As a vulture investor myself, I’m finally beginning to see some additional capitulation in sellers (and bank owned REOs) lowering their asking price to meet lower demand.
Case in point: a 3BR/2BA condo, short sale, only 3 years old.
2006 price tag = $150,000
2010 short sale price tag = $64,900
Loss on investment = $85,000 or 57%
This isn’t the most extreme deal I’ve seen (foreclosure in same neighborhood went for $49,900), but in all seriousness, how do you think it feels to be this guy?
I’m not trying to pick on him, of course, but now that you’ve gone through the gut wrenching process of getting the bank’s approval for a short sale, you have more than likely accepted that you got duped following the herd by falling victim to the psychology of an investment bubble by buying at the worst possible time of a very over-inflated real estate bubble, and now, have to sell your no brainer investment that many Realtors said will “never go down in value” for 57% less than you originally paid for it.
Sort of reminds me of my no brainer investment in Cisco Systems during the tech bubble.
Personally, myself and a few others think real estate prices will continue to fall to revert back to historical trend lines. However, this is a market specific phenomenon, so what may be overvalued in one city might be undervalued in another.