Housing markets vary depending on the market you're in, in the really bad markets, the price of homes are half the value of what they were a few years years ago. This is an example of a real house, and what it went through during the wave with the crazy real estate market.
Some people I know purchased a house eight years ago for $210K. (Their family was growing, and they needed more space. What a good reason to buy a house. Isn't it a basic necessity as shelter?
Well it was a great time to buy for financial reasons as well, because that's right before the housing began in The Silver State. Over the next three years this home drastically rose in value. The owners decided it was time to move on in early 2005. They listed the house with a competent Realtor, and then within days had multiple offers. This same home they bought less than 4 years before, with only a few improvements sold for $425,000.
The new buyers of this house financed it with an interest only loan (expecting the value of the home to rise), and no money down. Great investment right? Real Estate always increases in value doesn't it? Especially when improvements are made.
As soon as they could, they invested $30,000 to upgrade the kitchen, adding solid surface countertops, stainless steel appliances, hardwood floors, new fixtures etc. Even though the monthly payment was more than these buyers could afford, they thought they would more than make up for it when they sold the house for thousands more.
Well approximately the day this transaction closed, the market shifted. Every house on the market didn't suddenly receive multiple offers. In a few months, some of the homes weren't getting offers at all. Then those months became years, and then easy financing diedin 2007 when credit and lending standards realized that things weren't working. Prices tanked, and then dropped some more. Selling a home was nearly impossible, and to make it even more impossible, many sellers had to come up with money just to sell their home. When finances got tough for these home "owners", there was no motivation to make a payment on a house that was worth far less than what was owed diminished. Soon a house payment was missed, then the default notice came, and before long the house foreclosed.
The bank took possession, hired a Realtor to sell it, and then waited. The price dropped, they lowered the price again. Still no offers.
Now it is 2009. The house is still listed. The asking price is. Approximately the same price it was purchased for eight years earlier. And that's why the real estate market is the mess it is now in.
