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Home › Forums › Housing › 1500 sq-ft house in MM just sold for $500k, did I miss the memo? › Nor-LA-SD-guy wrote:CA renter

July 6, 2009 at 11:03 PM #426581
CA renter
Participant

[quote=Nor-LA-SD-guy][quote=CA renter][quote=Nor-LA-SD-guy]Maybe it’s because there is so little inventory on the market right now,

Sometimes I think the banks are just waiting for a few more organic listings to come on the MLS so they are gauge what the real market is.

Hint, it’s not the price these foreclosures are going for.[/quote]

How do you figure foreclosures are not the market????[/quote]

Who are you going to buy the homes from once the mass foreclosures run out (and mass numbers of foreclosures will run out at some point in SD).

Also I would argue that in places that have been really hard hit, by the time builders pay all the fee’s etc.., you would have to sell at a significant premium to what these foreclosures have been selling for just to break even , unless you start building condo’s and duplex’s etc…[/quote]

For now, foreclosures are setting the market prices of houses, just like the fraudulent deals were setting the market prices of houses on the way up.

The prices seen during 2001-2007 were NOT “normal” market-based prices. Buyers, sellers, appraisers and lenders were using comps where the buyers had absolutely NO skin in the game and were lying on their mortgage applications. Those prices were no more “real” or “normal” or “market-based” than the prices of foreclosures that have resulted as a consequence of all those fraudulent transactions (and I include people who used mortgages that they couldn’t repay without refinancing, HELOC’ing, or winning the lottery in that “fraudulent” pool — even if their applications were technically legal).

Price will continue to fall, irrespective of foreclosures, until they reach a level where a critical mass of buyers can afford those prices over a long period of time.

People are focusing too much on foreclosures, IMHO. I’m looking at lending standards and income over time.

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As to builders not breaking-even on sales…

Builders do not set prices in a developed market. If builders cannot make money using current prices, then they need to lower their cost basis by paying less for the land.