We live in an absolutely gorgeous area.  I feel wonderfully blessed to be in this part of the Southern Outer Banks.

Unfortunately even the pristine waters, fantastic climate, low taxes, wonderful places to visit, and friendly people cannot protect your home from a real estate slump.

Like many areas we have been struggling with homes that cannot find buyers or buyers that will not pay as much as the owners want for their properties.

I have spent a lot of time studying figures and providing information to people about the properties which are actually selling.  Those properties are the ones which are establishing market prices.

While there are exceptions to every rule in real estate, I can say fairly confidently that very few properties are selling close to their most recent assessed values.  Most properties are selling under their assessed values because our county, Carteret County, like many others did their most recent property valuation at the peak of the real estate boom.

Unfortunately I have some clients interested in properties that were purchased at the peak of that property boom.

The sellers know what they paid for their properties and are hoping to make a "reasonable return" on their investment.   The buyers are smart folks.  They have done their research and know the prices at which comparable properties are selling.

This often means that both buyers and sellers are far apart on their offers and counter offers.

I recently had a client make an offer on a property that had been on the market for nearly a year.  In the year, it has received two offers including the one from my client, both were within a few thousand dollars of each other.

Even after being reduced in price, it is still listed at about 7% over its assessed value.  I actually have a pretty good idea what the owner paid for the property and improvements.

My client was willing to offer the owner a slight profit on the property.  However, the owner quickly came back with a counter would have given him close to a 20% profit on a piece of property that was bought near the peak of the real estate boom.

That 20% profit is certainly nice if you can get it, but in a market with few buyers and even fewer buyers who are willing to pay premiums for specific properties, I suspect the owner will be waiting a long time for someone to come along pay his inflated price.

The whole situation reminded me of the property that I sold just before Christmas.  It was a relatively new home which ended up selling for $5,000 more than it did in 2004.  That was about 1.4% more than it sold for originally. 

On the one hand I know that some sellers can keep their homes on the market indefinitely.  However, I also know that after over a year of no furniture and being unoccupied, the properties do not look nearly as nice.  Eventually the property which doesn't sell for a year or more will get a stigma attached to it.

For years putting money into a house was better than putting it into a certificate of deposit.  Somehow I think much of 2004, 2005, and 2006 are not going to be years where money invested in homes is likely to grow quickly unless you have found a very special property.

I have no doubt that homes are still good long term investments, but when it comes to selling your home quickly, the prices which other similar homes are selling for are much more important right now than what you paid for your home.

It you want to make money on what you put in a home during the peak years, you have two choices, wait out the real estate slump, or sell the home for what you can get, and start making that money work for you in another way.  Waiting for a buyer to come along who might pay your price is not much of a strategy.