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Wednesday, May 6, 2009
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44 comments:
New York Times - Housing rebounding....maybe...
This city was among the first in the nation to fall victim to the real estate collapse. Now it seems to be in the earliest stages of a recovery, a hopeful sign for an economy mired in trouble and anxiety.A syndicate had bought a three-bedroom foreclosure on a cul-de-sac in eastern Sacramento last fall for $172,000, made a few improvements and was flipping it — another boom-era element that is back. The Whitmans bought it three weeks ago for $224,500.
Senate Defeats Vitter FHA Solvency Amendment to Helping Families Save Their Homes ActAn amendment offered by Senator David Vitter (R-LA) to the Helping Families Save Their Homes Act (S. 896) has been defeated by a vote of 36 to 56.The amendment would establish “solvency” as the primary and foundational responsibility of the Federal Housing Administration (FHA). It would require the FHA Secretary to close down any FHA program if it seems “reasonably likely” that the FHA might need credit subsidies from Congress to continue their operation.Some debate quotes --
Senator Dodd:
Again, I oppose this amendment because it does exactly the opposite of what we ought to be doing at a moment such as this.
We thank our lucky stars that we have the FHA providing credit at this time. In exactly a moment such as this, you need the FHA out there to provide that credit when credit is so unavailable through the clogged-up financial system in our Nation. First and foremost, this amendment fails to reflect the fact that the primary mission of the Federal Housing Administration is to help create and sustain home ownership for American families. The mission of the FHA is especially important now, while we are struggling through such troubled economic times. FHA currently insures nearly 30 percent of the mortgage market in our Nation.
If you extend the logic that the amendment proposes, you would shut the doors of Fannie Mae and Freddie Mac right now because both have had to draw on their credit lines from the Treasury. Without them, we would lose the other 70 percent of the mortgage market overnight, turning a housing recession into a deep housing depression.
In my view, if it were not for the Federal Government at this hour, working through FHA and other federally supported institutions, there would be no mortgage credit available at all.Senator Bond:
The bottom line is this: The FHA is a powder keg that could explode, leaving the taxpayers on the hook if Congress and the administration continue to overburden the Government agency. As I stated at a recent Transportation, Housing and Urban Development Appropriations Subcommittee hearing, the FHA's health and solvency are at high risk. The signs are troubling in many areas: FHA default rates are at their highest level in several years. FHA's economic value has fallen by almost 40 percent over the past year. FHA approval of new lenders has increased by 525 percent over the past 2 years, and there is evidence that some former subprime lenders and brokers have infiltrated FHA to conduct business. That in itself ought to be an alarm bell that goes off. Fraudulent activity in the mortgage industry has put and is at risk of exposing FHA to more risk. FHA has seen a significant increase in foreclosures, which endangers the stability of communities and neighboring homes. The rise in FHA defaults and foreclosures, especially in areas already victimized by subprime lending, threatens to make a bad problem worse. These troubling signs all point to a powder keg that is waiting to explode.
What does this mean for taxpayers? It means, by law, FHA is required to carry a 2-percent reserve or a 50-to-1 leverage rate. If it falls below that statutory level, FHA must raise the premiums it charges to borrowers or Congress must appropriate funds. That means taxpayers footing more of the bill.
I have a message for my colleagues in Congress and the administration: Americans do not want another bailout. The taxpayer credit card is maxed out.
In a rational world, Congress and the White House would tighten FHA underwriting standards, in particular by eliminating the 100% guarantee. That guarantee means banks and mortgage lenders have no skin in the game; lenders collect the 2% to 3% origination fees on as many FHA loans as they can push out the door regardless of whether the borrower has a likelihood of repaying the mortgage.Quotes from commenter YLSP on CR
Compare and contrast what wood floors, staging and a location with a view of woods or water will do to a TH price right now.
(all solds, subtracted off seller subsidies)
with view, tricked out:
http://franklymls.com/FX7010782
$356,000 4/30/2009
http://franklymls.com/FX7017478
$346,000 5/5/2009
no view, common looking:
http://franklymls.com/FX6999901
$235,300 4/24/3009
http://franklymls.com/FX6936429
$248,500 4/23/2009
Yup, you're reading that right. One hundred thousand dollars. Okay fine, I haven't checked out the sq footage on these, I don't know if the cheap ones need new roofs, etc. But they're not the dogs, and they're both in good school districts.
