Well, not trenches actually. It’s more like a report from my neighborhood. As long time readers know, I keep a close eye on the real estate that’s for sale around my house. It’s really been a fascinating experience to watch houses fall in to foreclosure and then sit for many months unoccupied as the lawns grow out of control. I’ve often wondered what the circumstances were behind each foreclosure and imagined what kind of stress people were under during the process
One of the houses that has been sitting vacant for nearly a year is back on the market for the third time since the bank took it back. Here are a few tidbits about the house:
In June of 07 this house value was: $439K
First bank sales price: $340K
Second bank sales price: $299K
Third bank sales price: $275K
Today’s sales price: $265K
What is a bit shocking to me is that, while this house isn’t quite like mine and isn’t in quite as desirable of a location as mine (we live in a culdesac), it’s really not all that different. We purchased our house 7.5 years ago for $280K. After 7.5 years in our home, someone can drive up today and buy a house somewhat like ours for $15K cheaper than we did so long ago. Ouch.
At this point, it doesn’t really matter all that much to us. We aren’t planning on moving so it’s really like holding on to a stock that has fallen in value. You only lose when you sell it. Sure, there could be more downside risk, but I just don’t see how it can go too much lower. The good news is that we haven’t used our house like an ATM machine so no matter what happens, we still have plenty of equity.
You want to talk depressing, I’m seeing houses that were built in the mid to late 1990’s now sell for less than what they were sold for, and chances are the original construction prices didn’t even include things like landscaping / decks, etc. So, here in the metro Detroit area, we’re looking at 10-15 years of gains out the window, and our market definitely went up in the 2000’s, but nowhere near the pace at which it did in other parts of the country. The fact that it’s fallen so hard without as big a rise has made it even more of a whammy.
Is it time to buy another house? I think things generally dip below fair value. If they’re selling for below construction cost might be a good investment?