Holy House Price Batman.

[Michigan CG]

Doing some late night work, organizing my office and sending e-mails tonight, so late night TV is pretty bad on Sunday nights but I need to put something on my office TV.

What the heck, I turn on House Hunters on HGTV and these people actually are buying a 900 SF POS for $475,000. In the markets I know that house wouldn't get $80,000. Now some people are looking at a place for $527,000.....it is 1,000 SF.

The median family income in the U.S. is approaching $50,000, which means a maximum loan (if you are financially responsible) of $150,000-$200,000. Where do normal people buy houses in these markets?

Now, I am guessing, because it is late night on a Sunday, that these episodes might be from 2003-2006.

USA Today article from 6/25/08 says home prices down 15.3% since last year, AP article 6/26/08 says home sales and prices dropping still. Another editorial says home prices in some markets will drop another 20%.

Sounds like a problem to me, Batman cannot fix this stuff.

 

[timd354]

Doing some late night work, organizing my office and sending e-mails tonight, so late night TV is pretty bad on Sunday nights but I need to put something on my office TV.

What the heck, I turn on House Hunters on HGTV and these people actually are buying a 900 SF POS for $475,000. In the markets I know that house wouldn't get $80,000. Now some people are looking at a place for $527,000.....it is 1,000 SF.

The median family income in the U.S. is approaching $50,000, which means a maximum loan (if you are financially responsible) of $150,000-$200,000. Where do normal people buy houses in these markets?

Now, I am guessing, because it is late night on a Sunday, that these episodes might be from 2003-2006.

USA Today article from 6/25/08 says home prices down 15.3% since last year, AP article 6/26/08 says home sales and prices dropping still. Another editorial says home prices in some markets will drop another 20%.

Sounds like a problem to me, Batman cannot fix this stuff.

Its all about location, location, location. Those type of prices would be low in the very close in Maryland suburbs in Montgomery County adjacent to northwest Washington, DC. Of course the median household income for that county is almost $100,000 and the median income for Chevy Chase, MD (zip code 20815) which borders DC is $193,000. There is an area of 1,000 sf 1950's ramblers in Chevy Chase that sell in the $500,000-$600,000 range; they are considered "tear downs" at that price and are typically torn down and replaced with a McMansion.
The crazy part is, that the "tear downs" were selling form $700,000-800,000 at the height of the market.

The really not so beautiful part about all this is that all of the wealth in the area is derived largely through government largess......the area is home to big time lobbyists, politicians, lawyers, talking heads, government contractors, and others who generally leech either directly or indirectly from the government. The sad part is, this is only one example of many neighborhoods in Maryland, northwest DC, and Northern Virginia where people are fabulously wealthy based on directly or indirectly sucking up govenrment funds, which we all pay for.

 

[Mike Garrett RAA]

I caught part of a story on a house in CT for $1.5 mil...would sell here for about $150,000. LOL.

 

[Mike Boyd]

900 SF[/B] POS for $475,000. In the markets I know that house wouldn't get $80,000. Now some people are looking at a place for $527,000.....it is 1,000 SF.

.

Location, location, location. I appraised a remodeled 900 sf home on 2 acres early this year for $1,200,000. Even now, it is worth +$900,000. Located in the Napa Valley. 30 miles north in Lake County you would be lucky to get $200,000 for the same property.

 

[Financially Feasible]

Doing some late night work, organizing my office and sending e-mails tonight, so late night TV is pretty bad on Sunday nights but I need to put something on my office TV.

What the heck, I turn on House Hunters on HGTV and these people actually are buying a 900 SF POS for $475,000. In the markets I know that house wouldn't get $80,000. Now some people are looking at a place for $527,000.....it is 1,000 SF.

The median family income in the U.S. is approaching $50,000, which means a maximum loan (if you are financially responsible) of $150,000-$200,000. Where do normal people buy houses in these markets?

Now, I am guessing, because it is late night on a Sunday, that these episodes might be from 2003-2006.

USA Today article from 6/25/08 says home prices down 15.3% since last year, AP article 6/26/08 says home sales and prices dropping still. Another editorial says home prices in some markets will drop another 20%.

Sounds like a problem to me, Batman cannot fix this stuff.

Location, location, location. I appraised a remodeled 900 sf home on 2 acres early this year for $1,200,000. Even now, it is worth +$900,000. Located in the Napa Valley. 30 miles north in Lake County you would be lucky to get $200,000 for the same property.

I was going to say something along those same lines. Tim, you've obviously never been to LA before. :icon_mrgreen: I've been there several times and I always read the real estate classifieds (as I do no matter where I go for vacation or business). I can't tell you how many times I saw: "FOR SALE: 1,100 sq. ft. beauty! 0.25 acre lot! Newly renovated! ONLY $825,000!!! Buy it now before it's gone!"

Typically, housing prices are skewed right along with median household income for a geographic area (USUALLY). I'm sure that the median household income for Los Angeles or San Fransisco or San Diego is DRAMATICALLY different than... oh... say... Intercourse, PA! You were right to comment on the median household income... but that's based on national data. That is skewed in-and-of itself. Also, buyer preferences are dramatically different in those markets. Obviously, you know all of this... but just making a point. :icon_lol:

However, it is a head-shaker knowing that ANYTHING of that size could fetch anything REMOTELY nearing those prices. I always told myself that if I was spending 700-800K+ on a property, my minimum is 6,000 sq. ft. and 10+ acres with either a golf course view or a WATER view ("water view" = Atlantic/Pacific Oceans, major ocean tributaries, the Great Lakes, etc... not your run-of-the-mill retention pond!).

Just my .02.

 

[Terrel L. Shields]

Its all about location, location, location

Then its time to relocate...

If I can make $100,000 and have to buy a $1,000,000 home for $600 per SF, then I prefer to move somewhere that I can buy a home for $120 a SF even if I have to give up $25,000 annual income....crunch the number. A $200,000 home vs $1,000,000 on 15 year note at 7%, even the reversionary value isn't going to rescue you in your lifetime.

 

[George Hatch]

The differences in income are nowhere near enough to account for the differences in home prices. People who live in the high dollar markets frequently cut back in other areas of their spending.