Personally, I think this should be required reading for every real estate agent and potential seller.

I have no argument with making a profit when selling one's home, but come on now. I have been looking at homes for sale for a year now. Each time I see a home I'm interested in, I look at the Maryland State Department of Assessments and Taxation's website (http://sdatcert3.resiusa.org/rp_rewrite/) for the price history. And it's shocking. Sellers are looking to double and even triple their investment in a span of just a few years. I will not purchase at these inflated prices. And apparently, looking at the huge drop in volume, neither will anyone else.

No house appreciates at this rate, I don't care how "special" it is to the seller. We are tied with LA for the massive rise in housing prices. Baltimore cannot sustain the kinds of prices LA has.

Unfortunately, it does appear we're in a deadlock here. Sellers won't come down and buyers won't buy. How will it end? Who knows. I for one will continue to rent and save my money until the masssive drops which are coming finally hit.

At that point, I will make a purchase. The funny part is, by that time, the sellers will have to come down even more. Nothing but greed here.

Baltimore seems to trail Washington in terms of general economic cycle, similar to the way suburban Maryland trails Northern Virginia. So, it may be that Baltimore will start feeling some pain later than Washington has. It appears this pain is already being felt in the high-end condo market of Baltimore, which also has something to do with the housing that can be substituted for the same price or less (row houses, detached single families, etc.).

I don't understand why prospective buyers (like Anon above), who seem to want to buy, don't take advantage of the current state of the market. What a seller is asking is pretty much irrelevant. If you like a home and think it is overpriced make an offer for what you think it is worth! It's a simple concept. Waiting for LIST prices to come down doesn't help. That will only bring out more buyers who will then purchase and decrease the supply. Instead of waiting for list prices to decline, qualified buyers with no home to sell should be putting in offers, no matter how ridiculous they might seem. You never know when a seller will just accept it so they can move on (hint: new construction standing inventory = motivated sellers).

Jamie, you make a very good point. But is it realistic to waste my time (not to mention my $4/gallon gas) with lowball offers that will probably be rejected. Wouldn't it make more sense for the sellers and their agents to simply price it right to begin with?

If a house were priced just a few thousand above reasonable-ness, then I could see making a counter-offer. But when they are off by many tens of thousands of dollars, I simply lose interest. Most of the houses I've been looking at are over-priced by about $50K-$75K. I come to this figure by taking the value from 2002 and adding in "normal" appreciation.

The new construction is actually more tricky. I know of 2 sets of buyers (one in county, one in city) who have had new construction contracts fall thru because the banks refused to approve the loan. The reason? The banks are doing real appraisals again and then doing an additional one to get another opinion. In both instances they have come up with a number under the agreed to price which is around 10% under list because the banks are refusing to give more than 30 cents on the dollar for "upgrades". The stainless, granite, stone floors that in a way became standard are now loss leaders to get people in the door, not the profitable add-on of before.
This is causing the builders to balk because they refuse to lower the price to the bank's appraisal because previous buyers are also demanding pricing protection in the way of a rebate on any comp sold below what they paid.

This is why the builders are now requiring there own finance company to get the closing help and incentives, they need to "coverup" this issue by inflating the appraisal.

This issue is bad for every side, but til builders either go bankrupt or clear inventory they are doing anything to keep cashflow up.

I can understand why all of you are upset. If I lived in the Suburbs I would be too.

Negativity won't create change until you do.

I could not agree more with Anon. Even people who bought on top of the market 2 years ago still want to make a nice profit from the sale.

Also the author brings up a good point about the accuracy of the recorded property prices. I think that the records should reflect the closing costs. Otherwise it confuses both sellers and buyers. The realtors are probably the only ones who benefit from this. :(

Jamie:

In my experience, it has not been worthwhile to make offers in this market because the sellers are so unrealistic.

I made an offer 20% below asking (but 80% above the price paid by the seller in 2003). The offer was not rejected....worse: the seller found the offer so "insulting" he refused to respond at all.

This stalemate cannot last forever.

On a related note, the gap between Washington and Baltimore asking prices has narrowed remarkably. A year and a half ago, teh DC median asking price was $150K higher than Baltimore. Today, the DC median asking price is $50K higher than Baltimore. This should deter people who work in DC from looking to move to Bolton Hill, Station North, Roland Park etc., since they can now afford roughly the same style of house in DC for the same price (especially since they won't have to burn all that $4 gas or pay for MARC tickets every day).

Here is the source info for asking prices from HousingTracker:

Baltimore median Asking Prices
6/08 297K
1/07 325K
4/06 344K

Washington DC median Asking Prices
6/08 339K
1/07 439K
4/06 479K

In the discussion of whether sellers are asking too much for a property, no one seems to mention whether the seller has made any improvements in the property to justify the 100% increase in price over the seller's price X number of years ago. Are you taking that into consideration when branding sellers as just "greedy"?

