How far has the real estate market dropped??

October 30th, 2006 by Kenric

I don’t pay much attention to all the housing bubble articles or the statistics that everyone comes up with every quarter.  I personally pay attention to the subdivisions that my homes are in and their surrounding areas.  As an investor you can keep a pulse on the overall market, but that doesn’t mean too much to you when you decide to sell.  According to the statistics, the median price of homes in Phoenix just started dropping last month.  For my properties, they’ve been dropping since April.  We know that median home prices can be skewed by a few sales of high priced homes. 

So what about my properties…

The price of SFH#1, which I had under contract at $430k and again at $419k last summer, has come down.  Based on the current asking prices of similar models, I feel that it has lost $20k-$30k since June.

When I closed on SFH#2, other people were selling the same model for $599k.  I’ve always thought that this price was over-inflated at that time.  I realistically thought that $550k would have been a good price for it.  One investor dropped his price to $460k and sold it in a day.  Right now, the same model is on the market for $535k.  I feel that $499k would be a good price for my house today and that it has lost $40k-$50k in value.

In hindsight, it looks like I sold Condos #1 & #2 at the height of the market.  None have sold for more than what I got for them.  There are some newly remodeled ones asking less than my sold price.

In contrast, my Salt Lake City townhomes have steadily climbed during this time.  I believe that they have peaked right now.  I probably should have sold them two months ago when I was thinking about it.  But, they both have had their leases renewed and with my PM, they are pretty much invisible to me except when I cash the rent check once a month.

I have no idea how my lots in St. George are doing.  I’m too afraid to call my realtor.  I figure that I’m probably down $10k on each one.  All I can do is sit and wait it out.  Hopefully the new subdivision being built is not a flop.  If it is, I have a feeling that I’ll be holding this land for a long long time.  I am really tempted to build on my lots as houses sell easier than lots and I can at least try to rent out the house after its done.

Posted in Real Estate | 5 Comments »
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  1. 5 Comments to “How far has the real estate market dropped??”

  2. Are you happy with your PM’s in Salt Lake?

    By Clifford on Oct 30, 2006

  3. Sounds like things are taking a turn already… not good news. What percentage would you say you are down in the various markets?

    By NLG on Oct 30, 2006

  4. I’m not thrilled with my PM, but at this point I’m not going to change. Once my tenants leave I may switch PMs, but I’m not going to do it now while things are going smoothly.

    NLG, things started turning about 1 year ago. I knew this was coming, but I’m cashflowing or breaking even so it’s not affecting me that much. Realistically, I think I’m only down $50k in the Phoenix market. That’s because I never believed that my houses could have sold for what other people were trying to get.

    For example, some people were listing the same model house at $489k last year. If I based amount down on that price, I would be down $120k on one of my houses. But the truth is, they couldn’t have gotten $489k for that house even in the hot market. They probably could have gotten $440k.

    By Ken on Oct 30, 2006

  5. Can you tell me who your PM is? I’ve been looking for one in Salt Lake for future deals.

    Thanks,

    Nigel

    By Nigel Swaby on Nov 3, 2006

  6. “We know that median home prices can be skewed by a few sales of high priced homes.”

    http://en.wikipedia.org/wiki/Median

    http://en.wikipedia.org/wiki/Mean

    The median is reported because it cannot be skewed by a “few sales” of anything.

    By Triseis on Nov 5, 2006

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