This is what I mean by a fluffy bottom. I'm not refering to the plotting of the median line that may like the stock market have multiple dips in time. I mean this huge spread, where just a dash of desirability commands a $100k premium over prefectly good REO stock. The ~$250 places may or may not be at the absolute bottom, I can't tell you that, but they're close based on rents. Sure, they're not the median property and hence should be cheaper than the median income times 2.5, which they're not, but at least they are accessible to half the households in the area.
This is what I mean by "tricked out THs" populating the $300-$450k range. I know some people can afford that, but right now all you get with that extra income/cash is the ability to overpay for a TH.
zerodown,
good finds. Seriously, If people really believe that the FHA provides a good and indispensible service for home buyers, then they should be all for a restriction to require solvency. This should save the FHA, instead of allowing it to become a powder keg and dissappear.
The Onion, Nation ready to be lied to about the economyWASHINGTON—After nearly four months of frank, honest, and open dialogue about the failing economy, a weary U.S. populace announced this week that it is once again ready to be lied to about the current state of the financial system.
Tired of hearing the grim truth about their economic future, Americans demanded that the bald-faced lies resume immediately, particularly whenever politicians feel the need to divulge another terrifying problem with Wall Street, the housing market, or any one of a hundred other ticking time bombs everyone was better off not knowing about.
...
The Onion, at it's best again.
Cara, obviously I haven't inspected any of these townhouses (great comparisons, by the way) but I definitely would not call the differences between them "fluff." The differences between them are real and they are expensive. People have always paid more for good views and good locations and I would bet the price difference could be quantified if you had the full sample. In addition to the differences you noted, which aren't cheap, the first one appears to have a big new kitchen. Just to give you some perspective, I had an estimator out Friday to do a VERY basic makeover of my much smaller kitchen and he told me the absolute minimum would be $25K. As another example, the first of your two low priced ones appears to have had NO updates, and often foreclosures have been damaged or fixtures stolen.
I guess my definition of fluff would be where it really isn't clear why two similar properties have a substantial price difference.
Cara, Haha about the Onion - they always nail it. Someone said almost exactly that to me the other day - "I really think a lot of this recession is caused by all the negativity in the news..."
Forgot the link to the story
Cara,
So much truth to The Onion story. I heard that Nouriel Roubini is not getting as much TV time these days because the public just can't take it anymore.
So the media has resorted to stories like this.Warning: you don't want to see his loft.
Maybe Roubini'd have better luck if he sought a girlfriend who may be ugly but has a beautiful mind too.
It doesn't sound as though he needs much luck, though.
Ace,
sorry I keep making new terminology and then explaining it badly. By fluff, I meant my "fluffy bottom" theory. Where some properties (the less desirable ones) are already there (or near) and others are not even close.
These distinctions you note are real. But $100k??? No, this is market dynamics not real prices distinctions. Their tax assessments are 30-40k different. Which I do think may be appropriate. But, seriously the previous owners got to live in those redone kitchens and across those wood floors, they shouldn't expect to be paid back fully for their initial cost.
There are some even nicer ones in the $250k sold range, but that requires going back to sales this winter when fewer people were in the market. And recall the truly tricked out gorgeous, slightly oversized $319k one that also sold in this time frame. These people are VASTLY overpaying for the privilege of a move-in ready place, that doesn't need updates and has some intrinsic merit to the location (which the $319k one was lacking, though it was way better on the inside and layout).
The distinctions are what are keeping Burke's market so healthy. You won't find more than a $10-20k difference on truly equal properties. This helps people to justify their purchases and keeps homes selling at a nice clip. However, the dynamics do matter. The two I noted do are not the ones down at $180k that have junky locations, questionable neighborhoods or are teeny-tiny. What people aren't realizing is that the junk falls first. Places on main roads, with lesser schools or that need major work. The unremarkable ones fall next. The ones at $250k aren't worth that either, but these are just two out of 20 I could have chosen from. The ones that have some distinction fall last.
This time shift exaggerates the price differences between groups. In Burke the real junk is already going for under $180k. (for THs). The unremarkable stuff is clinging to $250 and slipping. The ones with distinction have budged off their $450k highs, (that were shared across all categories) but not nearly as far yet.
It's like a microcosm of the housing market as a whole playing out on a shorter time scale in a smaller price range.
Just for anyone new and thinking about buying then don't pay attention to income times 2.5 as a rule of thumb.
What you can afford depends on your total debt and available interest rates.
Lower debt and lower rates can reasonably push that number to 3.5 to 4 times your income.
