I usually watch the market (housing) like a hawk but have paid little attention lately.

For one, there is less for sale than usual anyway (in our neighborhood).

So I was poking around zillow today and was rather shocked at how things are settled.

Our neighborhood has been so WEIRD. For one, big homes saw little trouble for a LONG time. Still plenty of move-up buyers, though obviously the writing has been on the wall a long time as the small homes have sat and sat, for about 2 years now. I am not even sure if any have sold. Some have been sitting for well over a year.

We had our home briefly on the market in mid '06. We would have taken $499k (wanted to make a lateral move in the area). There were 3 houses for sale for $600k. I thought they were absolutely insane and we priced around $525k at what seemed reasonable at the time. All 3 houses sold for $600k. 2 of them in less than 3 months. No houses sold for less.

Obviously that wasn't sustainable, but it was interesting all the same.

So I mentioned earlier our neighbor had to move for health reasons very quickly and wanted to sell fast. They took $490k in about a week and fled. I figured that would bring prices down, but no real signs of desparation in our neighborhood. Not a bigger price drop on the horizon. (wasn't $110k overnight enough?)

& then I saw on zillow today the bigger homes that have been sitting a while now with short sale signs and all that - well one of them I have noticed for a long while anyway - it is priced at $399k! Wow! & not a nibble. There is another one priced around $425k.

So it pretty much breaks down to this:

December 2006 - $600k price - sold easy (full price at that).

December 2007 - $399k price - sitting

33%+ price drop in the blink of an eye!

I have said a million times those people asking $600k were crazy idiots. What the hell do I know? They sure squeaked out in the knick of time. What luck!

So anyway, though most of me is not terribly surprised. I am still a little amazed. When the heck did this happen?

What happened is clear though. The last sellers in 2006 were not desparate in the least. One of them held out a year to get $600k. They were also rather "greedy." I am not sure most people in their right mind would care that much to have to get $600k. Or maybe there was some looming desparation there. I just don't know what their thinking was at all. I am just surprised it worked for them.

On the flip side, all we have is desparate sellers today. Thankfully not too many in our neighborhood. Yet. But enough... All it takes really is one.

WE locked in the base price of our house in mid-2001. $260k. The big ones were going for $270k. (Lots more space but we didn't like the layout, orelse we would have grabbed one of those - sure for $10k extra for a few hundred square feet!)

I know they were well into the $400k range by December 2002.

At $399k I swear we are back to June-2002. (& these are the big models).

I just didn't expect it to happen so fast. I am starting to think things will get a lot worse than I imagined.

As for us, I am not too concerned. There was lots of concern if we were getting in over our heads buying a $260k house in Sacramento in 2001. From the locals mostly. WHo did not fully understand that the alternative was 1/2 the house for twice the money in the Bay. I always said back then, I don't care if the house depreciates to 0. I just wanted to live somewhere that didn't cost an arm and a leg. & we were blessed to find that and still stay in the state and be close to family, etc.

PRetty much how I Still feel today.

It helps to have a reasonable mortgage and to have paid 30% down already. I just assumed we would never be upside down in this house though. I assumed that until about today. It is starting to get UGLY!

Wow, the tide turns fast.

I still feel pretty good though. My house's appreciation might amount to a hill of beans tomorrow BUT the houses we could not afford in 2001 in San Jose are holding strong at $800k+ today (from $500k in 2000). I'll take this any day. Appreciation was a nice side benefit I never expected. Sacramento had never appreciated like that before, and who knows if it ever will again. I know a lot of people who got out at the right time and made bank. We decided we didn't want to get out though, and I am just as happy with that decision today.

But in the meantime, yeah. I think I will just switched to assessed value for net worth purposes. I am not sure how long that will even be enough at this rate though. I have the house at $450k in Quicken which felt rather conservative like a week ago. $325k or so assessed. (I'll have to double check!) That's what I will go with for 2008.

We paid about $300k (in 2001) with all the upgrades & landscaping, and owe $210k today. So we've paid off a chunk, for sure.

I also was not holding my breath in the least that we could fight our property taxes anytime soon. Wow, at this rate our assessed value could possibly go down next year. That's crazy.

I still feel like this is only the tip of the iceberg so I am trying to brace myself now. The possibility of us being upside down on our house just did not cross my mind. Impossible. We bought before all this mess... I don't know. Not sure it will happen, but it suddenly looks a lot more plausible...

It was kind of nice to be blissfully unaware...

I think this is where my juxtaposition on house ownership lies though. 90% of me just does not care. In the least. Maybe more than 90% doesn't care. My house is my house. I think the only reason I have ever looked at my house like an investment, at all, is because how expensive houses are out here. HEll if I going to put $100k into a house and not make sure to increase the odds of keeping that $100k. Hell if I am going to sell my house for $600k and throw that money down the drain by not doing my homework on my next house purchase, etc., etc. But at the end of the day my house is really little more than a house to me.

I can't say I will lose any sleep over any of this. Just a bit of a shock factor today.

Outside my own little bubble though, this is certainly a wake up call to how bad it is getting out there .. Just, wow...