I love Wordplay and the Irony of some names:

A shill: a person who publicizes or praises something or someone for reasons of self-interest, personal profit, or friendship or loyalty.

So, for those of you who are fans of wordplay and double entendres, Bob SHILLer is providing the info for personal profit.

Sat Jun 7 2008, 10:04

Hi Simpleman, from what you said you bought for $215K and can sell for $420K, so you made a profit of $205K in 6 years (minus selling expenses, time value of money, etc). I am not sure why you are worried, many people would love to be in your position. Housing prices are falling cause they never should have been this high to begin with and people are now realizing that without exotic mortgages and the belief that they can buy whatever and sell in 2 years and make a ton of money, they really should not be paying that much. It doesn't matter if construction costs rise, inflation rises, etc., people can and will not buy homes that are out of their price range. In general, home prices are based on income, average income in Hampton Roads is $65K and the general rule is housing price should be 3 times income, so that average price should be $195K. That is roughly where your house was back in 02 and probably where it should have been assuming your house is nicer than the average. Now at $420K you have priced most buyers out of the price range. People used to pay that much cause they could do interest only loans, or they thought, "hey I can afford this for two years, then I will sell it for $600K and make $180K", those days are gone. I am no real estate expert, but I can't see how prices can appreciate over the next 18 months. I really see them dropping in the next 18 months so I would sell now if you are comfortable renting.

But all in all, you made over $200K in 6 years just for living in your place. You should be extremely happy and not worry so much :). Good luck though!

Sat Jun 7 2008, 09:33

Dear SimpleMan,

I think that Occam's razor is going to be the least scary way to answer your question. Occam's razor is a principle that basically means, "All other things being equal, the simplest solution is the best." The fact of the matter is: everyone's crystal ball is broken and although we may make some predictions as to what will happen, no one is really sure what the future will bring.

So here comes the razor, ask yourself," if I had never seen this video, what would I be doing right now-selling or waiting?" Some areas in Virginia Beach are deemed declining markets and some are not. The Hampton Roads area as a whole has performed beautifully compared to the national average so I got to tell you, if you want to sell now and rent, then do it, if you want to wait then wait. I do not think that the difference between what your house can sell for now versus then is going to be enough of a profit or loss to make a huge difference either way.

On one hand, you may pay less for a rental (note I said 'may') than you do your mortgage, but then again you will not get the tax write-off from your interest paid over the next 12-18 months as you would with keeping your home.

People may not agree with this simple answer, but I truly believe that in your case you should do what you think is best for you right now. Also ask yourself, "what am I going to do with the money?" If you have some other investment that you would like to use your funds for, then go ahead and sell now and begin investing earlier.

Whatever you decide, good luck with it!
Samantha Sedlak-Moren
Abbitt Realty
(757) 810-6153

Tue Jun 3 2008, 15:50

Penguin, if prices can go down in Newport Beach, Santa Monica and Beverly Hills, California, they can go down in Virginia Beach.

NewportFiji

Thu May 29 2008, 12:02

Dont worry - prices either go up or go horizontal in Virignia Beach as you are close to the Beach.

Thu May 29 2008, 11:22

The Case Shiller Home Price Index is an excellent tool to look at past performance and current price trends. The indices use repeat sales pricing technique to evaluate the housing markets. The approach, developed by Karl Case, Robert Shiller and Allan Weiss uses data on single-family home re-sales, and re-sold sale prices to form sale pairs. Therefore, it is generally more accurate the median price comparisons which can be influenced by a change in sales mix. This index family includes 20 regional indices and two composite indices as aggregates of the regions.

You are mistaken that prices always go up. Similarly, historically, there have been several instances where prices have gone down over several years before they started to rebound. Take for example the Los Angeles County market in desirable southern California.

