Hi Matt,

Just be careful about waiting too long. The new conforming loan limits are going to open the market up a bit and I think things will pick up this summer. I know in my neighborhood, all the lower priced foreclosures have been purchased. Before March, there were probably 8 houses in my neighborhood in the low-to mid-500s, and they are all gone now. Some of them even had multiple offers. Also, if you are thinking about buying a short sale, be very, very careful; some realtors call them "fake listings" because the banks don't really want them to sell and instead want them to go into foreclosure because they make more money that way.

Good luck to you!

We're still on the sidelines for now, but the bank-owned houses are getting closer to what we'd call reasonable. We're looking in the Wheaton area as the best compromise between affordability, commutability, and safety / crime rates.

Prices are going to come down more for sure, as lending tightens back up and more houses get listed, but what the banks & short sellers are offering right now, which is about "2003" pricing, seems like a relatively low-risk target price.

Hi Matt,

Where are you looking? Have you had any success finding something you like, or are you waiting to see if prices go down even further?

Excuse me - - "... in neighborhoods where [the median income of the residents] was 1/8th of our income."

To clarify my own comments, I've been forced to sit on the sidelines because of the rapid rise in home prices. It got to the point in 2005, my wife and I could only afford homes in neighborhoods where our the median income was 1/8th ours. It's frustrating to want to buy, and be ready to buy, but market insanity forces you to either keep renting or make a very bad financial decision.

The karmic retribution is very due, but it's also sad. I'm happy tho :-)

Hi Matt,

Thanks for your thoughtful comments (and the compliment!). After I posted that bit about "karmic retribution", I realized it could be a bit controversial or might seem unkind. I really do have sympathy for those sellers who trusted their realtors and made what they thought was a smart financial move when they bought, only to now be paying the price as they try to sell. I guess what I was really getting at is that the market had been too sharply skewed toward sellers, and the pendulum has needed to swing back pretty fiercely the other way in order to bring better balance to the market. The "karmic retribution" comment was made solely in reference to how unbalanced things were, and looking at that from a market perspective instead of a human perspective, but I did not take pains to clarify that.

I appreciate you stopping by!

Interesting phenomenon & a great post.

I think this statement made in a comment above is the saddest part: "[. . .] sellers are experiencing a bit of karmic retribution for the grinder that buyers were put through a few years ago."

The thing is that some of the sellers right now were the very same buyers in a grinder back then - how unfair it must feel that they had to get in a bidding war to purchase a house that no one will even submit a low-ball on today . . .

Devil,

You are absolutely right about sellers being led down the primrose path a few years back. When we were looking to trade up from our townhouse in 2003, we were lucky enough to have a realtor who told it to us straight (at least on this issue). We were thinking of buying a house that backed to a road, and she strongly advised against it because "When the market comes down, AND IT ALWAYS DOES, that may be when you're trying to sell this house that backs to a road, and buyers will have the option to buy houses that don't back to roads." She was definitely the exception, and I have felt badly for people who trusted their realtors to be the responsible experts and got left holding the bag. However, the market has been in a downturn since fall of 2005, and I have to admit my sympathy is running out. It's been almost 3 years since the market peaked. If I had to sell my house today, it would be at a loss (to the tune of $75k to $100k). That would really suck, but being stubborn about it wouldn't change the reality.

Thanks for stopping by!

In the sellers' defense, when they bought at bubble's peak, their buyer's agent told them "Real estate ALWAYS goes up!" Many many sellers are still clinging desperately to that belief, while the agents that LIED to them are going broke.

And, to those sellers who say "But it's MY hoooooome!" Um, no it isn't, unless it's absolutely mortgage-free. Aren't people learning anything from all these foreclosures all over the place?

Hi Lovelace,

Definitely, the biggest obstacle to overcome when trying to get sellers to lower their price is their emotional attachment to their property. I think that esp. here in Northern VA, people take tremendous pride in their homes and think that a lower price is a poor reflection on them or their property, rather than simply being a reflection of the market.

When we sold our last home, our agent gave us 2 pieces of advice: "When you put your house on the market, detach yourself and realize that it is a business decision" (which is very similar to your comment); and "Your house is worth what someone will pay you for it, and not a penny more." It is definitely different from the height of the market when sellers set the price and then would get above that. Frankly, there is a part of me that thinks that sellers are experiencing a bit of karmic retribution for the grinder that buyers were put through a few years ago.

That doesn't mean I don't have sympathy for people trying to sell a property these days. It's got to be unbelievably nervewracking, and even the most unreasonable sellers are still real people facing real losses. That's why I think that unless a property really needs to be sold right now, it shouldn't be put on the market.

Thanks for stopping by!

Hi Yup (that makes me laugh),

Thanks for stopping by! I would be *thrilled* if you would submit this information with your offers! It's definitely past time for a little tough love.

Another thing that drives me nuts is when sellers don't seem to realize that foreclosures are actually competition. Sellers seem to think that just because a low-priced house is a foreclosure, it doesn't count. How does that even make sense? Do they think foreclosures are invisible to buyers? It used to be that foreclosures were generally abandoned, dilapidated, or just plain outdated, but here in Loudoun, most foreclosures rae in fantastic condition and are fairly new. You just have to be willing to muddle your way through all the red tape.

Where are you house hunting?

Well said.

In discussing why overpricing happens, The New York Times article says: "For starters, people have an obvious emotional connection to their house. After you have raised a family or enjoyed long meals with friends there, you are naturally going to place a higher value on it than a dispassionate buyer would. It’s your home."

To which someone I know really well says:

"It's no longer your home the moment you decide to put your house on the market. Get over it!" Loudoun sellers would be wise to learn this lesson.

Yup -- I'd *love* to see _that_!

Interesting post. As a buyer returning to DC (we sold our last house before going overseas a few years ago) I am shocked at the prices being asked. Especially when the houses are vacant and have been on the market 6 months or more. Maybe I'll send your blog posting and the Leonhardt article along with my offers....