A Simple Explanation of How Some Bad Subprime Loans led to a Recession

by Karen Goodman on March 20, 2008

Thanks to Jay Thompson’s post today, I found a New York Times’ article that does a great job of explaining how one thing led to another and we now are finding ourselves in a recession.

It’s time for sellers to get realistic in their pricing. I’ve talked to several sellers just this week that still expect to “make money” on their home sale even though they’ve only owned for a year or two. They bought at the peak (or in a declining market that still hadn’t hit bottom). Still, they keep telling me how they just “aren’t going to give the house away”.

Even in a good market a home purchase isn’t a short-term investment. It can take 2 years just to recoup the costs of buying and selling when a home is appreciating at the average historical rates. And we aren’t in a good market!

For sellers that don’t have to move and have purchased in the last few years, the best option might just be to stay put for now. On the other hand, if you have already moved to another state and your property is sitting vacant, it’s time to cut your losses and price it to sell quickly. The chances that buyers in the next few months are going to suddenly decide your house is worth more than the buyers that have already been through it and walked away is really pretty slim.