Everyone's situation is unique and rules of thumb end up misleading people when the variables change.
The reason I bring this up is because there are "plenty" (actually not that many) unremarkable THs available in my price range now. In SFHs, only the truly problematic have fallen (to near bottom, everything's fallen from peak). I think I'd much rather buy when I can chose between merely unremarkable SFHs and TH's with some distinction rather than choosing between the bottom of the SFH barrel and unremarkable THs.
Am I just seeing things and projecting my wishes onto reality, or am I being reasonable here?
Cara, thanks for the explanation. I think we're differing on a matter of degree as opposed to a yes-no dichotomy. Without seeing the properties, it's not clear to me whether the $100K difference is legitimate, but given my experience I think it's highly likely that the difference is justified by more than emotion. You would be AMAZED at how expensive it is to do things that you just don't see, and yes, if you paid for and endured the hassle of these changes, you would expect to be compensated for them. Certainly not 100% for a kitchen you put in 10 years ago, but again, we're talking about a matter of degree. What's the difference between paying $300K for a property and expecting to get at least $300K plus inflation when you sell it later (presuming a stable market), versus paying $200K, putting in $100K, and expecting at least the same price? Why should the improvements hold their value less well than the original price?
It's extremely easy to underestimate what it really costs to get things done, to say nothing of the hassle of missing work to meet the contractors, bugging them to correct mistakes, etc.
In your case since you know what you want to do, you don't want to pay for someone else's improvements. But it is perfectly rational for others to pay a $100K premium for at least $100K in size, location and condition differences. And enough buyers do pay for them. The critical question is to inspect the difference in the properties to see just how much of the price difference is justified.
Ace,
A lot of things in Burke are asking 40k difference for being a real sale with nice paint and all wood floors over being in the same TH block (both interior but backing to wooded parkland) and having to take down wallpaper trim (just the border) and needing to put in wood floors. I've personally helped two friends lay wood floors including properly cutting the trim, it's not that hard (okay I'll admit, I think its fun) and it's at most twice the cost having of new good carpet.
Trust me, the degree being paid here is way off. Normally?? Updates help you sell faster, not get you your full money back. That's the reasonable expectation. Dollar for dollar is a product of HGTV and the bubble.
What I want to see? Really? Is something with a prime location that just needs paint, appliances and floors. Too bad this puts me in direct competition with every remaining flipper out there.
Very interesting Cara. I wonder if there is some "self sorting" involved - the first examples going toward the investors and value driven crowd - and the latter going to the "wow I love this place" crowd?
I know this distinction exists, but didnt realize the price gap could be so large. Any idea what the gap was in regular (non-bubble)times?
CRT,
Good point, I haven't looked that up. I know that in bubble times the $250k($180k) stuff was pumped up to just $50k($100k) under the ones with views, but I haven't checked the tax records for things in these neighborhoods that were sold in 1999....
There definitely are two types of buyers out there right now. Those that want a deal and the freedom to make their own design choices, and those that want move-in ready now, and the wow factor.
Question? - When appraisals are done on "healthy sales", are the appraisers allowed to use foreclosures and/or short sales to compare to???
Thanks.
dgg,
yes, in fact I believe they must. But they put in some fudge factor for how to weight it and the expected discount.
but I could be wrong, so you could check out the
actual current appraisal guideleines.
dgg,
better yet actual appraisers having this discussion.
For Self-Contained and Summary Appraisal Reports, USPAP requires disclosure of “economic property characteristics relevant to the assignment.” Market conditions (including sudden market changes related to catastrophic events) are “economic property characteristics,” and so should be identified in the development of an appraisal and disclosed in the appraisal report.
Standards Rules 2-2(a)(v) and 2-2(b)(v) address the type and definition of value used in an assignment. The Comments to these Standards Rules state, in part:
Stating the definition of value also requires any comments needed to clearly indicate to intended users how the definition is being applied.
In cases of sudden market change, it would be necessary to specifically disclose such things as how the appraisal has addressed the motivation of buyers and sellers, supply and demand, the conditions of the sale (e.g. exposure in a competitive market), etc.
As noted in STANDARD 2, the content of all real property appraisal reports, “…must be consistent with the intended use of the appraisal…” In the case of a rapidly changing market, the report must have enough information to allow intended users to understand the market conditions and to use that information in their decision making.
I would categorize CATASTROPHIC EVENTS to include the demise of the mortgage lending industry and the drastic increase in foreclosures and REO properties.
