The banks hold the key to a recovery

I just received a comment from some one saying that real estate value is relative. He was referring to an article I wrote discussing the fact that 80% of the home owners in Las Vegas have a mortgage that is worth more than the underlying real estate.


I agree with this statement of course because the appraisal system is for pricing residential property typically relies on the comparable sales method to set value. If you neighbor sold his house yesterday for 200,000 and it is similar in size and detail as yours, you will not be able to sell your home to someone for 300,000 the next day. Unless of course they are willing to pay cash and are ready, willing and able to purchase, you would have no need for an appraisal. If your buyer is financing the property it is a different story.

The mortgage system is set up in such away to protect everyone. It protects everyone if the parts are working correctly to carry out the checks and balances meant to keep unscrupulous sellers and lenders from taking advantage of buyers.

So pricing is relative when you compare with your neighbors and appraise property. However, most people could care less about relative value when the bank holds a note in an amount twice the value of their home. R
Read more on the how the housing crisis has devastated many Americans. 
We are seeing this in many areas of the country, especially in Las Vegas. There will be no speedy recovery as log as so many people are underwater with their homes and burdened with debt that may never be able to be paid back. There is a chance that home prices not get back to 2006 levels for twenty years.

It makes the bailouts for the banks seem even more ridiculous.