More importantly, though, what will it take to get home values to rise? Stated another way, when will appraisers start appraising the houses for what the sales prices are rather than using past “shadow comps” to inform the current market? Shadow comps are from yesterday. When the market was tanking, the active comps were more relevant than the sold comps, it seemed, since the market was so confidently tanking that no bank in their right mind would lend on a house at 200k if everything else on market in the neighborhood is on market for 175k even if the sold comps support the sale price. Now we have the opposite happening: People are willing to pay more but the past comps don’t account for that, so…shouldn’t appraisers be looking at the higher priced active comps as just as relevant as they did when the market was tanking? On the surface, you’d think “yes”, but the reality is that an active comp on market for more or equal to the sale price of the subject property being appraised doesn’t guarantee that active comp will sell for that price. But an active comp lower in list price than a house currently under contract definitely guarantees that house will sell for less. There’s the rub, and one has no idea what will cause the dam to break.

We are in such a precarious place right now in the market, and things could go either way depending on how the lenders react to this buying frenzy…and what’s the difference between a frenzy and and honest to goodness trend? I want so badly to spend money on marketing and investing in my business, but I am afraid I may be suffering form irrational exuberance (I claim that term!). Will we only know when we look back? Me? I work the street and call it as I see it, but so often I feel we are just reacting. And since all real estate is local, I think I have my pulse on trends here in the ATH area more so than anywhere else, and I can for sure say that something big is happening and it is not being fueled buy a first time home buyer credit or any kind of propping up that overstates the health of the RE market.

By August I think we will be able to look at the unfolding of the buying season and make some stronger, more accurate observations. Would love to hear from my readers of this blog, and as I post more, I think I can create a bit more of a conversation. Thanks for commenting, Dana! Good luck with the sale of your house!

1) How will values increase if values are being compared to other depressed-value homes?

2) This seems like it could be an answer to the big problem, BUT the system seems to favor those who have resigned themselves to take a value hit on their home.

Am I missing something?