Sunday, March 30, 2008

Local Real Estate Woes

**UPDATE: Didn't work out that well. 15 bids on 24 properties. Not one met the reserve price. The place was packed & my husband made no bids. People going to these things are looking for good deals. Otherwise, you may as well go the regular realtor pathway. There was also a 5% fee packed on top. Ah, well. See Projo for more details.

I previously wrote on this topic:

If you had any doubt about tough times around here- this provided a real eye opener. I see an auction of real estate sponsored by two large local agencies (with reserve prices withheld). It's been at least ?15 yrs. since I've seen this happening. My husband has a graph. In 1989 real estate (for the state as a whole) reached a peak. It then dived for the next 5 yrs. It was followed by a slow recovery until reached the previous high in 2000 was reached. That means a 10 yr. downward turn. In 2000 in soared upward until 2006. Then downward once again. Anyone who is projecting a short downturn in real estate in this area, must have their fingers crossed. Talk about a bubble bursting is premature- it's more like a steady, slow leak.

Let me be more specific. In 1990 (winter) we went to an auction exactly like this (despite Projo's expert's claim that this is a first-time happening). I know this to be true because my husband & I were in attendance & purchased a property - NOT in foreclosure either. It was slightly less than $25,000 (cash) & needed a LOT of work. Converted to today's dollars, that would be $31,116.21.
Do you think that you could do it today? LOL!!!

Why do realtors, sellers subject their properties to this procedure? It's a way of guaging the value of a property & adjusting prices. Will it spur the market with all the new hype? Never has.

It's always been a boom-bust cycle around here. Until there is enough pent-up demand (and this takes years). Real estate just freezes after dropping. By the time the public realizes that we are in an upward cycle, it's already beginning to deflate.

While mortages are low right now, with excellent credit you need 20% down. Without the absolute best rating, think more like 30% including all the extra fees. Banks would rather make $ on other things.

See my previous posting on my concern for the local economy. And this all begs the question, what effect will this have on the local tax base? Re-evaluation must take place every 9 yrs. However, statistical evals may happen every 3 yrs. This will compare your statistical area's recent property sales & set prices. Have they increased or decreased in the past 3 yrs.? Your evaluation than will be adjusted accordingly. What will happen when EVERY property (or even most) has gone down in value & there is a cap on the local tax levy? Will all towns/cities apply for exmptions?
A Statistical update is a thorough analysis of all real estate in a city or town so as to determine the fair market value of all properties. Rhode Island General Law 44-5-11 that statistical updates be performed every three (3) years with a full physical revaluation every nine (9) years
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