When distressed owners slash their prices to get out of their financial nightmares or let the house go to foreclosure and the lender takes whatever the market will give them to get the property off their books, the actual selling prices will be the new values for the respective neighborhoods. If someone bought a house in X-area in 2003 for $500k and a similar house sold across the street in 2005 for $625k………..but two or more desperate sellers or foreclosed similar properties in the same neighborhood are put up for sale and close at $400k in the next couple of months, the real value has now become around $400k. That’s the reality of real estate values…….period. It doesn’t matter what someone paid in 1990 or 2006: What is relevant is how much equivalent properties in the same market/area are now selling for.
