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What We Need is a Security Blanket for America.

Do not read this if you are of the mind that "thinking positive" and working hard is all that's needed to have a good year in 2009.

The National Association of Realtors told us to think positive early in 2008 too. From the article on Yahoo, The Worst Business Predictions of 2008 , came this quote.

"Existing-Home Sales to Trend Up in 2008" -- Headline of a National Association of Realtors press release, Dec. 9, 2007 On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million -- down 11% from a year earlier -- in the worst housing slump since the Depression.

Now I'm generally a positive thinking person. I believe in the Law of Attraction and being upbeat and positive and all that. However, I also read enough to recognize that you have to be realistic, not unrealistically optimistic in today's world.

As Realtors, we have been advising our clients that the home is usually the biggest investment that the average person makes in his lifetime. While not really promising the property will go up in value, the underlying belief for most Americans was that owning a home was a "safe" investment and would provide security for their family.

raleigh homes for sale For most Americans, their wealth is based on the equity in their home.

Now the bursting of the housing bubble, followed this fall by the collapse of the stock market, has caused Americans to lose their perceived, and real, wealth.

They have lost the security that their home brings because of the depreciation of any equity in the home. What equity that was amassed is either completely or partially gone. In the worse cases, they've lost all of their wealth and security because their home is not currently worth what they paid for it

At the same time, any savings that were attained for retirement have been greatly diminished by the collapse of the stock market where Americans have their 401K's and other retirement plans.

Add to this the accompanying loss of jobs and increased unemployment rate to further increase the insecurity of the homeowner.

So how do we expect people to be convinced that now is the right time to buy a house? They have no reason to believe Realtors after the NAR has misled us for the past few years.

$ The only way they will buy a house is if they see houses appreciating in value again.

$ They need to SEE that owning a home is a Secure Investment.

$ They will not be ready to sell their present home until the equity that was lost is regained.

$ They will not be ready to buy a house unless they know that their job is secure.

$ They will not be ready to buy a new house if they have no savings left for retirement.

The government needs to give the homeowner a reason to feel Secure in owning their home and land.

We need a Home and Land Security Act for the average American, not more bailouts fo North Carolina Homes r the corporate world.

When the buyers and sellers start feeling secure again, the economy and the housing market will turn around

We need to be selling security, not consumption. Bring on those old Security Blankets!

About The Author

Linda Jandura is a North Carolina Residential Real Estate Specialist that can assist you with the purchase and/or sale of real estate in the Raleigh Cary Metro area or any place else in the country by connecting you with a relocation professional in your destination of choice.

To find all available homes for sale in the Triangle area of North Carolina, please visit www.justnchomes.com

Linda Jandura & Craig Rutman. Call us TODAY at 919-771-7779

Email us with your Raleigh Cary area questions

Posted by Linda Jandura Realtor North Carolina Buyer & Seller Specialist on 01/05/2009 05:03 PM

Comments (12)

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12 Comments on What We Need is a Security Blanket for America.

JAN

Linda - very good points. You are right - if people do not feel secure about their jobs or their finances then they are not going to make a move.

Hey Linda -- I do believe that positive thinking and hard work are key elements to success, but I read your blog anyway.

While I agree that blind consumption is not the answer, and that the focus should be on individuals and not corporations, I also think we have an opportunity to 'be the change' instead of relying on the government for that. We can really make a difference by pointing out certain elements to home buyers they may not be aware of:

$ That judging a home's appreciation/depreciation over a one or two-year period is not what owning a primary home is about and is just plain unrealistic (respectfully). Expecting to realize a substantial gain over that time period is the equivalent of day-trading on the stock market: sure, a fortune could be made, but a huge loss could also be realized;

$ That the average appreciation for a home is typically around 4% per year (+/- depending the area of the country, neighborhood, etc. etc.), and that the 2005/2006 appreciation and the 2007/2008 depreciation levels were the exceptions, not he rule;

$ That owning a home is as secure of a long-term investment as you can get without it being guaranteed (and even that has considerations), and that they should look at being in a home for four or five years or more as far as realizing a significant 'return on investment' and just the term 'secure investment' in and of itself is a bit of contradiction in terms;

$ Job security is another area we should probably be realistic. The retired members of United Autoworkers of America probably haven't been feeling that secure about their jobs lately and I can't think of a more 'secure' group, recent events aside;

$ And finally, while I share your frustration toward the markets in recent months, I'm not sure I agree that it's the government's job to provide a financial security blanket. Let's look to ourselves individually to make a difference by providing solid counsel to our clients about the benefits of home ownership. In fact, certainly there are exceptions but generally speaking, I submit that now is absolutely the best time to buy a home!

