hold onto. He gets out with $100K which is still better than a poke in the eye with a sharp stick AND helps drag down prices to $300K. By the time Mr. "I'm a seller and set prices" gets desperate, the buyers are willing to offer him that $200K again. When credit tightens up, he'll be stuck with the renters while us buyers will move into his place for pennies on a dollar. Sweet!

Buyers are wising up in a number of ways not available even as little as 10 years ago. It's common for most buyers to research past history sales and comparables via county tax assessment sites. I laugh at HGTV where some buyer hears a price of $300K and thinks they get a bargain if they haggle them down to, say, $290K! Wow! But now I commonly hear in elevators buyers talk about how they webbed the address and found the seller paid $150K for the same property 8 years ago. That sure affects the opening bid, doesn't it? Oh, they got a HELOC and blew it on vacations and kids college? TOUGH! Let us know when the bank takes it and we'll talk to them!

Now it's a matter of waiting for Obama's policies to fail (what a surprise!) and then prices will collapse that much faster. Oh, and it will take down northeast hypocrite liberalism down too. Double bonus! Whoo hoo!

Well said emilyo. Many of the houses are inherited with nothing done to keep them up. They expect 2005 pricing. Well, too bad. 2005 pricing, as we all know now, was a function of free money policies and liberal community activists (ACORN for example) trying to stuff as many deadbeats in homes as possible. Why should I have to pay for someone who was dumb enough to buy at the top of the market (I sold in 2005), who used the equity to buy boats, RV's, pickups, and other depreciating assets, and who could otherwise care less about me. This is a business transaction. The market doesn't care whether you're up to your eyeballs in debt. I don't care. Maybe it is time that you actually do something productive other than flipping houses. In the boom, realtors loved to say "buy now or be priced out forever." Well, now it is "sell now or be priced in forever."

Marcus, couldn't have said it better myself.

If I was a seller, I would price my house 20-30% below what the "going rate" is and sell it now. You'd have to be delusional to think prices are not headed there anyways. And once they do get there, you'll be forced to lower your price even more to move it.

Yes Mary, it is ultimately the banks, through credit availability that drive prices. That's why we had a bubble: credit was cheap and easy. Wages also play a large role in setting home prices, but in many places during the bubble, wages could never support prices, so it was credit availability that ultimately drove prices.

I had an agent say once, with a straight face, "I can show you comps in this neighborhood from three years ago that are 200k over this price".... wow, really? You can? Color me not so impressed.

And... to boot... it was an inherited home, with 1960s decor. It looked like the old woman died yesterday.

So I didn't walk, I RAN back to my rented apartment, and started counting my cash.

We have been trying to find a good house for a resonable price for years. We are pro couple with good inclone and saving, but we just don't wabnt to overpay or become homeslaves, not home owners.
Guess what? We are still waiting.
When prices strated going south finally in 2007 everybody screamed: "Bargain, bargain!" And suckers bought houses in 2007, 2008, and where they are now? Many of them already under water!
Go figure out!

Realtor associations have been telling buyers for the past 3 years that things are great and that they are in the buyer’s seat. If you track nearly every home purchase made during 2005 to 2008, that home is now worth much, much less than what the seller’s paid for it.

If Realtors want to spread the Gospel and tell the truth of the matter, they should be speaking out, along with the Print Media, on why it is the Sellers who should be dropping their inflated asking prices. They won't and they can't, as it is the Seller who is in the driver’s seat. Realtors and the Print Media have no skin in the game. It is not their own money at risk. People are naturally greedy and want as much as they can get – or think they can get, above and beyond the 5 or 6 percent Realtor commission. That amount of money is preventing many higher priced homes from selling in this dismal market.

Sellers, if they don’t have a good reason to sell (divorce, job, relocation, death of spouse, etc), can sit on their overpriced listing until the cows come home. Their listing Realtor can do the same, as they have little or no money of their own at risk and they can use that listing to hold an open house to meet potential prospects.

Imagine a TV ad where (for once) it would tell Sellers that now is a good time to sell, as conditions are only going to get worse. The only radio and TV ads we hear is that it is a great time to purchase real estate as the prices have become more favorable. Maybe they have fallen a bit from their over inflated sky high bubble prices, but they are still out of whack with salaries and inflation. Try speaking truth to the issue for a change! I remember John Lennon singing about wanting some truth. Where is the truth today?

"buy now or be priced out forever."

Way back in 2001 I remember when I first heard this and laughed. I told them that it was unsustainable and that if I can't afford it, the "value" is imaginary. All assets are only worth what the market will pay for them.

Many people thought I was stupid for my position on the matter.

As usual, I was right. These same people are probably the ones overpricing houses.

