June 24, 2008 6:29PM

Reality Bites

By Cheryl Casone

Does anyone feel the need for a reality check? I am mostly a positive person, not to the point of Pollyanna, but I am positive. Turns out there are “a lot” of positive people out there. Scott Rasmussen was on today talking about his latest poll. Only 9 percent reported their home was worth less than they paid for it. I questioned him on it, and he said “look, they might have bought four years, seven years ago, and they are losing money.”

Reality bites doesn’t it? I don’t have much sympathy for home flippers, and I don’t feel too terrible for those that put zero down, and can’t pay their mortgage. But, I do feel sorry for folks that have not faced the reality that their home is not worth on paper what they think it is.

79% percent say buying home is still a good investment. 81% of homeowners are somewhat or very confident they know how much their home is worth in today’s market. BUT 80% SAY THEIR HOMES HAVE INCREASED IN VALUE.

Ok folks, you think you know what your home is worth? Reality is that it is worth less right now if you were to sell it than you think. Even in some of the stronger recession proof markets, prices are down according to real estate agents about 30%.

The market in New York City is under pressure. Real estate agents here are quoting prices in Euros, because the Europeans are the only ones who can afford NYC prices! We’ll have a guest on the show Thursday to talk about that angle of the story.

Feel free to disagree with me because I hope I am wrong on this one!

4 Responses to “Reality Bites”

Comment by Justin

June 24th, 2008 at 7:42 pm

You’re right. New York real estate is about to fall, and Cody Willard is dead on for renting until prices finally drop. With all of these job losses on Wall Street, people are going to be downsizing or moving else where in search of employment. As the credit crisis continues, it’s going to get even harder to borrow money. When money gets harder to borrow, and jobs are being cut left and right, high ticket items are going to fall. New York heavily relies on wall street commerce, and when wall street downsizes, the entire city will feel the effects. I expect alot of foreigners to be buying up assets here in America over the next few years. The scariest thing is that we haven’t even begun to see the inflation of the most recent rate cuts. If you thought 2008 was nasty, just wait until all of that easy 2% monopoly money helicopter Ben has been printing up finds it’s way into the economy. Honestly, I believe we will see a nastier recession then we had in the late 1970’s. We certainly won’t be getting any help from DC either with socialists like McCain and Obama.

But I hope I’m wrong too.
Comment by Rob

June 26th, 2008 at 11:07 am

You’re absolutely right Cheryl. I paid 285k for an investment condo 5+ years ago and the unit next door is going for 250k right now. I’m walking away and filing bankruptcy.
Comment by Lori

June 28th, 2008 at 7:11 pm

I once thought of myself as a positive person, always looking for the bright side of everything. I know now that there is really no bright side to this situation we are in deep trouble. Anybody who believes that their home is worth more now needs to seek professional help. A home is only worth what a potential buyer is willing to pay and right now the buyers are sitting back and waiting. Of those potential home buyers most can’t even get a mortgage.

Home prices are at best holding steady in a few areas and for most markets, falling. Anybody that has a foreclosed property nearby their home can expect their home to drop in value. My only question is, if property values are decreasing then how come my property taxes keep increasing?

We can thank the investors and speculators for this mess and should expect to see the same or worse results to our economy from the now oil speculators.

In all the positive side that capitalism in a America is working and if you got the money to invest (or the right investors), you can drive up prices on a product or service, screw over the common person and the government will bail you out with taxpayer money. That’s a consumer economics lesson for us, the working middle class taxpayers.

Bailing out the Financial institutions that came up with all those creative mortgages and drove housing prices up based on speculation is the real part of the reality that bites.
Comment by Annie

June 29th, 2008 at 11:36 pm

Sorry to disagree with you Cheryl. New York…Well it’s been overinflated for decades and it was bound to see a correction…The housing prices are nuts! Michigan…of course it’s hurting, what’s not to hurt about there??? Detroit’s the murder capitol of the country, union thugs running the auto industry, a Mayor who has been endicted on more counts than anyone is willing to talk about, not to mention the Governor who has all but, (and is succeeding), dragged the entire state into a depression! But check out places like Austin, Houston, Dallas, we’re doing great down here and the only (2) things that can screw us up is a big government President and the negative reporting that you & sooooo many others in the press just love to feed us. Well…I’m not eatin’ it! I’m in Real Estate here in Austin and I am moving forward with an upbeat message for all my clients…”DON”T LET THE PRESS MOLD YOUR MIND! Look around you, look at the growth the traffic the hi-tech on and on.” Were movin’ and shakin’ down here. I’ve been in RE for nearly 2 decades and have seen my share of down markets. I’m also born & raised in MI and it breaks my heart to see the disaster zone that such a beautiful state has become. But ya know what…you guys are all coming here and I’ll put up with the traffic and you’ll dig living in an economically sound state! How’s that?
AS
Austin, TX