This real estate market has two dramatically different outcomes for people today. The two outcomes depend on which group you’re in. The first group includes homeowners who are getting hurt in this real estate market. The second group consists of homeowners and buyers who have a rare opportunity.
Real Estate Market – The Hurting
The largest percentage of homeowners in history will be those getting hurt in this real estate market. There are several reasons. Many overextended themselves on their mortgages, no thanks to the government programs and the greed in the mortgage industry that pushed mortgages on average Americans without income qualifications and with reckless disregard for ability to make the mortgage payments. While each of us bears responsibility for our own decisions, this mortgage debacle has resulted in more foreclosures and middle class Americans loosing their homes than any other time in our history.
Compounding this crisis is the economic recession with the total unemployment and underemployment rate at 16.6%. [See Real Unemployment Rate] Don’t believe the economists who says we are not in a recession. We are, and it’s been devastating for middle class Americans who are homeowners in this real estate recession. The loss of jobs by one or both spouses, or the reduced hours and compensation means they can’t make their mortgage payments, and because this real estate recession has put so many homes underwater (they owe more than the home is worth), they cannot sell their homes either. Middle class Americans are losing the equity in their homes in this real estate market, and their credit will be destroyed for the next decade. Their savings have dwindled to nothing while they try to make ends meet, and their credit cards are maxed out, resulting in further damage to their credit. Millions of these good Americans have collection agencies hounding them daily, and many have judgments already entered against them, also accruing interest at 12% (the legal rate), and these judgments will follow them for seven years, unless they are re-registered, in which case the nightmare continues.
These are difficult times, and sad times for so many families.
Real Estate Market Opportunity
The winners in this real estate market will be those who do have good incomes, good credit scores, and cash to pay 20% or more down on a home. Fortunately, there are many retirees who fall into this group. There is also a very small percentage of young families who have high paying jobs and also fall into this group of winners. Why are they winners? Because they will be the small percentage of buyers in this real estate market who can afford to buy homes at the best prices in years and at the lowest historical interest rates. If you are a buyer when everyone else is a seller, you end up the winner. This is an economic reality.
Real Estate Market Choices
There’s nothing you or I can do individually to change all of this on a macro-econcomic level. On a micro-economic level, however, each of us must take responsibility for our own financial futures. You and I cannot save the millions of families losing their homes or struggling without a job, but we can do something about own own futures. It makes sense to manage your financial future with conservative planning and with wisdom. Right now the application is to take advantage of this real estate market to take care of your own future. After all, before you can help anyone else, you have to be able to help yourself. This is a time to buy carefully at the right price. This is definitely a buyer’s market in this real estate market and in this recession. As I’ve written elsewhere, distinguish the market from the house. The real estate market is down but don’t buy the market. Buy one house in the right area at the right price, and that’s how you win in this real estate market.
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