I agree that letting a house sit "as is" for several years and then expecting a 100% return is unrealistic, even with what the market bore 2 years ago. But when a seller has actually made improvements, the SDAT records of the past transfer are not going to reflect that. If you are lucky and the house has been reassessed since the improvements, that figure might reflect the change in the house's value.

Is someone really going to suggest that improvements can double or even triple the value of a house? Perhaps if they tore the existing house down and put in one twice as big?

Come on, putting stainless steel appliances in the kitchen costs about $3K, get real.

I also note that Dunn the realtor keeps his hand in the game. How do you know we are discussing suburban homes? Perhaps because your market is Baltimore City. You are shameless.

Sherry:

Your argument is a nonstarter. Buyers are capable of telling whether improvements have been made, and they are also able to estimate the value of the improvements. A granite countertop is not worth $50,000, new cork floors are not worth $100,000, and a new bathroom does not double the price of a house.

Reading these comments is so enlightening. You can really distinguish between the would-be sellers (and their realtors) and the would-be buyers. Would-be sellers are in such a world of denial, and would-be buyers are finally getting the message that no house is worth bankruptcy. The best part of this is though, we would-be buyers have the money. And until the would-be sellers come back down to reality, our money will continue to remain in our savings accounts.

The anon that mentioned about the reason folks will not even look at places are simple.....why bother I am the buyer and it's my money. The seller is the one who is not in the negotiation chair.

Also realtors don't like showing places above what people qualify for. I know it's hard for the sellers who did not sell at the top to understand but if you can not afford the house at the price your asking when you bought it 4 years ago, neither will anyone who is in the market now.

John argument about the upgrades are correct. Most of the time the only thing you end up being "even" on is the bathrooms. However folks in the city went overboard on upgrades that most people really don't care about, or are totally personal taste.

HGTV in a way created this idea that doing upgrades adds value. It did in the days of subprime 100% financing. In the new reality of buyers that know how to balance a checkbook and have to put 20% down your lucky to get 2003 prices.

If you can't take that sellers than pull your house off the market as buyers are hitting the internets and are aware of how things work.

After a year of looking in Baltimore and Harford counties I gave up. I've now parked all my equity in money market accounts and I am renting. SFH's are overpriced and prices have not come down. I actively shopped from May of 2007 untill May of 2008. 95% of the houses I considered adjusted their prices less than 5% over that period.
When I sold my old place in November of 2007 in Delaware I made a series of price adjustments totaling 13%. The house sold in less than 60 days. That is how the market is supposed to work. Many houses here I considered were listed in the 400-550K range. The seller delude themselves by reducing their price 1-3k every month or three. This is never going to get a buyers attention. I have now had the satisfaction of seeing several houses relisted or sold under what I offered the sellers less than 6 months ago. I'm glad I'm waiting it out.

Oh by the way, one house in Bel Air I made an offer on the seller countered by raising the price he was so insulted by my offer. That house listed at over 500K just sold for 8k over my offer price. On top of that the house was orginally list over 140k higher. I guess all the buyers should have been too insulted by the ridiculously high original asking price to make an offer.

What about areas like Mays Chapel where prices seem to be holding steady and houses seem to be selling at those prices? Is this a price protected pocket or just a reflection of buyers who really really really want to live there and are willing to pay a premium?

Viper / Jeremy:

Give it up. Harford has been chronically underpriced, and now with the BRAC et al, homes are priced as they should be. I sympathize, for it must stink not allowing yourself to purchase the keys to the kingdom!

-Fresh

Let's not forget the most important RE addage holds true now more than ever - LOCATION, LOCATION, LOCATION.

Desirable neighborhoods are still faring better than 'new' towns like Perry Hall...to agree with George, where I am in Mays Chapel, townhomes, homes, and condos are selling briskly when priced right.

This is addressed to the last 2 posters. There are NO locations desirable enough to over-pay for a house. No bank will lend more money based on such an intangible. If a house is priced accordingly, it will sell. No one here claims the housing market has died! If you will read the earlier postings, you will see that what the majority of the folks here are saying is that the market is flooded with sellers who think this is still 2005.

I also want to add that I am truly grateful to see that I am not the only would-be buyer who does research before blindly making an offer. Houses, which I have personally toured, and which still look today as they did in 1985, have sold for double what the seller paid in 2000. I cannot understand how a buyer can be so foolish.

But as was said earlier, I have also seen houses languishing on the market for months with only token reductions. So I guess you can fool some of the people some of the time ...

I have made offers on houses based on historical income to housing cost ratios only to have been rejected. It is indeed time for sellers to realize that house prices are unrealistically inflated due to the housing bubble.

John/Anon - I don't believe my comment referred to $3K worth of trendy appliances as "imporvements." Are you really saying that gutting a bathroom and kitchen, adding a 2d bathroom, replacing a furnance or adding CAC, or upgrading electrical don't add value to a house? How exactly does a buyer who looked at the SDAT sales price know whether any of those things have been done as opposed to just replacing appliances?

