Real Estate Denial in Boston

With some moderation in the decline of the Case-Shiller housing index, a discussion was started on the real estate blog on Boston.com.

One commenter in particular is quite amusingly unaware of how the housing market works:

#9: I've been trying to sell my home for some time - and have also drastically dropped the asking multiple times, I can tell you that I'm done reducing the price. I literally can't afford to drop it anymore. Therefore, I'll just sit on my property and ride this out. Why should I continue to drop my asking price, only to have potential buyers come in, lowball me even further (who's being greedy then?), only to find out later that they can't even qualify for the loan! Anecdotally, I'm starting to hear many fellow sellers out there say the same thing. I don't think I'm being "greedy" for trying to sell my home for the assessed value (in my case, CONSIDERABLY less than the assessed value) - I'm just trying to get by, same as everyone else. Once the rest of the sellers out there get fed up with this situation - and see that houses aren't selling even when they make large price reductions - they're also going to stop dropping their prices. Then this market will finally bottom out. Posted by jack January 30, 08 10:27 AM

Well Jack, that's not the way it works. Home prices remain ~30% above the historical norm, and lenders, having stopped smoking the crack pipe of cheap credit, are returning in a big way to historical lending standards. Actually, they're being really tight with mortgage approvals - a mortgage broker told me recently that if your score is under 650 good luck finding a decent rate if you can get a mortgage at all. Traditional loans means that buyers won't be able to pay for houses that cost them 50%+ of their gross income...which means that sellers will inevitable come down to earth, screaming and kicking about their lost bubble equity. Boo-hoo. My heart bleeds for them.