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Bright Side of Lowered Home Values

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A few weeks ago, two homes in my little neighborhood were put up for sale. We knew the owners of one of them, they were moving to Boston because the wife got into a graduate program at Harvard (we were sad to see them go), but the other was a stranger to us. As curious neighbors often do, the first thing we all did was try to find the story behind it and the first step in that was looking up the sale price.

$184,800.

In a vacuum, that figure is meaningless. To us and the neighbors we know well, that figure was staggering because a year or so ago the homes in our area were selling for above $300,000. $184,800 is remarkably lower. You can list it for $1 but it’s ultimately the sale price that matters, it’s just amazing to see it priced so low to start.

After some additional digging, we discovered that the house was purchased in June 2010 (two months ago!) and was foreclosed on barely a month later. We had no idea it had been sold (no signs at all) or subsequently foreclosed on by Bank of America, which is probably looking to unload the property ASAP. It appears to be in good condition from the outside so I suspect it’ll sell for far more. If not, we can always contest the housing property assessment for lower taxes!

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13 Responses to “Bright Side of Lowered Home Values”

  1. ctreit says:

    If you are really taking such an enormous hit on your real estate investment, I don’t think that a tax break would make up very much of the total loss. In my mind the decline we experienced in real estate prices is painful no matter which way we look at it.

    • Jim says:

      Well, it’s always painful and by definition the tax break can’t make up the loss… but it’s better than nothing.

    • MikeZ says:

      I suspect that most people who are already living within their budgets its meaningless even if you do sell your home for a loss. After all you have to live somewhere.

      For homeowners it really only matters if you are moving into a smaller home. Now would be a great time to go for that home upgrade. If your former $300K home is selling for $180K, now may be a good time to buy that $400K home that is selling for $240K.

  2. Nick says:

    I think another “bright” spot in this whole mess is that as prices decline or stabilize, folks who are keeping up with their budgets and saving money are able to have more time to save up for a good down payment.

    So the prices are coming down, the amount needed for 20% or more down payment is reducing and they have more time to do it right.

    At the end of the day, those folks will be much better off when the dust settles.

  3. Lower prices are great for buyers and investors, and bad for sellers. Let’s hope we never see ninja loans and liar loans again. Long term housing prices have roughly kept pace with inflation so this housing correction will probably last a while.

  4. freeby50 says:

    “purchased in June 2010 (two months ago!) and was foreclosed on barely a month later.”

    You are probably getting that off a website like Zillow or Redfin or similar. That information may not be accurate. If you look up the property in zillow and redfin then you might see stuff like this but one page will say one thing and the other site will say another. I saw a house on Redfin that was supposedly bought in May but Zillow says the house was delisted in May. When you think about it, it doesn’t make much sense that a bank would foreclose on a house within 1-2 month time period. Banks simply don’t foreclose on a property then relist it that fast.

  5. Joe says:

    I can’t believe there weren’t even signs up about its sale. That seems rather odd.

  6. It definitely is all about convincing the county assessor’s office that your home is worth only $1. Gotta do what we can to lower carrying costs.

    I WISH they assessed my house close to zero. That would be so sweet.

  7. Shirley says:

    When we bought our home for 15k, 47 years ago, we considered it a place to raise our children rather than an investment.

    Many times we felt a bigger home would be more convenient but it just wasn’t in the budget and we made do with what we needed rather than wanted. Everyone had their own bedroom and the back yard was ‘big enough’ to accomodate our wants, so it worked out fine.

    Obviously it is now priced much higher than what we paid, but its market value dropped from 379k to 269k with the downturn. It did turn out to be a good investment and any tax breaks are welcome too. :-)

  8. live green says:

    The same thing happened in my neighborhood, except the house was not in good shape at all and it was a foreclosure as well. It was a little scary when I first was that the price was 50k+ less than most of the houses in the neighborhood.

  9. cdiver says:

    Do I need more coffe this morning or am I missing something? How can a home be forclosed on within 2 months of the purchase date?

  10. And to turn this into the dark side of lowered home values, what happens when there are 3, 4, 5, or more properties available on the same block at the same time? In the race for the bottom of the price range, they start going to investors rather than homeowners. Investors don’t take care of a property like someone who owns and lives in it because there’s no ownership pride – it’s nothing more than an investment that needs to continue a return on investment.

    In the end, a block of ramshackle buildings rented out to people who don’t much care if they get their security deposit back when they leave. You, the lone owner-occupier, can’t sell for a decent price because … well, who wants to buy a nice house on a cruddy block?


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