So, just disclose!
Cara, Ace and CRT,
95% of buyers want move-in turn-key properties. They are willing to pay dearly for this.
In many cases, they don't have the vision to see what paint and carpet will do.
I have benifitted greatly from this mind-set. Since our first purchase in 1981 (a pre-foreclosure with "cosmetic" issues), we have always gravitated to the fixers.
I'll spend 20K - 40K to make 60K - 100K any day of the week.
va_investor
I don't know about the 95% number, but it is indeed the vast majority.
I, on the other hand, love painting. I have been looking forward to painting my own place since I was 12 (when I chose way too light of a color for my room). Not only have my rentals been white, but my mom has her whole house "museum white". I've helped many of my friends paint and learned a ton from an ex-roommate (she can paint with no tarp and not get a single drop on herself or the floor, it's amazing, we always did put down a tarp and tape everything up anyway, but seriously her hands would be spotless).
Cara and VA_Investor, the "updates help you sell faster but don't increase your sales price" argument I've heard many times. But it makes no sense and isn't supported by the data at all. It's a little like saying having more square footage doesn't increase the sales price but helps you sell the place faster.
It's also important not to lump all types of updates together. I'm not talking about slapping on a coat of paint and expecting hordes waving offers at you. And expensive updates done with...ah, shall we say, unique taste, yield much lower return.
I agree with you, VA_Investor, that there certainly are people who overpay for minor or cheap or badly done improvements and can't see beyond the superficial. That's why several of my houses were fixers. But you've also seen the advice that people who don't know the costs of renovation or how to do the work themselves can quickly lose their shirts when buying fixers, and may have also seen competitors fall victim to this first-hand.
The original argument was over the extent to which variation in prices indicated that the market was still having trouble finding a bottom to the extent that one buyer was paying a lot more than a second for very little difference in value. No question there is still some of that going on, but I'm just cautioning not to dismiss real investment differences and resulting costs and values with "we fell in love with the place and had to have it at any price."
Here's an example of a house where the sellers are probably thinking, "but we've spent all this money updating the house...can't believe no one will pay us for it!"
http://franklymls.com/AR7008438
The square footage in the house is excellent, and if they had used more thought when doing the renos, I think they would have sold this house long ago for more money. For example, why not make a huge country kitchen out of the current kitchen and dining room, and convert the nearest living room into a dining room? And the two-tone cabinets aren't too popular with most people even though these look as though they might be expensive. Why not build an attractive exterior instead of the cheapest one?
Ace, they're just pricing too high compared with the competition.
While this listing doesn't have interior pictures, from the outside it looks a lot nicer, roughly same location, and 100k cheaper.
http://franklymls.com/AR7038886
"The original argument was over the extent to which variation in prices indicated that the market was still having trouble finding a bottom to the extent that one buyer was paying a lot more than a second for very little difference in value."
No. that's not the original argument at all. As I said before, truly comparable places are differing in sales price very little. The argument I'm making is that the dynamic of the market are taking intrinsic differences and seperating them by larger amounts than will be the case in equilibrium. That just as there are clear market distinctions in the timing of the fall of rental-type housing, THs, small SFHs, move-up homes, and mansions, there are also market timing differences within a much smaller range of the intrinsically bad location tiny homes, the just plain average homes, and those with some intrinsic semi-rare desirability.
This argument over how much one should pay for move-in ready and how much renovations are worth is a side issue as far as I'm concerned and distracts from my original thesis.
Fluffy bottom. Fuzzy bottom. Blurry bottom.
I for one, see the point. Too bad we can't call it Foggy Bottom.
For that matter, too bad it (hopefully!) hasn't yet been reached in Foggy Bottom.
I think hard job times, easy credit, high defaults, high government stimulus, large investor community, the steep drop, and the large amount of inventory built or improved at various points along the fast moving housing timeline all create the potential for a wide variation in price discovery. Right now you can't just say "price to rent" or "price to sqft", even if you try to factor in location, location, location and the age of the kitchens and baths.
Which, by the way, hurts my thesis that all the cookie-cutter homes that have recently been packed into development spaces would force sellers to compete almost solely on price to counteract the lack of differentiation.
Hmmm, OR, perhaps the price differentiation is exactly what is CAUSING the fluff/fuzz/blur/fog, SUPPORTING my thesis. If so, it would help if we saw the similar higher priced houses have price reductions that race toward or below the lower ones.
