I realize that this is not the only cause of falling housing prices. But reduced demand is not solely responsible for collapsing values in all areas. Can someone explain to me what makes the selling prices of SSs and REOs qualify as comparables?
The underlying truth is; the comps are what the equivalent price of the house is for that period of time.. whether REO, flip or shortsale. It is what people are willing to pay for the property.
Comps and actual value of the property are different. Comps outpaced actual value over the past years because of loose financing. Too many people were speculating one way or the other (this is why so many foreclosures in the first place). The banks are assuming that there may be another leg down, so they are being a bit conservative. The fed told them that there is not going to be another ‘bailout’. They got to get healthy NOW. In addition, people got used to really loose financing. 20% down is closer to the norm.. so what is the problem? Lower house prices mean lower property tax.
