Then: San Diego's housing market was so hot that the town house next to Jeff Cruce's was flipped from buyer to seller three times in three years. The owners, who never moved in, didn't even need to put up a For Sale sign.
Now: Since August, Cruce and seven of his neighbors have put their town houses on the market (that's nearly 20% of the units in the complex).
All have cut their prices, including Cruce, who chopped his price last month by $30,000 to $559,000. Not one has received an offer yet. Each time one owner would lower the asking price, it put pressure on the others to follow, says Cruce, 38, a salesman who's moving to Atlanta.
That domino effect, rippling through neighborhoods across the country, pushed down the nation's median home price in September by the largest amount on record, the National Association of Realtors (NAR) said Wednesday.
The median price for a single-family home slipped 2.5% from September last year to $219,800, the sharpest annual drop since the NAR began tracking the data in 1969.
The median-priced condominium fell 2.8% to $219,800, the fourth annual decline in a row.
At the same time, the volume of home sales fell for the sixth straight month, tumbling 14% in September compared with a year ago.
In the softest real estate markets, sellers are waking up to the harsh reality that they can't get anywhere near what their neighbors sold their homes for last year. So they're grudgingly reducing their asking prices and offering to pay closing costs.
At the same time, many buyers, emboldened by the transformed market, are low-balling sellers and getting deals they couldn't have imagined last year.
Just ask Sevan Derderian and Reggie Johnson.
In 2004, Derderian bought a house in Las Vegas as an investment for $281,000. He found tenants, but he kicked them out after 10 months because their rent was always late.
I found that it's really hard to be a landlord from a state or two away, says Derderian, 43, a salesman in Los Angeles. He held onto the property for another year, hoping prices would keep going up. Once the market turned south, though, he panicked.
He listed the house in the summer for $305,000. Having owned real estate only during boom years, he assumed it would sell in about a week. After a month, he cut the price to $289,900.
Another week went by. He offered to pay nearly $9,000 toward a buyer's closing costs.
Then along came Johnson, a 38-year-old truck driver, who snapped up the house and boasts, I got a great deal.
Derderian, meantime, lost about $25,000 from paying the mortgage on an empty home.
Where's the bottom?
That's a risk confronting sellers in 56 metro areas, including Las Vegas, San Diego, Phoenix, New York and Miami, that are expected to suffer annual price drops, according to a study this month by Moody's Economy.
com.
Prices in a few markets, such as Las Vegas and Portland, Ore., won't bottom out until 2009, the study projected, and in many areas prices will stay flat through the end of the decade.
(For a full list, click here.)
It was surprising just how quickly the market seemed to turn, says Mark Zandi, chief economist for Economy.com.
It was like, boom, boom, bust. It was like, 'What happened?' The psychology in the marketplace unraveled very rapidly.
In fact, about half of American homeowners who thought of selling their homes in the past year have delayed putting their homes on the market, according to a USA TODAY/Gallup poll conducted this month.
And roughly one-third of those who had considered selling have abandoned the idea. (The poll of 1,007 adults has a margin of error of plus or minus 3 percentage points.
)
Of course, home prices aren't going to fall in every market. About one-third of the nation is expected to see moderate price growth for the rest of the year. Those areas include Dallas, Austin, Newark, Del.
, and Birmingham, Ala.
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