When will real estate recover?

[Ginny Favers]

Zillow doesn't even list a price for my house. I think it thinks it's free.

But that graph is actually a perfect example of our home. It says that house prices are about the same as what they were in 2004. We bought in 2004-- and the value of our house is pretty much the same now as what we paid for it then. Prices are slowly going up.

 

[amylevan]

I would take anything zillow says with a grain of salt. I live in a development all built by the same builder, and a couple of house away is the same model as us, just mirror imaged. I've been inside their house and there are no major differences in quality of things like flooring, kitchen & baths. Same acreage, but we have more of the wooded area cleared with grass planted. But, they are on the corner, so 1 side of their property is adjacent to a higher traffic road, which is NOT something I would assume would be desirable.

Zillow has their house as $43,000 more than ours.

 

[disneymagicgirl]

It is, and it has enabled us to do wonderful things. We took a gamble, burning through so much of our savings to buy this place, but not having a mortgage has been really liberating. We wouldn't have been able to consider private school for our girls or take as many vacations as we have... Heck, there have been times where it would have been a stretch just to keep up college & retirement contributions if we were still paying a mortgage every month.

Color me jealous!

 

[emilymad]

SEPA here. We bought in 2008 on the down swing. Our house would sell for about $30K less than what we bought it for. At the worst it was probably $55K less what we bought it at. I think things are starting to sell a little better. I live in a townhouse community where the difference in houses is never that great. There are always a dozen or so homes for sale. Some have been on the market for a long time but many seem to have sold in the past few months.

I use the realtor.com app. It gives you current list prices plus what houses sold for. I feel that it gives a slightly more accurate number than Zillow. It just gives the sale price so there is no way of knowing what the seller gave back to the buyer at closing.

The same builder is starting a new development next to ours but the houses are about 1,000 square feet smaller that my neighborhood. It is going to be interesting how that effects things.

 

[QVCshopper]

I'll chime in from SE PA. We just put our house on the market (for about $100K more than we bought it for 11 years ago) and have had three showings scheduled in 24 hours, so I'm hoping it sells quick. One down the road sold in three days with multiple offers at asking price--but that was a four bedroom while ours is 3. We are the only ones in our whole town right now within a $15K gap. But I have to say that selling a house is quite stressful with three kids! It seems to me like the inventory was fairly more lush earlier this year and it's hit a lull, with not much available. We rushed to get on the market--took us just about ten days. Have never worked so hard in my life.

 

[jedijill]

Things are looking up a bit at least for me. I got an offer yesterday and after a counter offer, I accepted a full price offer today on my house in Kansas City, MO after being on the market for about a week. Much better than I was hoping for. I am going to net about $5k less than I paid for the house in 2004 and will see zero return on the upgrades that I made when I lived there. I am happy to be rid of it as I hate being a landlord.

Jill in CO

 

[Jenny3]

My area has been recovering nicely (suburbs of NE Philly); I'm a Realtor and have been incredibly busy over the last year or so. My last 3 listings all sold within a week for 98% of asking price with multiple offers. I think it all depends on the property - location, condition, etc - but around here, there is just not that much inventory and homes are moving fairly quickly. Average days on market is about 45-60 days.

The market is definitely recovering; nationwide numbers are showing that markets are improving each year. It's going to be a slow climb out of that unrealistic, nasty bubble that popped.

Zillow is not accurate at all; they don't take anything into account with their 'zestimates' other than the price of your neighbor's home - not location, amenities, upgrades, etc. Your best bet is to contact a Realtor for a CMA or an appraiser.

 

[Darcy03231]

Zillow is way off on my house (in fact its way off on the entire neighborhood).
They have our house at $247,000

A small one story 2 bd/1.5 bath home with a two car garage and a finished basement just sold on my street for $300,000. The house is in excellent condition and the kitchen had been all redone with stainless steel appliances and granite counters. The basement was also professionally done and they put a 3/4 bath in down there and a room that could be used as a bedroom (although it wouldn't be legal as there's no outside access), and a really nice family room.

My house is 2 story garrison with 4 bedrooms/2 baths upstairs, 1st floor living room, dining room, eat in kitchen, family room with fireplace, 1/2 bath and laundry room. Basement is also professionally finished with a legal bedroom, bathroom, office, living room and sitting room. We also have a 2 car garage and a bigger lot. Last year we did new siding, windows, roof and deck. We've also put in a new heating system. This year we're re-doing the kitchen and the two upstairs baths.

We plan to go on the market next spring and will probably be in the $375,000 range (which is what similar homes in my neighborhood have been selling for), which is way over the Zillow estimate.

