The "Denial" Stage

This section is from an article from the Inman News Blog, posted by Jessica Swesey. I thought it was quite interesting and wanted to share it with you. I'll continue with my opinion at the end:

"Denial is a defense mechanism in which a person is faced with a fact that is too painful to accept and rejects it instead, insisting that it is not true despite what may be overwhelming evidence." --Wikipedia entry.

Zillow leaked some survey results today showing that 77 percent of homeowners polled nationwide said they believe their home has held or increased value in 2007, despite all the news reports of the sagging market, credit crunch and depressed values.

At last month's Real Estate Connect conference in New York, Barry Ritholtz, chief market strategist of Ritholtz Research and CEO and director of equity research for Fusion IQ, noted the similarities between the market and the five stages of grief learned in college psychology class.

As in grief, Ritholtz pinned denial as the first stage. When the market began to slow, some analysts and experts, and especially industry groups like the National Association of Realtors, said the slowdown would be short-lived.

At the next stage, there was an admission that there was a housing problem but a denial that it was impacting the overall economy.

One would think that we've been past this denial stage for some time, but Zillow's survey conducted by Harris Interactive, paints a different picture among homeowners. About a third of homeowners surveyed (36 percent) said they believe their homes had actually increased in value during 2007.

Interesting huh? Real estate is a part of life, therefore when there is grief in real estate, it must follow the same stages of grief in life.

The overall point of the article is to say the sellers are in denial about home values over the past year or two. I do hate to be the bearer of bad news but sometimes that's my job when it comes to real estate: Do not expect that your home has appreciated in value over the past couple years. In all honesty, don't expect that it's value has even stayed the same.

Yes, you're home's value may have actually decreased from 2005. For many of you, this won't be a big deal because you've been living in your home for over 5 years. In that case, even though the value has decreased a little over the past year or so, you're still coming out ahead because from 2000-2005 the value increased at a much greater rate than this decrease.

But if you've purchased a home in 2005, 2006, or 2007, don't ecpect to sell your home now and make a profit (unless you bought a fixer-upper or something comparable). The market is stabilizing itself now, and property values are getting themselves back to where they should be. They were probably too inflated in '04 and '05.

Please be realistic. If you want to sell your home to make a profit, you're going to need to wait another couple years at the very least before you try to sell. If you want to break even, you may even have to wait.

Don't kill the messenger.

But please trust me... things will work themselves out, and things will be back to normal sooner than you probably think. I'm sure of it.

Contact me if you have questions.

Dan Hamilton
Keller Williams Greater Columbus Realty
www.HamiltonHomesGroup.com