In Sunday’s (Dec. 9 ) NYTimes Week in Review Section there was a really good article, "When the Price Isn’t Right" that hit the nail on the head — about financial ambiguity that’s choking markets, including real estate.
One quote: "The real estate market … is locked up because few can agree on a fair price. Sellers cannot fathom how their homes could be worth so much less than a year ago… Buyers have heard about plummeting prices and are holding out for some of that. The result: stalemate.:
The whole article is pretty interesting, about the difficulties in establishing values right now in a lot of markets, not just real estate. In reading through the article, I realized that a big part of what I’m sensing from potential buyers here isn’t that they can’t or don’t want to spend, say, $400,000 on a farmhouse, nor are they mired in economic fear. They just don’t know what the right price should be for what they want. Consider a hypothetical lakefront 5 acre lot at Chapin. 4 years ago it might have sold for $350,000. A year ago it might have sold for $650,000. So what’s it worth today? $650,000? $550,000? $450,000? If this hypothetical lot is on the market, it might actually be listed for $750,000 (with the seller optimistically extrapolating an upward trend from last year’s prices.) The problem is when I have a buyer interested in buying a lakefront lot at Chapin, they don’t have a good way to put a value on it. You just can’t look at what a similar property sold for a year ago, because the market is very different today.