So heres my dilemma. I'm looking at a house where the owner is willing to unload it for $225K and he originally bought it for 241K in 2003. So he's slashing his price by about 6.6% since 2003....is this a good deal? The neighborhood is pretty upscale, no foreclosures as of yet and not too many homes on sale either so its not like its a bad area, so is 6.6% a good correction since 2003? hmmmmmmm not sure what to do...
Its a nice area, mostly middle class/upper middle class. I've been scouring zillow and all the recent sales of homes are in the 250K range....man its tempting. Silliest thing is that the stupid "Tax Assessed Value" is 271K...man the first thing I'd do if I bought this is go fight the property tax value on this place. I can't believe the current owner didn't already do that.
Someone's going to have to do an appraisal that should be the key. You might ask the owner what the house appraised at in '03.
I wish middle class housing near me sold for 250k. Where I am 450k-600k is middle class. Housing is going to fall further. I'm sure that house will be worth no more than 215k in 3-6 months. ARMS still resetting and foreclosures skyrocketing nationwide. Bottom is farrrrr, farrrr away.
no! it may not be a bad deal but if you think thats a GOOD deal you have not done very much shopping around. Houses that were built last year are selling for one-half what they cost TO BUILD, no lie. If you are buying right now you shouldnt be paying anywhere near last years prices.
Are you talking a primary residence or rental property ? Have you considered REO / Bank Owned Properties....? People are offering .60 - .70 on the dollar and many are getting the homes.
You shouldn't be looking at the price correction to estimate if you're getting a bargain. Instead you should look at what it would cost to replace the house and buy at a 30% discount.
First I suggest you check out the chart in the below article. I think the data in the chart goes through the end of April 2008: http://calculatedrisk.blogspot.com/2008/05/case-shiller-real-prices-off-21-from.html My personal opinion (which is only an opinion and can be safely ignored) is that average home prices will continue to decline until the inflation adjusted Case-Shiller index approaches 100 (which is about equivalent to nominal house prices hitting their pre-housing bubble 2000-2001 levels). That translates to about $200K for the house you are looking at. However, if you like the neighbourhood and the house, need to make a move anyway, and don't intend to flip the house quickly, taking on a $25K downside risk (again based on my uneducated price guesstimate) may not be too bad of a purchase. (Note that these are nationwide composite numbers and may not apply to your particular city/state).