The cost of the housing market “correction”

A few days ago I used several online calculators to get estimates of the value of my house. Most were simple online calculators, but one, from, arrived in my inbox, sent by an actual human being — a realtor to be exact. He sent three comparables — recent sales in my neighborhood, all of which were priced $10,000 to $20,000 below what I paid for my house a few years ago, and an estimated range of $219,900 to $234,900.

Four years ago, I bought my house for $230,000. A year later, it was appraised for about $280,000. So this was unhappy news, even though I saw it coming.

The realtor contacted me a couple of days later, to ask if I had received the “Home Evaluation,” and mentioned the difficulty of estimating the value of a house without seeing it. I wasn’t going to bother this guy with questions (I’m not really selling my house any time soon), but given the opportunity I asked him:

I did receive the evaluation – thank you! The details of the homes you sent seem about right. I know that the market has been bad lately, but my home was appraised for $280,000 in 2004, when I refinanced. Do you think that the market has gone down that much that my home would be worth around $230 again? (That’s about what I originally bought it for in 2003).

His reply:

Good Morning! It’s sad to say but the answer is yes. I have a property that was appraised at 238K at the end of 2005, now I have it for sale at 212K. Another client had her house appraised at 345K in 2005 now it’s for sale at 314K.

This market correction is hard on all of us home owners.

Not quite as drastic as a 50K reduction in price, but still not what I’d like to hear. I have a friend who just bought a new house and is trying to sell his old one — its been on the market for over a month and only two showings. He’s going to have to dip into his 401K if he can’t get his asking price, and that may very well happen.

One thing that could reduce the 50K difference in (very loosely estimated) value — it doesn’t account for any improvements that I’ve made to the property.

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One thought on “The cost of the housing market “correction”

  1. This realtor is serious — must be another sign of a bad market. I clearly indicated on my form that I wasn’t selling my house anytime soon, but I’m on this guy’s email list now, and received a very professional-looking HTML email from him today:

    I recently completed your market analysis based on the information you provided through Since I haven’t seen your home in person, my estimate of the value might not be as accurate as you need. If you want, I’ll be happy to drop by for a closer look so that I might provide you with a more thorough market evaluation.

    From the information you provided, I understand you are not ready to sell your home at this time. When you decide to sell, I can help you with a number of matters such as:

    * Fine-tuning your asking price
    * Providing the widest possible exposure through the Multiple Listing Service
    * Developing a marketing campaign specifically designed for your home
    * Making sure potential buyers are qualified
    * Negotiating on your behalf
    * Following up on the transaction details until it is closed

    I will touch base with you from time to time and offer specific suggestions or tips. In the meantime, please feel free to contact me by phone or email if I can be of further assistance.

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