As prices decline you can insure your home's value

The Home Value Insurance Co. has re-entered the insurance market with a product that promises to protect homeowners from falling home values. Faced with a declining and turbulent housing market this insurance product provides homeowners a level of protection against taking a loss if they sell their home for less than they paid for it.

The product works by covering a loss of owner-occupied primary residences if the homeowner sells for less than home’s value when it was insured. Homeowners who acquire a policy are locked in at the present homes value for 10 years, ensuring that they are protected and compensated in case of a market decline of up to 25 percent. If home values appreciate during the policy term, insureds can cancel their current policy at no cost and purchase a new one with a higher insured value.

While very helpful to some the insurance policy will not apply to short sales or foreclosures and the policies will only cover homes that are worth $500,000 or less.  Ohio is one of the first few state to feature such insurance. If you are interested in the product contact us.

Prop8.org takes advantage of a California proposition that allows for homeowners to get a reduction in their property taxes. Prop8.org charges a fee to help homeowners navigate the legal paperwork, and submit the necessary papers. We do not have this luxury in Cincinnati but it is important that the next time your property is assessed that you pay attention and gather the recent sale data for your neighborhood so you understand you new property assessment.

So here is Home Predict, website that is allowing people from all over predict the value of homes and neighborhoods. What is important is that market value is a function of the Wisdom of Crowds. If 90 of 100 people think that a neighborhood’s average home is worth $200,000 it is good bet that as a buyer you should be looking to pay about that much, and as a seller it would be wise to list it as such.

In the market boom what we saw collectively was a skewing of the perception of value. We all thought homes were worth more, and therefore the price tags went up. Now as the market cools, and the economy slows we collectively are correcting our perception. Potential buyer’s value perception are the most important information to have, but a community wide poll would probably return similar results. I’d like to see a group of us getting on and helping to set the value of our homes and real estate here in Cincinnati.

The short story is that there are 64 more homes on the market today than there were one year ago, 1/2% more inventory than in 2006 and 1.8% more inventory than 2005. Now it is true that prices have gone down slightly; for the median home the drop since 2005 is 3.35% and for higher priced homes 4.45% over the same time period. Lower priced homes have dropped 5% since 2005 but also did not experience the price spike and hard correction that the median home and luxury home experienced.

What this translates to is that if you are in a median priced home it is the best time to move to a bigger space if you need to. I know it is against everything that we have been hearing on the news but the reality is that the price of the home you want is closer to selling price of the home you have right now. Math does not lie – the difference between a median and high priced home this week is $90,000. One year ago that difference was $97,000 and in 2005 the difference was $94,302. In real dollars upgrading is ALWAYS a good move in a down market. If your Cincinnati real estate agent is not telling you this they are just plain wrong.

Week Inventory 25th Percentile Median 75th Percentile
11/28/07 11,415 $99,900 $149,900 $239,900
11/28/06 11,351 $104,900 $158,000 $255,000
11/28/05 9,418 $104,900 $154,900 $249,202