Buy My House: Reverse sticker shock

A Realtor may be coming to the Squeeze house soon to evaluate how much it might sell for in today's market. We're anticipating the news with the same joy that comes with opening our 401(k) statement.

How low will our number go? It's that reverse sticker shock, Realtors say, that's among the biggest obstacles to the housing markets rustling again. People aren't buying homes, in part, because they're unwilling to take a hit on the homes they live in.

Last month, the Squeeze began helping you navigate housing issues in Charlotte by telling you the story of one house. My house. (Our promise: We won't exploit this very public venue for any actual deal-making.)

Our story is a familiar Charlotte story. We purchased our home in the University area in late 2004. Our mortgage was a five-year adjustable rate, and today we are less than a year from that adjustment, facing a decision to bear the expense of refinancing or take a chance and put the house on the market (risking a future refinance.)

We're also confronting a reality seen throughout the city - houses are staying on the market a long time, in part because the market isn't accepting the listed prices on those homes. MLS figures last month show that average sales prices in the Charlotte area were more than 11 percent below what buyers were asking - a gap that has widened in recent months.

Real estate experts have long said that one key to selling is to price competitively from the start. Last year, 55 percent of U.S. homes that sold in just one week sold for the full listing price, according to statistics from the National Association of Realtors. Only 31 percent fetched full price after 2 weeks, 22 percent after 4 weeks, and 15 percent after 8 weeks.

But, says Allen Tate president Pat Riley, it's difficult to convince people that they won't sell their home now for what their neighbor got two years ago.

"It's been brutal," Riley says. "We have supplied our people with every chart, every graph that shows history, shows cycles, so they can sit down and explain this."

Except: "A home is very emotional. It's 'I'm going to wait until I get what Sally down the street got, because my home is nicer than Sally's. ' "

Part of the blame resides on what he calls "The Roaring 2000s," a decade that largely saw home prices spike across around the country, including many neighborhoods in Charlotte. People began seeing real estate as equal parts residence and investment - even in the short term - and they grew to expect nothing less than significant increases in their home's value.

Instead, the market has withered. Prices on homes here fell 15.5 percent last month compared to February 2008, the 15th consecutive month of year-over-year price declines and the second month in a row of double-digit declines for MLS transactions.

That pain is more severe in neighborhoods that saw bigger spikes earlier this decade. Those homeowners are likely better off waiting for values to rise again. "If I bought at the peak and put very little down, I'm handcuffed to that house," Riley says.

For others, including those in more modest neighborhoods like mine, there might be opportunity. Interest rates are abnormally low. Houses in the neighborhoods we'd like to live have also dropped.

And the Squeeze house? Because it appreciated slowly in the middle part of this decade, its value probably has not plummeted.

But it isn't what it was one, two, three years ago. How much loss can we swallow? We're not sure we want to find out.

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Tell us about your house. Are you selling, waiting, dreading?