Whats Really Going On With Our Real Estate Market

(News about the housing market and home prices in general have been scattered all across the board in recent months. )

One day you’ll read that the market is on its way back to full health and things are looking just fine. The next day you could read that the market is crashing and there is no hope in sight.

So what is a homeowner, prospective buyer or someone who is just interested in real estate supposed to do?

Well there is no concrete answer to this question but one recent article published in The New York Times, looks to put an end to all of this housing market nonsense.

The December 6, 2006 article by David Leonhardt, “What statistics on home sales aren’t saying,” discusses what is really going on with the housing market.

“The truth is that the official numbers on house prices — the last refuge of soothing information about the real estate market on the coasts — are deeply misleading. Depending on which set you look at, you’ll see that prices have either continued to rise, albeit modestly, or have fallen slightly over the last year.”

“But the statistics have a number of flaws, perhaps the biggest being that they are based only on homes that have actually sold. The numbers overlook all those homes that have been languishing on the market for months, getting only offers that their owners have not been willing to accept.”

The fact that all of the homes that have been sitting on the market are not added into the data definitely skews it significantly. Although to their credit, it would obviously be very difficult to collect such numbers.

The article discusses an auction that recently occurred in Naples, Fla. that shows the true state of our housing market. Recently, homes sold for 20 to 35 percent of the value that they sold for in some cases less than a year ago.

“One three-bedroom ranch house with a pool sold for $671,000. In 2005, the same house sold for $809,000. Another house, just steps from Naples Bay, sold for $880,000 at the auction., compared with $1.35 million a year earlier. On average, the houses that changed hands at the auction had fallen about 25 percent in value since 2005, according to Thomas Lawler, a real estate consultant who analyzed the auction’s results.”

This same phenomenon seems to be occurring throughout the entire nation.

“In reality, homes across much of Florida, California and the Northeast are worth a lot less than they were a year ago. The auction in Naples may have exaggerated the downturn in the market there, but not by much. Tom Doyle, a Naples real estate agent, estimated that a typical house there, sold in the normal way, would go for about 20 percent less than it did the previous fall.”

For most homeowners, these downturns do not really mean much. They didn’t profit from the run-ups (unless the sold their home), so they won’t feel anything from some value declines. And for people looking to buy a home right now, prices are down so they are likely to get a bargain.

The biggest thing we should be focusing on right now is the people who took on too much debt to get into these homes during the boom and now are in over their head because of the declines in worth.

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