what is real market value? what is fair market price?

AME

We have been looking to buy a bigger house since our current house is getting too small for our family. We have 4 kids and a dog. Our current house is 1600 sq, 3 bed, and 1 bath. I don't think we can wait a year or more. We have been looking at houses for 9 months and understand that everything is still overpriced. A few houses we have been watching are slowly being reduced but still have a ways to go. My question is.. would fair market price be 4% appreciation/year from 1998? Or do you believe when the market corrects itself the true market value be around 2%-3%. And when we find the right house we plan on staying there for at least 10 years (when my son graduates from HS).

rose-colored-coolaid

If you are trading houses, it really doesn't matter as much. Sell this one, rent a larger house for 6 months while looking, and buy in December when desperation is the name of the game...

ira s

Fair market value is roughly the most likely price a home will sell for at a particular time. This generally determined by finding houses nearby of similar age, size, and style that have recently sold. i'm not sure that you can say that fair market value is finding out what a house sold for in 1998 and adding 3 or 4% a year...Most people here agree that houses in the Seattle area are still overpriced and should continue to drop in price. But how far is where lots of us disagree. I'm one of the more optimistic, I think we'll hit bottom sometime between March and September of 2009, and then linger there for a couple of years, and that the bottom will be somewhere between 5 and 15% lower than they are now....
Right now there is a large inventory of houses on the market and selling them is taking longer than it has in the past, but if your house is in an area that people want to live in and it's priced right, it will sell.
A lot of real estate agents say that now is a good time to buy, but when haven't they said this?
From the standpoint of a lot of houses on the market, yes, but if prices are dropping and who knows how low, maybe not...But if you are planning on living in a new home for ten years, and you make sure that the home you buy is less expensive than comparable homes and you can easily afford the mortgage payments, then you've done some cushioning of the risk.

perfectfire

Rents will tell you what a place is worth when the value isn't pumped up by an insane credit bubble.

Read this: Want to Know When Housing Has Bottomed? Here's How
And the follow-up: More on Catching the Bottom in Housing

Robroy

perfectfire wrote:

Rents will tell you what a place is worth when the value isn't pumped up by an insane credit bubble.

Read this: Want to Know When Housing Has Bottomed? Here's How
And the follow-up: More on Catching the Bottom in Housing

I rent. I pay fair value based on the offerings currently in Craigslist. My home and those around it were all listed above $500k in Zillow last year, and it matches the prices being fetched early last year in sales.

According to the income formula, my home is worth approximately $285K. People don't fully understand this, but prices really CAN drop that much. It requires a paradigm shift, but the market will accomplisth that shift. And since we are almost certainly headed to deflation (aka depression), don't expect house prices to go up any time soon. What we are experiencing is "peak credit" that has taken many decades to reach. Look out below.

ProVega

Historically, over the long term on average, home prices appreciate at the rate of inflation. Supply and demand creates variances in this, but generally speaking think the rate of inflation.

Big Mike 34

Ame:

Current market will depend on Area you want to live, the condition of the house, Availability in that area, The size of house you are looking for (is it a popular size that fits most families in our General area)

I have been looking in Issaquah and to answer some of your questions and this is very general data based on my own observations and not any scientific study:

99-05 prices went up about 60% in 7 years somewhere around 7% a year (I don't want to look up the actual compound values so it may be slightly less)

O5 to fall of 07 it went up about 30% roughly 10% a year

Fall of 07 is when prices started to drop a little....The bubble turned down...I think in the Issaquah area is down about 12% so far and still dropping.

Hope that helps...I think when prices drop down to about the 05 level is probably a pretty good time to think about buying. I think that may happen by this Fall...

Final note in Seattle The numbers are probably much different if that is where you live....