Real estate values: gee, that sucks!

[The Gorn]

Before I bought my present house in 1994, I looked at this house across the street from ours, which has been vacant since the fall of 2008 (the husband was a blue collar type, an HVAC company employee). It was finally foreclosed and is now for sale as a HUD property:

http://www.comey.com/disp...um=1200132&mls=cincy

The house closed a couple of months after I bought mine in 1994 for $86,500. I *think* the original listing price of that house back in '94 was $92K.  It has sold twice since then, most recently in 2006 for $138Kish.

It is now listed at $85,000. It needs some repairs - mainly it has sh*tty paint and decor and it needs recarpeting. The septic is 9 years old and the heating/cooling is new.

The value of that house has essentially rolled back 14 years.

We probably have put $50K in improvements into this place. I never looked at this house as an investment, but still. Gahh. Looks like we're staying put!

[Origisaurus]

From the pic and your description, I'd say that's a fair price in today's depressed market.  At $138K, it was definitely in the bubble.  Subject, of course to location, location and location.

Your reaction is typical of those who've been able to keep and improve their houses through the bubble and crash.  Of course, sale prices and "values" will recover, albeit slowly.  This may be an opportunity to get your tax assessment reduced.

Improvements, except for cosmetics like paint, hardly ever pay for themselves on sale price - the owner gets to enjoy them as long as they stay rooted.  So there you are, Treebeard.  

[Richardk]

Prices are strange. We've updated our home and while things are 'new' and better than before it only adds marginally to the sale price of the home. For instance, people expect a roof and windows as long as they are in good shape. It doesn't seem to matter much how new they are once they're 'broken in'. Also location and relative value matter, like you don't want a Mc Mansion in a trailer park.

Updating our insurance policy was a recent eye-opener when they wanted to insure us for over 3.5 times the "value" of our house, stating that's what it would cost to rebuild it, even though we couldn't sell it for anywhere near that price. We didn't have much of a bubble here but something is out of whack with prices like that.

[Fortune Green]

Looks like it sold for $83,334 on 10/12/2009.

http://www.trulia.com/homes/Ohio/Lebanon/sold/22789827-2789-West-Ave-Lebanon-OH-45036

[The Gorn]

You'd have to check the county web site for the details. I am pretty certain that was the transfer from the mortgage company to HUD, and that happened fairly recently. The house was showing the last couple that bought it as owners, up to this fall.

The big kickers in this case:

It's HUD owned. All you ever heard about HUD properties 10 years ago (say) were usually in inner city slums.

A realtor was offering it last spring for $135K, and explained that it was a short sale.

I think the more realistic "true" value of the place is $100K or so. It's got no basement and no garage. It's now underpriced because it's a repo, because it's sat for over a year empty, and because the interior decor is horrible. Not a wreck, but stuff like deep red wall paint in the kitchen and one of the kid's bedrooms is painted with Cincinnati Bengals colors and done not all that well.  It needs all rooms painted, some drywall work, and new wall to wall carpet. Otherwise it's liveable.

[Origisaurus]

Except for the carpet, it reads like a fixer-upper.  I wouldn't recommend it as a project for you, but some ballsy speculator could, maybe turn a fast 10 grand or so on it.  As follows: Purchase and closing $85K, painting, carpet and general cosmetics $10K, resell for $105K.

[unix]

Except for the carpet, it reads like a fixer-upper. I wouldn't recommend it as a project for you, but some ballsy speculator could, maybe turn a fast 10 grand or so on it. As follows: Purchase and closing $85K, painting, carpet and general   cosmetics $10K, resell for $105K.

I would be afraid to touch any RE in this market... Hear predictions of a long and shallow recession instead of a sharp "V".

And of course "It's not a crash, it is a correction"

[John Masterson]

Except for the carpet, it reads like a fixer-upper. I wouldn't recommend it as a project for you, but some ballsy speculator could, maybe turn a fast 10 grand or so on it. As follows: Purchase and closing $85K, painting, carpet and general     cosmetics $10K, resell for $105K.

 
  I would be afraid to touch any RE in this market... Hear predictions of a long and shallow recession instead of a sharp "V".  
 
  And of course "It's not a crash, it is a correction"

You mean you think we are going back into a recession? When do you predict it will start again?