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Red-Tag 50% Sale on Homes, Going On Now!

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Cash is king.

I was reading a great story on CNN today about a families being able to buy homes at a fraction of the price they sold at a few years ago:

Mary Ann Lepley, her husband, Derrick, and their 2-year-old daughter, Melody, have been in their 3,000 square-foot home here for about three months. They bought it for about $250,000. Just two years ago, amid California’s housing boom, the same house sold for nearly $550,000

I’m glad that they were able to take advantage of the current state of the economy because they deserve it. According to CNN, they were “cautious with their spending and savings in recent years,” as other took out home equity lines of credit and borrowed against their future. Now, with the economy turning, they were able to buy a house at more than 50% off. That’s a wonderful story.

I feel for the other family in the story, the Aceves, who bought their house a few years ago for $620,000. Their neighbors bought their house for $220,000 and a house across the street sold for $267,000. (If you’re wondering about these huge swings, it all depends on how much of a view you have in the case of houses that are on the side of a hill) I’m not saying the Aceves were reckless, far from it (I don’t know their situation), but I think everyone would agree they overpaid.

If you have money because you saved when other spent, it’s now your turn to take advantage of the situation. Your financial prudence has opened up a lot of doors.

{ 19 comments, please add your thoughts now! }

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19 Responses to “Red-Tag 50% Sale on Homes, Going On Now!”

  1. devil says:

    Fifty percent off bubble prices is still too much. That 250K house will be even cheaper in a year or two. But, hey, if they’re happy with what they paid, fine.

    • Jim says:

      I think it’s difficult to make that statement so definitively (just like it was folly to say housing prices can only go up because they aren’t making any more land), but in the end it’s up to the person.. if they’re happy, then that’s what matters right?

  2. Dave says:

    I think its all relative – houses in my neighborhood peaked around $500-$525k in 2007, then started dropping in 2008. My wife and I bought our house at $460 in June, and the house down the street is on the market now for $445. That’s only a drop of about 20% off peak, which I would think is fairly reasonable. My town also has awesome schools and is a great community, which I’m sure helps keep prices a little more stable.

    I think what’s happening in California and some other places (Las Vegas for sure – my dad lives there and prices have dropped tremendously) were driven up by speculators and investors. I think in alot of other parts of the country, there was less of this, so the downside to the bubble won’t be as steep.

    • Jim says:

      Most of the foreclosures are happening in those “hot” areas like California, Florida, Nevada, New Mexico, etc. Pittsburgh home prices haven’t been moving one way or another and houses in Maine are at 1970s prices it seems. :)

  3. JamesV says:

    Location, Location, Location…. If your house is in a good Location, in a nice-safe community, low-crime area, great schools, clean & fairly updated, and within 1/2 hour of major diverse-industry employers, I think you’ll feel much lesser of a swing in house prices. I’m in a modest midwestern city of only 10,000 and have only seen my neighborhood’s newer house values drop by about 10%.

    With this all said, now “IS” the time to buy a home if ever or make your move to a bigger home. I fully believe, even with my statement above, that you can get an amazing deal on a home now with savings of 20-50%. All you have to do is put in an offer, and if not accepted, just walk to the next home for sale! DO NOT let Buyer-Agent Realtors tell you that you cannot put in a low offer. Realtors don’t fully care about your financial picture…they mainly care about their commission.

  4. Yana says:

    I think that is fantastic. We would like to do the same thing, but pay outright for a home. The prices aren’t quite low enough and we don’t have enough money yet to do it. I hope those people who say that prices will go down even more are right.

    Just as a side note about realtors: if you’re selling a house, it is much less expensive to use a lawyer than a realtor. That was one of my uncle’s tips, which he used many years ago when selling.

    We’ve actually been watching a house, which has been on the market since August 2008. Whoever set the price must be out of his mind, because it is priced without taking into account the decline in value. It’s priced at $435,000. I’d say $260,000 is reasonable; however, we have only seen the outside of it. If we had the $260,000 for a house, I wouldn’t hesitate to make the offer. Remember, this is California where prices are obscene.

