Zillow: Hancock's house worth what he paid in 2003
I can't reproduce the Zillow graph, apparently because it's a flash chart. But it says my house is worth $491,000, which is about $5,000 more than we paid for it in late 2003. I know Zillow values aren't gospel, but they're a rough and interesting indicator of where house values have been and are going. We paid $485,000 for the Howard County house in November 2003. According to Zillow it was worth $670,000 by 2006, and as recently as last summer it was worth $540,000, according to the Web site.
Jamie Smith Hopkins quotes Metrostudy as saying that the tax credit hangover is over for home sales -- that the slump in activity that occurred after the tax credit expired has ended. Perhaps, but it doesn't seem to be having much effect on values in my neighborhood, at least according to Zillow. Nor is all the hiring at nearby Fort Meade. The expiration of the homebuyer tax credit pretty much marked a new leg down in the house's Zillow value. Not complaining. Just saying what's going on in my neighborhood may cast light on the big picture.
Comments
On average at least, prices are definitely still dropping.
Posted by: Jamie Smith Hopkins | January 14, 2011 9:14 AM
I find it interesting that Baltimore County started in 2006/2007 to match property taxes to what the estimated value of ones house was just before the housing bubble burst. So there are a lot of people in Baltimore County that are paying way more in taxes then what their house is currently valued at.
Honestly, the property tax system is a farce created by the Government to take more money out of your pocket. When the Government needs more money they simply say your house is worth more and then they get a pay raise to be able to use for special projects they didn't have money for.
Posted by: Phillip | January 14, 2011 9:40 AM
Still, as far as investment return goes, lottery tickets don't seem much worse!
Justine: I figure I'm still way ahead. I got the use of a nice house for eight years and a great Howard County education for my two kids, which is one of the house's amenities. Considering all the folks whose houses are worth less than what they paid, I can't complain. JH
Posted by: Justine | January 14, 2011 10:17 AM
Good point, Jay. Houses are not truly an investment (for the vast majority of people who aren't landlords or real estate speculators) -- they are consumer goods that happen to appreciate in value over time.
During the bubble people were looking at them as stocks; if they didn't improve in value they felt gypped. Really, though, they are completely different things. Stocks don't really do anything for you besides act as an investment. Houses act as shelter for your family. That's what they are for.
Posted by: John J. Walters | January 14, 2011 11:48 AM
The question is: Why should house prices rise absent an increase in median household income? Remember, for well over 30 years, the relationship between median home prices and median household income was about 3:1. Suddenly, beginning in about 1999, the ratio jumped to 4.5:1.
That was simply unsustainable. What it meant was that housing prices, beginning in 1999 or thereabouts, jumped way above their true economic fair market value. We have a word for this: it's called a bubble.
The year 2003 was roughly one-third of the way into the bubble. (Here, I use not a chronological frame of reference, because that would put 2003 closer to half the way into the bubble, but, rather, an "economic" frame of reference, meaning that by 2003 we were roughly one-third of the way into "excess" price territory.) Using that metric (and not actually performing the calculations), it would appear that your house is pretty much priced right.
Posted by: Stuart Levine | January 14, 2011 11:50 AM
Stuart, the reason the ratio jumped from 3:1 to 4.5:1 is because real, not just nominal, interest rates fell. This caused payments to fall even if incomes were not rising...
Posted by: Ryan | January 19, 2011 12:58 PM