Home > Buying a home, Mortgages, NEWS, Supply and Demand > All Home Prices Decline at the Same Pace – NOT!!

All Home Prices Decline at the Same Pace – NOT!!

Aside from the credit crunch,  the biggest challenge that most home buyers face today is to determine what they should pay for a specific house. There is no question that housing prices are still falling in most markets across the country.  Read almost any local newspaper and you’ll see the evidence.  How to apply that fact to the house that you are considering is a conundrum (I’ve been dying to use that word in blog post).

Let’s take a hypothetical.

The house you’re looking at sold 2 years ago for $100,000 and local housing data says that home prices in that town have dropped 5% a year for the last 2 years.  Strictly speaking that makes the house you are looking at worth $90,250.  The asking price is $95,000.  So you tell your Realtor that you’ve done your homework and you want to bid $90,000 to open and you’ll negotiate up by $250 but not a penny more because you don’t want to overpay.

Your Realtor, who is legally obliged to present all offers, explains to you, that this house is worth more than $90,250.  You pull out your research and show him that he’s wrong. You begin to question the Realtor’s motives or, at the very least, his competency.

The fact is, that this particular house has not depreciated as much as some of the other in town.  It is close enough to the interstate to enable a good commute while being far enough away from the interstate to avoid noise and neighborhood congestion.   It has a great, level lot and driveway. Several other features make this house a good value.  The fact that you have selected to try and purchase it from among all the houses in town, should immediately tell you that it is more desirable – that’s why you desire it.

Local housing data is about averages – there is really no such thing as average.  I think it was the late George Carlin who use to refer to the national census data stating that the average American family had 1.6 children and he wanted to see the .6 child.  (It sounded funny when he said it – trust me)

The point is that when you are deciding what a house is worth – you need to look beyond stats and determine what it is worth to you. After all – that’s all that really matters.

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