 

[crjack]

Here in Greater Boston the market is strong. The front page of today's paper has an article on the "buyers market" and lack of inventory, particularly in the lower price range that most new buyers are in.

Our area never really had a big drop, plus the interest rates have attracted a lot of new buyers, so the homes I see sitting a little longer are definitely the very high end homes.....but that can happen for a number of reasons with expensive homes.

 

[tvguy]

Zillow is way off on my house (in fact its way off on the entire neighborhood).
They have our house at $247,000

A small one story 2 bd/1.5 bath home with a two car garage and a finished basement just sold on my street for $300,000. The house is in excellent condition and the kitchen had been all redone with stainless steel appliances and granite counters. The basement was also professionally done and they put a 3/4 bath in down there and a room that could be used as a bedroom (although it wouldn't be legal as there's no outside access), and a really nice family room.

My house is 2 story garrison with 4 bedrooms/2 baths upstairs, 1st floor living room, dining room, eat in kitchen, family room with fireplace, 1/2 bath and laundry room. Basement is also professionally finished with a legal bedroom, bathroom, office, living room and sitting room. We also have a 2 car garage and a bigger lot. Last year we did new siding, windows, roof and deck. We've also put in a new heating system. This year we're re-doing the kitchen and the two upstairs baths.

We plan to go on the market next spring and will probably be in the $375,000 range (which is what similar homes in my neighborhood have been selling for), which is way over the Zillow estimate.

The biggest portion of Zillows system is based on what houses are selling for in your area. It certainly can't determine what upgrades houses have, or other individual differences. I know my parents house would be a great house ready to live in house in almost any other neighborhood. But where it is, at 1750 square feet on a half acre lot, it's a candidte for being knocked down for a $3 million McMansion.

 

[angwill]

Sadly, where I live upgrades don't mean more money at all. All it helps is when buyers are comparing and upgraded renovated home to other homes in the area yours might sell first just because the buyers like the updates you put in.

 

[QVCshopper]

I'll chime in from SE PA. We just put our house on the market (for about $100K more than we bought it for 11 years ago) and have had three showings scheduled in 24 hours, so I'm hoping it sells quick. One down the road sold in three days with multiple offers at asking price--but that was a four bedroom while ours is 3. We are the only ones in our whole town right now within a $15K gap. But I have to say that selling a house is quite stressful with three kids! It seems to me like the inventory was fairly more lush earlier this year and it's hit a lull, with not much available. We rushed to get on the market--took us just about ten days. Have never worked so hard in my life.

Just an update. We've had 8 showings in 48 hours, with 2 more scheduled. Our realtor said she heard one couple will be submitting an offer by Monday. I insisted on going on the market for $5k more than she recommended, mostly because I have followed real estate here for over two years. So, I'd say things have been picking up here and/or there is no inventory left. Not sure what the offer will be, but here's hoping!

 

[taaren]

I'm hoping it won't recover too quickly, but from the looks of it its already begun here in this part of California. We bought our house about halfway down the price slide at the beginning of the crash and rented it out at a slight profit (at the time we thought it was the bottom, since it was about half of what prices had been a year previously). When we had to move several months ago, I wanted to buy another house like mine when I saw the price on Zillow was still lower than what we paid, and leave mine rented.

Then I actually went and looked at what was on the market in my neighborhood. Houses about 2/3 the square footage of mine with half the property size were going for higher than what Zillow believes mine to be worth. And everything is getting multiple cash offers within days of listing. Since we knew we just needed a place to live, and couldn't wait the long hunt for a unit that we liked in our neighborhood at a price we could afford, we just vacated our tenants and moved into the home we owned. Within the next year or so, once we are settled in, we'll start the hunt for a rental property nearby, but won't be as picky about neighborhood as we'll be going for rental value instead of the emotional attachment of the school we'd specifically picked for my DS, etc. Prices are reasonable, but have been steadily climbing since late last fall in the Bay Area. Its a feeding frenzy of a seller's market.

I think Zillow can only work on old data, what's already been recorded at the county deed offices, so its several months behind because closing can take so long. Then it has to aggregate and average the data, so I don't think its necessarily wrong so much as outdated, particularly if the market has been moving or shifting quickly where you're at.

 

[sweetdana]

Michigan is actually way up from the low. In some areas quite a bit. (UW for a MI mortg co, and watch appraisals/pur prices come in 5-10 times a day.)


