When a property is valued (appraised), it is appraised at current MARKET value. In other words, what a buyer under no compunction to buy and a seller under no pressure to sell with bargain for it.
For any property to double in value in just a few years is extraordinary -- which is just what the last 10 or so years has been -- houses being "flipped" like pancakes. Too easy money and credit, people standing in line to bid -- running prices up beyond all reason. That was what was referred to as the "bubble". And the bubble has burst in communities across the nation.
The cost to replace a house, rebuild it as it is -- is one thing. It is a figure appraisers use as one value in their reports. Builders are finding now that they have to dump their new houses and condos, many not getting their profits, but selling at a loss for what they have invested in those properties. And they are the pros.
But it is the MARKET price that buyers and lenders rely on -- what a willing buyer will pay and a willing seller will sell for. That price is determined by comparable sales in the neighborhood.
The spate of foreclosures is bringing down the prices of neighborning houses across the country.
Yes, inflation is here. Gas prices, food prices, everything relying upon fuel -- and it is depressing the economy overall. But housing prices are depressed -- not increasing in most communities because the money has dried up, lenders who got caught holding a lot of bad paper as unwisely made mortgages default are going down the tubes, and the person trying to sell is at a disadvantage. Fewer buyers, tighter money, prices being dragged down by foreclosures.
Historically, there have always been just a few months whent the balance is right. Right amount of properties on the market -- right amount of buyers -- and affordable, plentiful money to make the deals. The rest of the time, one or the other is out of whack. "Buyer's market" [like now] or "seller's market."
These past 10 years were sheer insanity -- with people going into homes with ARMS at low interest rates -- no equity -- making mortgages that were sure to increase in just a few years -- and bear monthly payments they could not meet. The foreclosure crisis was predictable.
Since people have to live somewhere, housing is always a good investment for the long term. But if one can get 5%, 10% a year appreciation on residential real estate, they are doing well.
The insanity bubble has burst, that's all.
My suggestion for you is to call a local Realtor who is familiar with the area in which your home is located. Ask them to complete a Comparative Market Analysis for you. Realtors conduct this service for you at no cost. It will be comprised of properties similar to yours that have sold in recent months and those that are currently on the market. It should also include marketing times for your area and the Realtor should provide you with additional information pertinent to your area and answer any questions you may have concerning the CMA or your current local real estate market. The price ranges found in the CMA will tell you approximately what your home is worth.
Another option that may cost you a fee is to contact a licensed appraiser to complete an appraisal of your home. If you are in the West Virginia area, let me know, maybe I can help you.
