Two houses on the same north Valley street, similar in size and age, are for sale. One lists for $749,000 and the other for $775,000. A third house came on the market on the same street a few doors from the other two. The new listing was similar to the others in size and age but priced at $659,000.Another account in the same story:
"The neighbors were really mad," said Thomas Stornelli, principal of Global Network of Homes in Scottsdale. "They knocked on the door and asked, 'What are you thinking?' For a lot of people, their home equity is their bank. It's like taking money out of someone's bank, their retirement account. People (future buyers) are going to use that house as a comp, even if it doesn't have the same upgrades. It's going to leave a mark."
The owners of the least- expensive home were equally upset. They were in the midst of a corporate relocation and wanted to sell quickly. Suddenly, angry neighbors were confronting them. One night, someone tore down their for-sale sign.
Stornelli is the listing agent for one of the higher-priced homes. His approach is to try for the higher prices, which he believes are justified in Scottsdale.
"Whenever you mix emotion and finance, there's going to be stress," he said. "As a Realtor, we deal with that every day."
The market has proven everyone wrong. None of the houses had sold as of the third week of this month.
A woman walked into Barry's Realty Executives office about nine weeks ago, sat down and began crying. She said she bought two houses last year, fixed them up and quickly sold them, making a $50,000 profit on each.There are a few others in the report. I expect we'll see more stories like this over the next couple of years as ARMs reset on people who are unable to sell or refinance.
She was a novice investor, but it all looked easy. She took her profits, threw in some extra money and bought five more houses. She spent money fixing them up, but when she put the houses on the market, she realized she had bought at the peak, Barry said.
"Her eyes just started to well up, and she just started bawling," Barry said. "She said she couldn't sell them for what she bought them for. She said her monthly payments were about $20,000."
Barry suggested turning them into rentals. She told him she couldn't get enough rent to make it worthwhile.
"She was expecting to flip them," he said. "The market flipped her. She was devastated. People have forgotten that houses are not a liquid asset. They never were meant to be."
Also check out the comments on this story at The Housing Bubble Blog.