The market in Baltimore remains completely disconnected with reality, so it should not be a surprise sellers or buyers in the area remain as disconnected from the market.

I'm getting ready to buy and getting ready to sell, and the disconnects are frightening, and suggest anyone waiting to sell is going to find out what happens when a market support breaks, which is what is in the process of happening in Baltimore (county).

Homes are wood and metal, and folks don't seem to realize the value is held in the land and it's proximity to transportation, civilization, and employment.

I recently viewed several homes in the Phoenix/21131 area. Two were foreclosures - including a beautiful 7200 sqft home that was last sold for over 1M which is now being cut in price by the bank on a weekly basis, current at 540k. While more house than most might want, the logic of other homeowners in the area really stupified me.

If (and this above foreclosure is just 1 example) this foreclosure has all the upgrades, feeds the same schools, sits on an equally sized piece of land, and is 20 years newer than your 3500 sq ft colonial built in 1985, which requires a new roof, new AC/furnace, wallpaper to be taken down in every room, new carpeting/flooring, has a 26 year old kitchen and bathrooms, under what scenario do you justify asking $699,000 for your home?

And likewise, buyers seem equally disconnected. Where I presently live, inventory moves in my development when priced right. I can't figure out what priced right means, because using my above example, I'll watch one unit which requires just about every update sell for 5-15% more than an identical unit which has some upgrades - new kitchens or baths, new flooring, new roof/furnace/windows.

Market is still out of equilibrium, and given there's no reason to expect a strong rebound in Baltimore in wages, employment, or credit/lending, we still have quite a ways to fall down. DC we are not.

Who should buy a 500k home?
Maybe you IF…
You earn 175k year in STABLE income for starters but that probably isn’t enough, here why.
$14583 gross
$10937 after taxes assuming 25%
$8187 after contributing $2750 to max out both spouses 401k assuming 2 household income
$6187 after spending $2000 month on daycare/college funds assuming you have 2kids (if you don’t, why are you buying such a big home?)
$5187 after spending $1000 month on two car payments. While Elweedz generally doesn’t condone this, I realize most must have a new car and I think $500x2 is way light for what most people spend that buy these homes.
$3157 after spending $2000/month energy/cable/phone/ 4 cellphones/ groceries/
$2157 after spending $1000/month on home maintenance. The generally accepted number is 2 % of homes purchase price to maintain it.
$1157 after spending $1000/month on premiums and uncovered deductible/co-pay health care costs (family of four)
$$357 after spending $700 to gas up and insure those cars listed above. This could be worse if the kids are older and you have more cars.

So that leaves $357 for discretionary spending on clothes, entertainment, slush fund savings. Don’t forget you need to have at least 6 months of expenses saved up for when you lose a job but, I don’t see where you can save it from such a paltry sum. I am sure there are a hundred things I am not thinking of in this budget. I did deliberately leave one glaring one out though…………………… THE MORTGAGE PAYMENT.

If you assume 20% down (ROFL over that assumption) that would yield you about a $2600 PITI + HOA if it exists…….Guess you’re going to need a second job.

Buyers- do you want to know what the bank would approve with above income? 26% of your gross or $3761 (they will approve more but this is standard). They could care less about the other things you have to pay. I just showed you how you couldn’t afford $2600. So which of the above are you willing to cut from above? Don’t forget no one paid for a vacation in my above example. Guess what happens when everyone stops buying? See Vegas, California, Florida. It’s a 50% off sale. Who are the suckers that keep giving these people hope by buying in this price range?

Sellers- I see listing after listing for hum-drum homes listed at 500k every day. How many more suckers can there possible be left after the last 8 years, you’re running out.

I'm waiting to buy. This time last year I was completing a short sale, and now a year later I'm better off for it, financially. My credit to a hit, but that was more so due to the reporting of the short sale.I've recovered from that event. Now when I look at the postings of homes for sale, the prices are still outrageous and there seems to be plenty of inventory on the market. I will wait about another year before considering buying a house