Are Homes Prices Much Lower Than You Think?

The New York Times reports:

Home sales are falling rapidly, and the number of houses on the market is surging. Yet each new economic report offering evidence of a housing slowdown also shows that the national median home price has continued to rise over the last year.

To understand how this could be happening, consider a three-bedroom house surrounded by oak and redwood trees, not far from the Golden Gate Bridge, in San Rafael, Calif. Reluctant to cut the price from its current listing of $1.54 million, its owners are instead offering a weeklong vacation time-share, every year for life, worth about $10,000, or an equal amount toward lease of a car.

"“Location and value will give the buyers a reason - this will give them a sense of urgency," said Tom Wessling, who owns the house with his wife, Brenda, and is being transferred to Atlanta. "“If nothing else, it will be the thing that calls attention" to the house.

In California, the Northeast, South Florida and parts of the Southwest, deal sweeteners like these are playing an increasingly important role in supporting home prices. From large national home builders to individual homeowners, many sellers are offering thousands of dollars in perks, including straight cash, so they do not have to slice deeply into asking prices.

But these discounts are almost entirely missing from the statistics on new-home prices reported by the government and on existing-home prices reported by the National Association of Realtors. As a result, home prices may now be falling, despite what the official numbers show, many economists say.

When the New York Times writes a story like this you know people are uptight.A huge coalition of people have a vested interest in artificially high real estate prices.Everyone from the tax collector,real estate agent,mortgage banker,homesellers,and the homebuilders.As you can probably guess,if real estate is so strong why the gimmicks?