By Barbara Blanchard, Licensed Broker Associate, GRI with RE/MAX In Motion

We are fortunate enought to live in an area with a stable economy spearheaded by Cornell University and Ithaca College. We never fell victim to the three primary causes that created the housing crisis.

1. Corporate builders saturated areas with thousands of new homes, primarily in states with low property taxes and heating bills.

2. Buyers came, along with the speculators. In some areas, houses doubled in value in a short period of time. Speculators purchased more homes with little cash out of pocket, hoping to cash in on inflated housing prices after holding the houses for a short period of time.

3. As prices rose at an unhealthy rate, many buyers couldn't afford to purchase homes using conventional mortgages. Instead of letting the market correct itself, banks came up with ways to loan people more money than they could afford, using tactics like negative amortization, adjustable mortgages with low starting rates, lowering credit standards, and raising debt to income ratios. They also gave risky loans to speculators. Many of these loans were sold to Fannie Mae and Freddie Mac, who used investors' money (pension funds, 401ks, mutual funds, foreign funds, etc) to purchase them. Builders kept building, speculators kept buying, driving housing prices up, until the market was oversaturated. The builders discounted their unsold houses, bringing down the price on others in the neighborhood: the speculators defaulted on their loans and many people with adjustable rate mortgages, that had reset at a much higher payment, lost their homes to the banks.  The banks discounted the houses, driving down prices in those areas causing housing values to drop significantly in those areas. Other people, who had nothing to do with the mess, couldn't sell their homes because they owed more than the adjusted value on their homes, causing more foreclosures. With all the non-performing loans, some banks lost money, as did the investors who purchased the mortgage backed securities.

In our area, real estate is a stable investment that allows us to enjoy a comfortable lifestyle with those we love. If you are thinking about buying or selling a home, just give me a call.