Scott,
Mmm, yeah I don't think the fog is hidding the bottom in Foggy Bottom yet...
Hard to say about the cookie-cutter new housing. It's tract homes here, but they're all old enough to have differentiated themselves.
Ace you dont need to spend 25k to do a small kitchen.
Go with stock cabinets, buy your own tile, shop around for you own appliances and countertops and you can cut your cost in half.
You dont have to do any labor yourself, just shop around for people who will do things at a fair price.
Well, Cara, here's my final comment and then I'll step aside. I don't see how you define "intrinsic differences" (let alone examine how changes occur over time), if you are going to ignore anything that contributes to real value in the house.
Thanks, Doug, I'm just going to live with it as is, and continue with plan A, of finding another house with fewer faults than this one has, and leaving it to the next owners to figure out what they want to do with the kitchen.
Cara's point is valuable. It is obvious that improvements and upgrades vs. as-is REOs have value beyond their raw cost. But how much?I think people zeroed in on the absolute difference in price of her comps and missed the fact that the nice houses carry a 33% premium to the REOs. Cara's point is that the REOs are close to a historical metric of value, but the other houses are still in a bubble. She's right.
Perhaps I'd quibble that the REOs are too expensive as well by about 10 - 15%. In a rational market, REOs should sell for more below the historical value metrics because you're buying an as-is property with problems, vs. a middle of the road "unremarkable home" vs. a true "tricked-out" property. The discount or premium of the property should be based along some kind of historical value metric. It is sustainable for an area to increases prices dramatically if it suddenly attracts people who earn a lot more money (Silicon Valley). It is not sustainable, if values were pushed up by too many people buying homes that could not afford them or if an attractive area becomes unattractive due to over-population.
But in terms of a fluffy foggy bottom :-), it is well known that the foreclosure effect pushes down prices. The areas where the foreclosures got worse earlier are further along the cycle in recovery. Areas where there are less or delayed foreclosures will take a longer time to correct. So different areas will bottom out sooner than others.
Much of the homeownership government bailout stuff is based on a belief that if we can just get through the next two years, we'll be fine. I know some homeowners who see the price declines as a "rough patch" and not a long term correction. They intend to wait them out.
Eventually, the government stimulus will stop, the new economic realities and restricted lending will fully work their way throughout the market and we'll have a rational market again - even if the emplyoment situation improves. I'm talking less about the "bottom" but about a market where historical metrics of value and financial reason operate again. We're not there yet.It will be a long wait. And this shouldn't be surprising. The Internet has accelerated a lot of things in life - human psychology not so much. Housing bubbles take close to a decade to run their course.
See you in 2012 :-)
Intrinsic were size, location and views. (TH size is usually unfixable) Same thing as your unfixable problems list (I can't recall what you called it).
The problem arose, because I couldn't find properties with prime locations, sizes and views that weren't also updated. And the updated ones with lesser locations but similar sizes that sold for $250k sold months ago. The 319k one was updated way way better than the two at $350k, though, and was just lacking the view.
(it actually sold for $309k)
http://franklymls.com/FX7000124
The other thing is, I really don't think these attributes should each get added linearly. Sure, by an appraiser they do, but not by a buyer. So, the $309k one is indeed arguably worth about $60k more than the un-renovated (but in perfectly good condition, AND one of which is in a better school district than all the others shown here). But the wood-view, lake-view ones aren't done up as thoroughly or as well as the "$319" one, so shouldn't get that full $60k base price up on top of which to add their location premium, which would still need to be a cool $50k.
Those amounts don't compute.
blacksilver2012:
yeah, it's the 100k on a 250k base-price that's astounding really. (i.e. the percentage)
And yes, $250k is only "reasonable" right now, because REO's are the only market for homes for regular folks, hence you don't get the usual REO discount at the moment. (For $250k from a "real" seller you get a way way worse subdivision though). But, yes, if this were a normal market these would be discounted off a base price that was also under the median.
Cara said: "The other thing is, I really don't think these attributes should each get added linearly. Sure, by an appraiser they do, but not by a buyer. So, the $309k one is indeed arguably worth about $60k more than the un-renovated (but in perfectly good condition, AND one of which is in a better school district than all the others shown here). But the wood-view, lake-view ones aren't done up as thoroughly or as well as the "$319" one, so shouldn't get that full $60k base price up on top of which to add their location premium, which would still need to be a cool $50k."
