Why Some Homes Don't Sell
LAFAYETTE, Ind., May 17, 2005
(CBS) The Nelson family is just days now from moving into their new home, but the trouble is they still own their old one.
As CBS News Correspondent Cynthia Bowers reports, their house has been on the market for more than a year. Upon listing their house, they say "nothing" happened.
That's when the Nelsons were forced to do the inconceivable. In the middle of a national housing boom they've reduced the price to a point where they now stand to lose money on the deal.
"The price has been reduced at least three times and currently now is listed for $5,000 less than I paid for it three years ago," says Joel Nelson.
One problem may be location. Not the house's location, just minutes from downtown, but the downtown's location in Lafayette, Ind. is a long way from the red hot center of the housing in the Sun Belt.
"In Sunday's newspaper they talked about Las Vegas appreciating 40 percent," says Kim Nelson. "It was so depressing."
Even in the best of times, Lafayette was never what you'd call a boomtown. Even so, houses appreciated a steady clip of 3 percent to 4 percent a year, just like money in the bank. So what's happened recently has caught everybody off guard.
Real estate agent Cathy Russell says the slide into the soft market has been happening for about five years.
"We probably didn't realize it was happening when it first started," she says.
Take a ride with Russell and you'll find something surprising: The housing bust is being fueled by a building boom. New houses are sprouting up all over old farm fields, putting even more downward pressure on prices.
Driving through a new housing development, Russell says these are the houses that people are opting for, as opposed to buying an older home.
"So what's sitting on the market are the smaller and the older homes," she says.
Some sellers are simply letting the bank foreclose just to get out from under the mortgage.
Russell says it's difficult to sit down with somebody and explain to them that their most valuable asset isn't worth what they thought it was right now.
"It's difficult. I do a lot more counseling nowadays," she says.
The Nelsons know all about that.
"It's depressing and a little bit scary because you think, 'OK, we've accepted the idea that we're going to lose money on the house, now it's a question of how much,'" says Joel Nelson.
How much longer?
That's a question no one can answer.
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Part 1: Housing: Boom Or Bust?
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