We should be recovering quicker. We have more buyers than properties to sell. Interest rates are low. There are still people out there with solid careers. So, what's going on?
Back in "the day", sellers would set a price. If buyers felt their price was fair, they would agree to sell the property at that price. There may be a bit of negotiation, but ultimately, there would be established a fair market value. What happened?
Sellers still ask a fair price. Buyers are willing to pay when the price is fair. They come to terms and escrow is opened. Then, the bank decided to set the market value in their eyes. The market value is the "safe" value that guarantees that the bank won't eat the loan...not market value.
Appraisal reform was established a few years ago to establish "arms length" determination of value. While the idea may have had some merit, the result was anything but arms length. Banks created Appraisal Management Companies as required by the new guidelines. The banks owned these companies. Then, when an appraisal was needed, the bank would assign the appraiser for the property. The banks created a whole new revenue source and in the process, was able to control valuation of a property.
Sadly, I don't see a light at the end of this tunnel. Banks created, through legislation, the real estate nightmare. Banks, through legislation, now have new revenue sources. Banks, through legislation, now have control of market values...not the consumer.
Please, tell me how we are going to get out of this mess sooner than later!