California is currently in a collapsing real estate bubble. The last down cycle took about 11 years to reach peaking pricing from the previous peak. In fact, prices continued dropping for seven years before they started to go back up again. Here are your Los Angeles County vanilla medians between 1989 and 2000: http://www.laalmanac.com/economy/ec37.htm

1989: $214,831
2000: $215,900

Pretty amazing, someone who purchased the “median home” in 1989 in Los Angeles for 214,831 sold for 215,900 11 years later. Understand, this situation was actually worse as the average home was larger and had more amenities in 2000 than in 1989. However, this bubble appears even larger in California than the 1989 run up as depicted in the following graph: http://latimesblogs.latimes.com/laland/2008/04/where-we-stand.html .

Simply stated, there is no guarantee that your home will be higher priced in 18 months and history has proven that real estate downturn can take several years to play out. Prices can and have gone done year over year for several years.

Best of luck,
NewportFiji

Thu May 29 2008, 11:07

nice video. it looks like that new rollercoaster ride at busch gardens, the griffon. prices falling over the edge.

Wed May 28 2008, 11:33

Sorry for the late answer. I just got into the system. I have sold lots of property in 23451 and lived at Harbour Point for a few years. I know this specific market very well. I can tell you what others have said, all markets are local.
It is true that Virginia Beach has experienced some slow down. However, it is still the most popular area in Hampton Roads. With military transfers, retirees moving into the area and people still moving up in value, houses are still being bought and sold. Housing prices have declined but at a much slower rate than other areas. The average market time right now is 86 days. A year ago at this time, it was 62 days. So, the answer is if you want to sell now, go ahead. Just be sure to market your home at or below the market for a home like yours. Also, recognize that selling your home is going to take longer than it did last year.
Neither Bob Shiller or me or anyone else knows when this situation will clear up. So just take a look at your financial goals and make your decision based on your own interests. Above all, remember, we are all in the same place you are in. I certainly don't think it should be scary for you. Again, dedide what you want, ignore the negativity of meda gurus and move ahead. If you want to know what your property is worth, just go to my web site.

Sun May 11 2008, 07:20

Don't let all the speculation crush your dreams of securing profits on the sale of your home. If you have location, location, location and you have owned your home for over 8 years, you should be in  a good position to reap the rewards. Is their currently a high number of Foreclosure properties on the Market in your neighborhood.?  When listening to the news on TV you must remember that not all States are suffering the same Housing problems. You should focus on your area only and follow the Market where you live. Be Happy.....Feel lucky....and keep the faith.

Sat May 10 2008, 21:44

Housing prices only go up but it's not a good time to sell a house. There are already too many houses for sale. So it is better to keep the house for another 18 months and moving is not fun.

Sat May 10 2008, 15:22

If you sold, you would no longer be able to deduct your interest so would that hurt you financially? If you don't have to sell, then don't.

If you have not refinanced since you purchased, and you’ve gained about $200,000 in equity, then you’re way ahead even if prices fall back slightly. Don’t be greedy – be happy your value has increased!

Bob Shiller is an economist and the prevailing words I heard repeated throughout that news piece is "we just don't know." And that news piece compared the US to Japan???

As previous agents stated, real estate markets are localized. The national news skews the facts as they pertain to “local” markets, so forget about what you hear in the national media but keep an eye on the “local” market.

Frank Biganski, Realtor ABR

Wed Apr 16 2008, 00:39

Your question cracks me up. Dude, buying a house back in 02 was probably one your best decision's in your life.

If u are sure u want to sell the house, then sell it NOW!!! Tomorrow might to be too late. Make profits while you still can.