  5. VicfromATL says:

    I live in one of the nice Atlanta suburbs and there’s hardly any decline.

    Of course, homes take longer to sell etc. but no panic.

  6. Jessica says:

    I live just west of downtown Fort Worth, TX in a neighborhood full of craftsman and tudor homes built around 1920-1930. The three rules in real-estate never fail… Location, Location, Location. Prices have at the very least leveled out and are more realistically, slightly going up. The only thing that seems to have changed is the average length for homes to sell. Since there’s so much land in Texas, there wasn’t a bubble in real estate although there was a big surge of new home construction in urban sprawl areas but that’s generally not a good investment anyways and most of those homes are shoddily constructed.

    I think it’s time to start investing in rental properties… :)

  7. DebtGoal says:

    This is such great news for someone with financial prudence. But I feel that having a lot of savings and living frugally still is not enough to make getting a 50% housing steal worth the while.

    Even if someone has these two criteria met, can’t taking on a hefty mortgage still be a bad move if they have a lot of income insecurity (job risk) or even low commitment to staying in their metro area over the long-term?

  8. Thor says:

    50% sale is all relative similar to a sale in retail. If an item on the shelf was originally sold for $100 it could include a massive markup from say a cost to produce of $10, so a 50% off sale to $50 sounds great but there is still the potential for prices to come down further.

    The housing market has some similar aspects in that the prices were marked up a few years ago and the 50% decrease could still contain lots of markup or profit.

    That being said the appropriate price of a home is similar to goods as well, if you are happy to pay a price and think the home or good is worth it. That is what that item is worth.

    A finance professor told me once, it is not how much it costs you to build that determines price but how much someone will pay for it that determines price.

  9. Chewbakka says:

    Chicagoland is not immune to price drops either. In my neighborhood, a 10-12% drop is what we’re seeing. Anyone else here seeing differently? My guess is that mid-west is not as dramatic as the coastal areas. Thoughts?

  10. Hogan says:

    The housing crisis had many culprits. One thing I think needs to be discussed is how the irresponsible were protected by Washington, encouraged to buy a house, and the business class was protected, they were making an enourmous amount of money off the irresponsible. However, the middle class were not protected, we were not willing to take the risk to take an interest only loan for a house with an inflated price, so guess what we lost out on the house or had to pay a ton more money for a house that was not worth what it really was worth, because the irresponsible had nothing to lose, and the business class had everything to gain.

  11. Eric says:

    Yup, my area dropped like a rock!

  12. HuBu says:

    We just closed on a house this Feb ’09 for $261k. It was sold for $400k in ’05. I am paying around $8k in property taxes a year (South Florida). House prices are still dropping down here, its so bad with the declining value that the government is proposing to raise property tax to make up for the decline in value.

  13. Scott says:

    Home prices in Norfolk, VA (very coastal area) are holding steady for homes in good neighborhoods. Homes in bad neighborhoods, homes that need work, and espeically condos are going for bargain prices. In the end, those who put time and effort into their house to make it nicer are still getting their money back. Those who did squat and expected home prices to rise and the value of their home to go up just because someone said it should, well they’re not doing as well and that’s to be expected.

  14. saladdin says:

    People still don’t understand. If you paid 250k for a house that sold for 550k two years ago then your house is worth…250k. It doesn’t matter what it DID sell for. Who cares what your house sold for 2 years ago? In 5 years that house has appreciated only 3% these people will be the ones saying “WTF Where’s my 550k house?”

    saladdin

  15. Donna Freedman says:

    Apparently no one builds small houses any more. Do three people really need 3,000 square feet?
    Remember, once you’ve bought it you have to heat it, cool it, clean it, maintain it and pay taxes on it.
    Just my $0.02.

  16. Chewbakka says:

    I 2nd Donna Freedman’s comment. There is some real sense in this because we live in an active society where we are out most of the time anyway. Home bodies get fat at a higher rate…last I heard, isn’t this a nationwide problem?

  17. jared says:

    What timing! Jim, I just finished an article on my site about MY experience buying a house, we go to contract Monday!…It’s my latest post if you care to read it.

    -Cheers


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