Daniel Gross writing in Slate on how things got so, well, unchained. Key bit:
And so, since the bubble popped and home prices ceased to rise, desperate players in the market have taken a series of actions intended to delay price discovery in housing. Rather than cut prices, sellers began to throw in free cars or other inducements to buyers who paid the asking price. Brokers reduced their commissions. Builders started including all sorts of extras (fancy kitchens, pools, etc.) for no additional price. Every link in the chain sacrificed margins and profits rather than cut prices.
While I know most of you looking in are industry professionals, I found the writing crisp, the thinking clear, and the piece instructive reading for the rest of us in the run up to BloodhoundBlog Unchained on May 18th.
Mike Farmer says:
That is very well written. Yes, prices are a bit of an illusion when you consider the conditions being won by buyers. That’s one way a good buyer agent can be useful to a buyer, in calculating the true market value and how to reach it.
February 17, 2008 — 11:36 am
Jacksonville Real Estate says:
I was showing this weekend. We were looking at new construction and resales. The new construction was priced $100,000 over similar resale homes.
The builder’s rep called me for feedback and asked how my people liked their home. I told them it was great but it was $100,000 over priced. They said “make an offer, you will be pleasantly suprised.”
I just don’t understand why the builder doesn’t price the house where it should be.
February 17, 2008 — 4:57 pm
Arlington Virginia Real Estate -- Jay says:
Jacksonville RE,
They price it higher because many floaters out there don’t have representation and aren’t savvy enough to know they are getting Punk’d. I wrote about the floaters here and I find them all the time–people who paid way to much for their homes & condos. The sad thing is that many times they did have representation–crappy representation which must come to an end….
Ouch! Buyer Loses $40,000–Don’t Be a Floater
February 17, 2008 — 8:48 pm
Robert Kerr says:
Good article. Too many people forget that leverage is a liability in a down market like this.
February 17, 2008 — 9:09 pm