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Good morning, I believe an alternate explanation for these swings, especially the double digit increases year on year of Median Sales prices, is that as the huge number of extraordinarily low-priced properties have been sold, the next tier of homes, at higher prices e.g. they’re larger, more amenitized, etc, are currently being sold. The Median price goes up because these are more expensive homes, not necessarily because the market has improved and prices have risen by these huge amounts. Further, if this explanation is correct, it is counter-productive to keep promoting the notion that prices are rising at rates rivaling the pre-bust market. It could become, yet another, self-induced and self-fulfilling prophecy; with the same results.
As for the markets which are reported to have large price increases, the sale prices are propped up by the huge volume of bank owned properties that are not listed for sale. The price increases in those same markets last decade were also the result of manipulation of supply and demand by the banks. Last decade it was demand that was manipulated by making “buyers” out of unqualified borrowers. At present, the supply of homes is artificially suppressed by the banks holding huge numbers of homes off the market. In Reno/Sparks, there are a reported 15,000+ bank owned properties not on the MLS. In Vegas there are reportedly more than 50,000 bank owned homes not listed for sale. If those homes were on the market, the bottom would drop out of the price. I know personally of a home that sold for $250,000 in Reno about 8 years ago. No payment has been made on the mortgage for more than 5 1/2 years. Late last year a short-sale offer of $25,000 was made to the major bank which services the loan. The bank countered at $30,000. The sale did not occur, and the homeowner remains in the home not making any payments. That is a “shadow REO” because the property is not owned by the bank, and the public record shows no foreclosure notice. I understand that realtors must rely upon the average or median sales price of the tiny percentage of homes sold compared to the number of homes that would be for sale under normal market conditions. It would be very dangerous to believe that these artificial price increases are real.
Dan Bussey and Reno Native are right on!! I live in the “RUST” Belt portion of our country. we have lost millions of people and decent paying jobs in our area. There is little or no new job creation here and corporate productivity is at an all time low. The Banks are not even foreclosing on many of the homes that are in default because if they foreclose and have the home vacant for even a week, the houses will be stripted clean by theft of copper plumbing, electrical wiring, built in appliances/fixtures, plumbing fixtures, heating and cooling components, even aluminum siding. My State Equalized Value (SEV), used to determine my home’s property & tax value DROPPED 29% last year alone. Who’s kidding whom… there may be small specific areas of our country that are recovering somewhat but overall the housing industry recovery as a whole in our country is a scam that we are being fed by the government and the banking industry. You can make anything look good on paper if you only include the sales figures that seem to prove the baloney you are trying to feed the public. How so you expect to have a recovery when many huge municipalities in your state are either in bankruptcy or under emergency managership because of their dire financial condition??
Dan Bussey….I am in 100% agreement with you. Our smaller midwestern, somewhat rural town southwest of St Louis, Mo. was doing fine until people couldn’t help but believe all the media presentation of how bad the market was when the bust started in the coastal states. Now that our market has finally started to improve in the past year or so, at the end of this month, Congress is taking away our USDA Rural Development Loan Program which will most definitely hurt our market tremendously once again. The only loan that leaves for these buyers is FHA which is a huge negative loan for these consumers. They already cannot afford very high loan payments and FHA’s PMI payments, at $75-$100 month, keep these buyers from being able to qualify for the type of modest home they need for their families. It’s a shame that decision makers do not pay as close attention to those consumers who live in these type of areas. This loan program should not be based on population….didn’t we all learn that Real Estate is all about…LOCATION, LOCATION, LOCATION. Happy Selling to us all and thank you for the opportunity to share my thoughts.
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