My neighbors have a small ugly home with warped garage door, trash in the yard, gutters falling off and broken garage windows and have hardly had anyone look at their home in 6 months but haven't come down on their price.Did i mention the location is terrible.? Denial is still out there big time

I purchased my Mcmansion ,3500sf 1.8 acres in easton back in feb 2003 for 525k. I refinanced to a lower rate in Sept 2005. Appraisal came in at 780k. I was so proud of that appraisal that I thought about having it framed. To get into this house I sold my first house, purchased for 219k in 1997 for 450k. I had just about 500k in housing equity in only 8 years. Man ,those were the years. Anywho, I forgot the point of this post. Time to crack another brewski and reminisce about the good ol days.

iI experienced approx 108 months of equity appreciation in the two homes that i lived in from 1997 to 2006. It was awesome. I went from $0 equity to 480k equity appreciation in just those years. Man, It was the best of times. I'll be some old dude sitting on the porch telling my grandkids this story some day and they will think that I am high or drunk.

Owners, may you go down VERY HARD with your FICTIONAL "wealth effect" from your gastly overpriced houses. These Boston bubble prices have robbed my children, and perhaps yours, from the American dream of homeownership. Given the high Boston rents, they cannot possibly save a down payment. Please, Lord, pop the bubble 30-40% further and return us to fiscal sanity and back to the world of actual EARNED income.

Sellers have to sell. They wouldn't be listing in this market otherwise.

Buyers do not have to buy. They can keep renting at far less than they would pay to own. (And frankly, speaking for myself, my rental is as nice as anything I would buy - I've no problem waiting toll 2015)

That's one reason why prices will go down.

The other is the banks, who are already headed for bankruptcy and will be disinclined to speed up the process by loaning people more than they can afford to pay back.

Voila! traditional market ratios re-appear!

Nothing angry about this, just basic facts. Whats to be angry about?

Well. I think #47 and #48 have made the best case against any taxpayer bailouts. If some people are worried that foreclosures in their neighbourhoods undermine their equities, let them take a piece of their 108-month appreciation and save that one guy on their block from foreclosure. Why should the taxpayer get involved?

Hey,hey,take it easy now,my equity stake has been hit hard by this downturn also.I am down to almost 400k in equity. I was planning on selling my house and walking away with 1 to 1.5 million in my pocket in 15 years when my kids leave.Times are tough all around.

Charles: "Sellers have to sell. " This is not always true, as i am sure you would agree. Plenty of people want to sell for whatever reason, but if they cannot cover their debt, will decide to stay put. The question is will enough seller HAVE to sell to cover all of the buyers who want to buy. If there are more sellers than buyers, then I would presume all of your predictions would be true. If there are not enough, then we may see a slow down in the housing price decrease.

Charles, by the way, can you help me? Can you direct me to the median house price in greater boston vs median income for the last, I don't know, 50 years? Is that data available? I am also curious if there is a median income vs annual cost of ownership data, data which factors in interest rates, etc.. You refer to traditional market ratios frequently, and while I believe you, I have never seen this raw data. For instance, if we look at the last 30 years, in how many years has the median house price in greater boston been at or below 3.5 x median income? 2 years, 10 years, 20 years? I just want to better understand this concept better and would love to have it explained to me.

Americans cling to homeownership as a central part of their American Dream, but tax incentives and other housing-specific policies intended to remedy the housing slump are not the highest priority for most Americans, said Pete Flint, CEO of Trulia.com. Consumers across the country are making it very clear that the way to restore faith and solve the housing crisis lies in preserving and creating jobs.

Home prices need to fall in line with historic trends for the past several decades, such as the listing price being tied to a certain percentage of the buyer’s income (between 28 to 33 percent). All of the exotic loan types, such as stated earning mortgages and nothing down mortgages which fueled the explosion in home prices are no longer available. These caused the market to enter into a bubble and made many homes (which people couldn’t afford unless they sold during the teaser rate expired within several years – almost like leasing a car you could not afford unless you leased it for several years) within reach.

It's been a painfully slow couple of months for high-end home sellers over 900K. The most expensive listings are languishing - often at dramatically reduced prices -- while foreclosed properties are selling like hot cakes.
The chances of selling a million-home in this market are extremely slim, but sellers are still trying, possibly out of financial desperation or perhaps because they've got nothing to lose. That is the key point. THEY HAVE NOTHING TO LOSE – many are still just testing the market, as if we are still trapped in a time warp! Realtors love having these listings as they are able to advertise a home, any home, but most importantly, a high end home.

I guess I have a hard time accepting the current housing crisis in regards to buyers over extending themselves. However, at the same time I do understand somewhat people who over reached a little bit at the peak of the market, in order to purchase a home in the Boston market due to the high cost of real estate here. Sometimes buyers need to accept that towns like Newton may not be in the cards for them at that moment and they then need to adjust their expectations. Take a look at other communities rather than ending up in a home with a mortgage that one would be hard pressed to be able to afford.

My husband and I bought a home that was priced at less than 3.5 times our NET income at the time, because we didn't want to become house poor but we wanted a solid single family home that we could live in for a while and expand/renovate this home as the need occured. When we were going through the approval process for out mortgage we were given the green light for double the amount of the house that we actually bought.

We stayed with a traditional 30 year fixed mortgage. Basically we did everything right, but we still feel the consequences of individuals who were not as conservative with their financial decisions and the lenders who preyed on such people. ( In the same breath I am not knocking people who have lost their jobs/income due to the financial crisis. 2 days after we closed on our house I was laid off from a financial services job and definitely flipped out but I was able to secure a new job within weeks. I feel for the people that were not as lucky as I)