Recently I’ve picked up a new hobby. It’s probably not one that others would like to have. A few weeks ago, my Bank of America Online account started offering a new feature called Zestimate, from Zillow.com bundled into its’ on-line portfolio section.
If you’re already a BofA customer with online access, you probably know about the portfolio management feature. For those that don’t, the My Portfolio is a section where you can register all your outside credit cards, investment accounts, Reward points programs, etc. to give you a one-stop view of your financial situation. Pretty nice.
The newest addition is a section called ‘Real Estate Center’ which lists an option to track the estimated value of your home on a day-to-day basis. This service, offered by Zillow.com, calculates the fair market price (roughly) of your home, based on a database of similar homes in the area, and the prices they’ve been offered for or sold at recently.
Race to the Bottom
After setting up the home name and listing the address, zip code, and such, you’re ready to have Zestimate start estimating the value of the house. I live in a modest 3 bedroom 2 1/2 bath home in a decent Midwest neighborhood. The original price a month and a half ago was $185k.
As of this morning, the Zestimate amount has dropped to $172,500. This is averaging around $500/day decrease.
The saddest part of all this? I can’t stop watching! It’s like driving by a car wreck. You don’t want to look, but you can’t help but stare. As a people, we’re fascinated with disasters, and my home value going down at this rate, definitely qualifies as a disaster in my book.
Now, I have nothing against Zillow or their tool. On the contrary, it’s a great wake-up call for people wanting to sell their home, but think they’re going to get top-dollar for it like they could have a year or two ago. Housing prices continue to be in free-fall, and there’s an estimated 2-4 million people facing foreclosure in the next year if congress doesn’t provide some sort of assistance.
‘POP!’ – Facing the Housing Market Readjustment
We’ve still got a ways to go before the house prices re-adjust themselves back to where they were, pre-housing bubble. It’s like lancing a boil; It’s going to really hurt at first, but it’ll feel better after it’s done. Of course that’s no consolation to those facing hard choices of whether to try to save their homes, or allow them to go to foreclosure. But at some point, housing has to return to something approaching ‘affordability’.
Many of the investors in real estate and the ‘living large’ crowd are going to see those investments dry up and blow away (if they haven’t already). But those same homes can then be re-cycled through the financial system and sold at a more realistic price to people that will buy them as primary residences, instead of speculative investments. The dream of home ownership isn’t dead, just injured.
It may take a couple of years (or more) but eventually we’ll be back to where buying a home is again affordable, credit is available for qualifying buyers, and there’s a supply of good homes ready to accept new families. It’s just a matter of time.
Until then, I’m going to keep watching my home value slowly disappear. Pass the popcorn.
Is your home decreasing in value? Are you upside down in your home? Tell us your story by leaving us a comment!
I am currently away on vacation and Randall from CreditWithdrawal.com volunteered to write a guest article for Cash Money Life. Randall writes about not relying on credit, the economy, and other personal finance topics. For more articles that help you end your credit addiction, visit his blog or subscribe to his RSS feed.