I don't understand how house prices are set. When I see a house that's $X I often think "$X seems reasonable" immediately followed by "$X/2 seems reasonable" and "$2X seems reasonable".
How does anyone ever set prices for real estate? Why do sellers have such a hard time cutting price 10% or 30% when the whole concept of "value of real estate" seems very nebulous and made-up, and each property is a completely unique combination of age, footage, state of repairs, location etc.?
It's a lot of factors that kinda organically all work to create the market. supply/demand/"what the market will bear", along with assessments of land, labor and, some self reinforcement from the fact that many people don't actually own their home.
Land and labor are pretty easy to see, a brand new house simply has a cost and that cost helps dictate many things. Obviously nobody is paying $500K for something if you could build from scratch for $50K
Supply/demand. if nobody wants to move to an area obviously no matter how nice your property is it doesn't hold value. Or if the area is desirable then your property is worth more. Even with medium demand if there's no supply price goes up and it will go as high as the market will bear.
Then you have "I can't afford to sell for less". if you bought a $400k house and still owe $300k on it you're not going to want sell for less otherwise it would literally cost you money. If the market slumps you might just stay put until things get better. With a lot of stuck people this could get better because it will drive supply down until the market comes back to a level where people can afford to sell.
And all of these factors can change at an interval of a few dozen miles so each little market can have very different factors and prices.
I think Google Trends controls for that, it's not just straight search count? But you might still be correct, that home-sellers are a larger ratio than in 2008.
Hah, yup. "And all for the fantastic price of [~25% below market]!" I got one of those calls. The VM left said that "I could have the money in my account in as little as a week! We could pay as much as (emphasis mine) $485,000 for your home!"
Weird. Taking it with a requisite grain of salt, Redfin's median home value for my home is $660,000. Even my county's valuation for property tax is in the mid 500s.
They are sometimes offering to buy my house at market value in cash without looking at the property. Other times they want to know the condition of the property and send an appraiser out to evaluate for repairs and updates. If they were to offer anything below market rate its because they are accounting for costs of maintenance and repairs that I don't bother with since I have no plans to put the property on the market.
I suspect this is geographically bound. I bet in some areas corporations assess some properties are not worth the effort, no matter their condition, unless they can get the property at a severely depreciated price well below market value. In my area it appears I could make some money without any effort if I were willing to move.
It’s sight unseen, and true ‘spot’ price for something in that situation. Which could be anything from a hoarder to a granny that keeps everything spotless and perfectly maintained, and is having cash flow issues.
If you can sell it on the normal market, it takes awhile but you’ll almost certainly get a higher price. Working as expected.
Prices are up. Interest rates are up. People couldn’t afford the home they’re in right now if they were forced to buy it at today’s price and interest rate.
Inventory is low, so if someone is forced to move to your area, then sure, your house might sell. Otherwise, everyone is waiting.
“Prices take the elevator up and the stairs down.” Sellers will make peace eventually that their prices are unreasonable, with those who must sell leading the downward price trajectory and setting comparables.
There is a price any property will sell at. Price discovery continues. To sell, lower your price until you have a firm offer.
I don't understand how house prices are set. When I see a house that's $X I often think "$X seems reasonable" immediately followed by "$X/2 seems reasonable" and "$2X seems reasonable".
How does anyone ever set prices for real estate? Why do sellers have such a hard time cutting price 10% or 30% when the whole concept of "value of real estate" seems very nebulous and made-up, and each property is a completely unique combination of age, footage, state of repairs, location etc.?
It's a lot of factors that kinda organically all work to create the market. supply/demand/"what the market will bear", along with assessments of land, labor and, some self reinforcement from the fact that many people don't actually own their home.
Land and labor are pretty easy to see, a brand new house simply has a cost and that cost helps dictate many things. Obviously nobody is paying $500K for something if you could build from scratch for $50K
Supply/demand. if nobody wants to move to an area obviously no matter how nice your property is it doesn't hold value. Or if the area is desirable then your property is worth more. Even with medium demand if there's no supply price goes up and it will go as high as the market will bear.
Then you have "I can't afford to sell for less". if you bought a $400k house and still owe $300k on it you're not going to want sell for less otherwise it would literally cost you money. If the market slumps you might just stay put until things get better. With a lot of stuck people this could get better because it will drive supply down until the market comes back to a level where people can afford to sell.
And all of these factors can change at an interval of a few dozen miles so each little market can have very different factors and prices.
> Searches for "Can't sell house" are higher now than during the COVID-19 pandemic and the 2008 financial crisis, according to Google.
Is it correlated for the fact that there is more people on the internet than it was during 2008?
I think Google Trends controls for that, it's not just straight search count? But you might still be correct, that home-sellers are a larger ratio than in 2008.
Weird. Where I live home owners get calls multiple times a week from corporations trying to buy their homes in cash.
Hah, yup. "And all for the fantastic price of [~25% below market]!" I got one of those calls. The VM left said that "I could have the money in my account in as little as a week! We could pay as much as (emphasis mine) $485,000 for your home!"
Weird. Taking it with a requisite grain of salt, Redfin's median home value for my home is $660,000. Even my county's valuation for property tax is in the mid 500s.
They are sometimes offering to buy my house at market value in cash without looking at the property. Other times they want to know the condition of the property and send an appraiser out to evaluate for repairs and updates. If they were to offer anything below market rate its because they are accounting for costs of maintenance and repairs that I don't bother with since I have no plans to put the property on the market.
I suspect this is geographically bound. I bet in some areas corporations assess some properties are not worth the effort, no matter their condition, unless they can get the property at a severely depreciated price well below market value. In my area it appears I could make some money without any effort if I were willing to move.
It’s sight unseen, and true ‘spot’ price for something in that situation. Which could be anything from a hoarder to a granny that keeps everything spotless and perfectly maintained, and is having cash flow issues.
If you can sell it on the normal market, it takes awhile but you’ll almost certainly get a higher price. Working as expected.
Prices are up. Interest rates are up. People couldn’t afford the home they’re in right now if they were forced to buy it at today’s price and interest rate.
Inventory is low, so if someone is forced to move to your area, then sure, your house might sell. Otherwise, everyone is waiting.
“Prices take the elevator up and the stairs down.” Sellers will make peace eventually that their prices are unreasonable, with those who must sell leading the downward price trajectory and setting comparables.
There is a price any property will sell at. Price discovery continues. To sell, lower your price until you have a firm offer.