Sun Apr 13 2008, 11:23

Some areas of Virginia Beach sell better than others, I would have a cma done of your neighborhood and see what is selling and what is currently selling. You can access my web site and see what is currently for sale in your neighborhood

Sat Apr 12 2008, 15:32

First of all, I like how they take such a serious topic and illustrate it with childlike graphics and cartoons. Just another symptom of the dumbing down of America. That being said, real estate is very localized. If you took the National average over the years, that chart may very well be correct. But it doesn't take into account population shifts. Michigan, Ohio, and parts of Western Pennsylvania have been hit terribly hard over the years by economic booms and busts because their economies are tied to one industry or commodity. Whereas other areas like New York and California have enjoyed steady and sometimes rapid price appreciation because of population increases in those state. But if you just take a national average, Michigan, Ohio, and Pennsylvania's losses in real estate values cancel out the gains in California, New York and Washington. I know MANY people who have become very wealthy investing in real estate. Much like any investment though, timing is everything, and a long term outlook is crucial. Don't believe the hype. We in Phoenix Arizona are already starting to see the market pick up again. However, your area may just be in the beginning stages of a downturn so you may want to take the money and run.

Sat Apr 12 2008, 12:48

The concept of falling house prices: Houses are like most other commodities. Price is governed by supply and demand. If there are more buyers than houses, prices will go up as the buyers compete for a limited supply of houses. If there are more houses than buyers, prices will go down; owners will drop their prices until a buyer decides to buy. That's where we are now.

Regarding inflation, cost of construction, etc., yes--that can raise prices slightly, all other things being equal. So, if there's a balance between supply and demand, and the price for new construction goes up 5% (counting labor, materials, land, etc.), then the price of the house will go up. But that probably won't help you too much, since that same inflation is increasing the cost of any new property you'd buy after you sold your old one. It's like two parallel escalators. Yes, yours is going up, but so is the one next to you. And inflation doesn't just apply to houses. It applies to fuel; it applies to food; it applies to durable goods. So, within reason, within limits, you're no better off with inflation than without it.

You note that you bought your house for $215,000 and that similar houses are listed for $420,000. Well, right off the bat we know that they aren't worth that to a buyer...or else they'd have been bought. And in today's soft market we know that offers are likely to come in lower than the list price anyway. And, in most cases, those houses will sell for less. How much less? Difficult to say. It depends on supply and demand. And it depends on the seller's motivation. Let's say that those houses listed for $420,000 actually sell for $399,000. That's a very modest 5% discount. Then let's say the owner's transaction costs (real estate fees, other transaction costs, etc.) come to 10% of the sales price. That means, reasonably, those sales will probably net the seller about $360,000. And if your house is comparable, yes, that does give you a nice profit.

So, should you sell (or attempt to sell) now, or wait until later. Check with an accountant or a financial planner. It partly depends on your tax bracket (your tax deductions that you'd lose if you sold and rented). And it also depends on what your current monthly payments are versus what you'd have to pay in rent. And my guess is that those two numbers are probably fairly close--around $1,700? It also depends on whether you anticipate further price declines.

Judging only from the tone of your question, if those numbers work out about the same...and if your selling horizon is only 18 months from now (not enough time to be confident the market will strengthen; it could go down for a while longer)...and depending on what your financial planner says, it might not be a bad idea to sell now, lock in those profits, and find a cheap place to rent for the next 18 months. You won't know until then whether that was the better decision, but it probably would be a reasonable move and I think (from the tone of your question) that you'd sleep better at night.

Hope that helps.

Sat Apr 12 2008, 12:34

Bob Shiller is your typically economist. He looks at the big picture or as some do can skew the numbers to reflect whatever he wants them to. Real estate is and always has been a very regional market. He is looking at a picture that has encompassed who knows what size region. You also need to see that he is probably including all types of housing, mobile homes, condominiums, townhomes, cluster homes, single family homes. Some of these housing choices don't appreciate in value. A mobile home will traditionaly depreciate.
As far as the cost of construction yes that should drive up the proce of housing. Although your best advice is going to come from a local realtor in your area that can show you the past and present trends and also inform you of any changes (zoning, new construction, industry changes) that will possibly impact your homes value.

If you do need a referral for a top agent in your area just let me know. Our international network refers business across the world and only the top well trained, and experienced agents are allowed to take referrals. So if you need one just let me know.

Larry Story
Coldwell Banker Triad
larry.story@coldwellbanker.com

Sat Apr 12 2008, 11:33