And, yes, I am a seller- who sold for over list price.

To Sherry:
Correct, none of that adds value. maybe 20c to the dollar for bath, 30c for kitchen, nothing for CAC, plumbing, electrical.
Price per sq foot for comps and exuberant desire for cashing in.
sitting out renting for 2 yrs after moving from NY

Sherry:

Your comment is meaningless unless you want to provide a street address and list price. Surely you must realize that: whether a "list price," as you so vaguely put it, is the fair price is the question we are all trying to tackle.

congratulations sherry, now you have the distinct pleasure of over-paying someone else for their nominal improvements.

repairing and replacing add nothing. the house came with cac when you bought it so if it broke you get to fix it. the next buyer isn't going to pay you for that.

As a former condo owner in Naples, Fl who bought a place in 2002 for $290K invested $35K in upgrades, and just sold the unit for $315K, property improvements are not a "sure fire" investment.

In terms of the Baltimore area, I think it's going to take two more years before prices sink back to 2002 levels. There was a 14 acre property with house in Sparks that got forceclosed for $700K last month. The lender took over a $300K loss on the loan. It looks like 3 more million dollar properties are coming up for forclosure in Baltimore county in the next month. This is an unheard of trend in the Baltimore area, and are the early signs that prices are about to start falling.

Jamie
This is a hot button topic that is under-reported by the Sun. Very obvious by the number of responses. People want to know: are prices changing? By how much? Is is location dependent - (like in Harford county - as illustrated by some posters above)

I hope you focus more on these questions!

Hi, "please reply"! (I assume you wanted me to do so here, since you didn't leave an email address.)

There's no question this is a hot topic -- the comments prove it. But I'd argue that it's not an underreported issue because just about every housing-market story I write includes some aspect of this issue. For instance, "are prices affordable," or "do buyers say they're too high" or "are economists predicting more drops." (Now, perhaps you think I don't write enough housing stories, period, but I am working as fast as I can.)

I'm very interested in the location question but am frustrated by the difficulty making judgments about which communities are holding up well and which aren't. The more local the area (a ZIP code, a city neighborhood), the greater chance that average and median prices may be skewed by some unusually expensive or cheap homes. This is why I tend to do these local-local analyses twice a year, when there's a number of months of data to look at.

All I know for sure is this. More and more inventory will come on the market as more and more housing developments finally get completed.
There is not an increasing number of buyers; the number of buyers is decreasing FAST. And there are so, so , so much new "high end" inventory. Good luck Silo Point. Good luck Harbor East. Good luck Magic Johnson. Good Luck Struever Bros. Good Luck Rodgers Forge. Good luck Cedonia (sinclair lane) Good Luck to Charles Village. Good Luck to the Townes of Butchers Hill.Go for it , Harbor East. Wish u the best Station North. good Luck to all of them,. but there are too many. we only have so many doctors, lawyers, and baseball players so sellers can hope and hope, but a smart buyer can wait out for the auctions. Just my opinion. remember scarlett place? love those auctions

1. Everyone here is a smart consumer, so of course prices look high. If you're selling, you will want to cash in on this regardless because you WILL need that money where ever you are going with it - bigger house, retirement home, doesn't matter. Just like at the peak of the bubble when there were still people buying at the highest prices and worst loans either because they HAD to or they weren't savvy enough to see a bad deal when they saw one, there are still people out there who will buy now. The industry is trying to shake out as many of them as possible.

2. I am a potential buyer with a house looking to upgrade. With assessments sending area tax bills through the roof, energy bills rising exponentially, and the general cost of living going haywire why would I expose myself to the risk associated with a greater debt load with all the uncertainty for my financial future? A really GOOD deal, that's why. Everybody needs to look at the broader picture, and there's a LOT more affecting this than just house prices and mortgage rates. We all have a different low price point trigger, and mine has not been satisfied as of yet. I put an low offer on a nice home that needed a lot of work last December. The owner was 'insulted'. Now looking at how the market has deteriorated, I'm glad I didn't get it. It's still on the market, and if they called me up today to ask me if I was still interested, I'd walk away.

If you live in a home for 5 years and replace a dirty carpet, it's not an "improvement" - it's called "maintenance". And don't expect the buyers to pay for this.

With energy prices higher, taxes high, etc ... housing prices really need to come down to compensate - not just because they ran up too high over the past 6--8 years. Also, imagine what will happen if banks start to require a 10% down payment for example. Who has an extra $30K sitting in the bank for a $300K home?

No area is immune ... if the $600K houses drop to $500K, then the $500K houses will drop to the 400's, etc etc ... Sure, some neighborhoods might weather the storm a little better, but prices will come down more.

Why is it that, 10 years ago a house in Rodgers Forge was about $150K and now it's $300K? They are basic, 3 bedroom rowhomes! All I hear is "but the schools are great!" Well, the elementary school is overenrolled by 450 students. How is that great? Sounds like a slide downhill to me.