An Anecdotal Housing Tale or Two

Friends of mine are trying to buy a house in the South Florida area.  You’d think there would be ample supply, but given the caliber of home they are looking for (high end – the kind of place that was $2.5MM a few years ago and is now $1-1.5MM, and brand new construction), they found that the available inventory consisted entirely of short sales.

Anyway, they found a house that they liked.  It was listed at $1.25MM.  They said “We’ll pay that price.”  The homeowner replied, “Negotiate with the bank for $ 1MM, then pay us $ 250K on the side, for “the furniture.” !!!  My friends declined.

They found a second house that they liked.  It was listed at $ 1MM.  They said “we’ll pay that price.”  The homeowner replied “Nah, we’ll just stay here until they foreclose on us – it will take another 18 months at least.”

I wonder if, in both of these situations, the homeowner was offering the house for sale with no intention of actually selling it – as a sort of bizarro “peace offering” to the bank (or perhaps a phony “good faith effort” is a more apt description?) to delay foreclosure?  It certainly sounds like that’s the story in the second case.

Although these two stories are purely anecdotal, they sum up two more key reasons why I don’t think we’re going to see any sort of real housing recovery for a very long time.

-KD

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