Though if you bought at the top, or over paid buying on emotion, knowing 6 months prior someone paid 20K less, or you bought new construction to get the NEWness, you will have paid a premium .. but you should see it slowly going up and staying steady for a while.

Rents are actually way up as well. ( not that changing a good renter is worth even a hundred $$ a month, but it is a side note.) The more foreclosure there are.. proportionally there are more renters.. as though once is a while they pay cash for a home, or live rent free with fam, the majority of them rent.


Don't give up, just pay every penny on principal you can, and you will see the light at the end

 

[sweetdana]

The biggest portion of Zillows system is based on what houses are selling for in your area. It certainly can't determine what upgrades houses have, or other individual differences. I know my parents house would be a great house ready to live in house in almost any other neighborhood. But where it is, at 1750 square feet on a half acre lot, it's a candidte for being knocked down for a $3 million McMansion.

yup a 2000 sq foot home is worth the same as a 1000 sq foot neighbor..

Zillow is a good indicator.. BUT not an appraisal..

it is only accurate when the whole sub is built by 1 builder and all homes are 5 yrs old.. and all the same size.. otherwise.. take it as a helper.

 

[tvguy]

yup a 2000 sq foot home is worth the same as a 1000 sq foot neighbor..

Zillow is a good indicator.. BUT not an appraisal..

it is only accurate when the whole sub is built by 1 builder and all homes are 5 yrs old.. and all the same size.. otherwise.. take it as a helper.

Well like I said, appraisals around here can be farther off than Zillow. Comps are closer, but the botton line is, a house is worth what someone is willing to pay for it.

 

[QVCshopper]

Just an update. We've had 8 showings in 48 hours, with 2 more scheduled. Our realtor said she heard one couple will be submitting an offer by Monday. I insisted on going on the market for $5k more than she recommended, mostly because I have followed real estate here for over two years. So, I'd say things have been picking up here and/or there is no inventory left. Not sure what the offer will be, but here's hoping!

So we are now under contract for the amount we wanted, which is the same amount the realtor said to list at. We ended up having 14 showing requests and two offers from Thursday afternoon until Monday night. I'm very happy and hope things continue smoothly; so I'd say the market is basically recovered here, but I'm not sure it ever fell too badly in the first place.

 

[Sheaboys]

Zillow is very very inaccurate.
Our house was hit by the tornado on June 1, 2011. They are still showing the house across the street as there, when it was wiped out that day.
It Shows my house as sold in 2011, which it was not.
We donated it to the fire department in March 2013, to burn down for training, since you could not live in it.

 

[lost*in*cyberspace]

This year we're re-doing the kitchen and the two upstairs baths.

We plan to go on the market next spring and will probably be in the $375,000 range (which is what similar homes in my neighborhood have been selling for), which is way over the Zillow estimate.

If you are selling in a year, you might want to seriously rethink putting any more money into your house, which you will never get back. It might be better to just do very minor cosmetic updates.

I agree that Zillow is way off on housing price estimates where I live as well.

 

[timmac]

I think a few other posters have already hinted at this, but I think the question originally posed by the title of the thread is interesting "When will the real estate market recover?" But that's not really what most people want to ask. What they mean is "When will housing prices be back to their 2006-2007 levels?"

The distinction between these two questions is kind of important, because the first question can be answered pretty simply by pointing out that the 2007-2008 housing crash basically *was* the recovery. Housing prices had been unusually and abnormally high over the previous few years, and the crash actually put them back closer in line with where they really should have been all along.

As for the second question, about housing prices returning to 2006-2007 levels, of course it depends on local market factors and such, but in general, it could still be a little while. Residential real estate prices, on average, track pretty well against inflation, e.g. 2-3% per year. (More on this point below.) For purchases made at prices that were some 30-50% above the expected trend, that means roughly 10-15 years for them to get to that point naturally.

It's a crummy situation for a lot of buyers who purchased in the several years of the housing bubble, no dobut. Unfortunately, a lof of the purchases were made, in part, under the assumption that real estate is a fabulous investment that always appreciates handsomely over time. We all now realize that isn't true, yet at the same time often find ourselves stuck in the same way of thinking about our purchase and it's waiting for it's value to "recover".

Now, just a few thoughts on the value of housing and real estate... the notion that it should be ever-increasing at an average rate faster than inflation is something of an absurdity. If it were true, then over time the number of people who could afford a place to live would be ever-decreasing, eventually to a point where all but a select few families were cramped in increasingly tiny residences... the net result would be social unrest, and probably some dramatic changes in society. (Plenty of historical examples of what happens when the majority of a group of people can't afford one of life's basic needs.)