Cara, what you would pay for a view, nice lot backing the woods is not the same to what others would pay. Also the beauty of upgrades is in the eye of the beholder.
I think that you are making too much ordeal out of these numbers, when what we are talking about maybe is a difference of 10-20K. You do not know for sure for how much any of these THs will end up selling either.
That all of these THs may still be overpriced, the REOs and the updated ones, is a totally different story. But I do not think the variation in price is that way off.
The NY Times may say Sacramento isrebounding but
ask the Sacramento Bee?
http://sacbee.com/topstories/story/1833742.html?ref=patrick.net
Nearly four years into California's housing downturn, close to 24,000 Sacramento-area homes and apartments are vacant, a number that climbed 40 percent in the past year, according to a Bee analysis of federal data.
Roughly a third, or about 7,200, of the six-county region's vacant homes have been empty longer than a year. About 3,500 have been empty longer than two years.
Major Banks Receiving Federal Aid Backed Subprime Lenders, Report Says
Banks that received federal bailout money financed at least 21 of the top 25 subprime lenders, the investigation found. They owned these lenders, extended credit to them, or bought their loans and then sold them as securities.
Wells Fargo, J.P. Morgan Chase, Citigroup, Regions Financial Corp., GMAC, Capital One and the insurance company American International Group all owned subprime lenders, according to the center's tally. AIG still owns one of those lenders, American General Finance. Ten of the top 25 subprime lenders have paid to settle claims related to abusive lending, and 20 of them have closed, stopped lending or sold themselves.
Time Warner mulls AOL spinoff
In a letter from then-AOL CEO Randy Falco e-mailed to AOL employees earlier this year, it was announced that 10 percent of AOL's workforce -- about 700 workers – would lose their jobs over the next several quarters.
In addition, unused space on the company's Dulles campus was to be leased out in an effort to capitalize on revenue-generating opportunities.
Now, Time Warner CEO Jeff Bewkes has announced via the company's first-quarter earnings report April 29 that AOL may be spun off from Time Warner altogether.The report states that the company has not yet made a decision, but that it anticipates initiating a process to “spin off one or more parts of the businesses of AOL to Time Warner’s stockholders.”
Ace,
Please accept my apology. This all got way out of hand, and could have been entirely prevented if I had made explicit the thought that was in my head, which was, okay $25k for the kitchen $10k for everything else, that's $35k, even if you don't discount it for use, where did the other $15k come from? If you add up the difference in value, you get at most the most generous $65k, not $105k, to me that's not degree, people shucking out almost double the worth for something requires a better explanation. Which was timing, and as CRT and others pointed out, it's as if these two sets of buyers are completely distinct and are operating in their own markets.
dc2
SOLDS, these were SOLDS. If you use lists you get much more insanity, but these are actually what buyers in this market paid.
I would like to be able to answer CRT's question about the proper difference in price in say 1999, but then I'd have to aggregate the data, because we can't critique the interiors from 1999, and one click at a time, that's not tenable.
The reason this is interesting is because unlike the difference between a 1.2 million dollar house and a 1.4 million dollar house, these are way easier to grasp and quantify. And there have been a goodly number of foreclosures throughout all of the TH complexes, so it's not as if one of them is immune. This is actually all a variation on what Ace has been saying for years about houses with unfixable problems having those problems ignored in the bubble and being the first to feel the pain in the crash.
CRT,
Yeah, at the moment all i have to base it on is the tax assessments, which is obviously insufficient. Seems like a worthwhile project for this weekend, I will report back.
Cara - I do think there are 2 markets. One is the value driven investor market, the other is the more casual "I like that place - I can afford it Ill buy it" market.
Second market can be very fickle. Its like on antiques roadshow where someone will pay $40,000 for an antique, non-functional cherokee baby sling, but wont pay more than $40 for a Graco model that will actually be used.
More concretely, I know for example that here in old town that (paradoxically) a new house, built in the last 5 years, will not command the same price as an identical one built before say the year 1890. The reasons here are very speficic to old town but you get the idea.
Now in down markets, that "premium" should be diminished versus regular markets, but by how much? I dont know, but I do think an earlier time (1999-2001) sales would give you a clue. If in the Burke TH market it was say 20% in the non bubble time, but 30% now, then obviously, the market has more correcting to do. However if it was 40% then, and 30% now, then it may be the better values are here and now.
Again, I have no idea here, this is all speculation on my part, but it would be interesting to see what it was if you were so inclined to research it.
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