I hope my comments will be taken in the spirit they were not intended: to spark lively debate, submit an alternative viewpoint and since you mentioned being realistic, offer some considerations about the benefits of home ownership even in our current economic and housing, let's just say, 'lull.'

I believe the National Association of Realtors was not intending to mislead anyone. They were simply taking the data available to them at the time and doing their best to interpret it and apply it to the business of Real Estate. Were they off a little? Sure, but that's misboating (missing the boat), not misleading.

Please comment back, I'm watching new comments. Let's get a dialogue going! Agree with me! Disagree with me! It is all welcome, I'd love to re-blog if you'd make it active! --James Wirth

Hi James- I agree with many of your points, especially about the government not being the only ones responsible. For the sake of keeping my post realtively short, and maybe because I'm a Realtor, not a writer (lol), I wasn't quite as eloquent as you are.

As far as job security- the UAW is an exception to what most people are facing.

I don't think most people are thinking they need to make a profit in 2-3 years. But now that they're at the 7-10 year mark in which they could expect some equity to move up, or down, their equity is gone.

And yes, I believe WE should be the change, that's why at the end I said we should SELL security, not consumption.

I'll permit this to be reblogged for you if I can figure that out!

Thanks for your great comment!

Actually, I had been writing this post for several days but hesitated to post it for fear I'd get flamed. But what the heck.

Very interesting. I too believe in being positive in order to acheive success, I am a believer of The Secret, but you had some good points, would like to see more comments.

Thanks for commenting back Linda, I appreciate the additional insight into where you were coming from and love the exchange of ideas. Hopefully your blog will stimulate some 'flames' and we can extinguish unhelpful thinking and get things turned around one commenter at a time :) Let's get more people in the discussion! You're not alone in feeling this frustration. A lot of peope -- industry professionals and consumers alike -- are feeling this way!

I posted my comments into a separate AR blog and hopefully people that might go there first will follow the link back here. Here's my blog: http://activerain.com/blogsview/866843/Who-thinks-Uncle-Sam-should-knit-us-a-security-blanket. Let's keep the dialogue going!

Thanks again Linda! --James Wirth

Ah Jim, here's where I'm going to (respectfully!) disagree with you, and mostly how you interrepted my blog. I really wasnt' stressing that the Governement should take care of us, but just giving a theory about why and when the economy will pick up.

You and I and most realtors will know that now is a good time to buy, in a down market, as you said. What I was saying is that it's easier said than done! Although Middle America can probably rationalize that theory, they still don't want to lose any money, especially if they really don't NEED a new house. It's the whole consumerism thing- people are realizing that they don't need a big new house, whereas a few years ago they might have thought they needed it, Now they realize that it was just a WANT, not a NEED.

I see that you're a mortgage lender, so you probably are coming from a different perspective, not to mention a whole different area of the country than I am. (although I've been to Bellevue- Seattle, have you been here?) As a lender you aren't taking buyers out to look at houses, aren't talking to sellers about lowering their prices, aren't talking to the average person who doesn't want to live in his big house any longer. You get the people when they've already decided to buy.

And yes, job security is never guaranteed, but it feels a whole let better when it's a steady 3% or so and the economy is booming than now when all the news is about massive layoffs at Bank of America, and other big companies.

I'm sure we'll have more 'Gree-s' to talk about tomorrow! Thanks for starting this, and for commenting & linking to my blog

Ha ha, well if I mis-interpreted your blog then I stand corrected! I say let the government focus on big business if that's where they're going to spend their time. Let's start our own movement: The Home and Land SEcurity Act: By the people , for the people! Let's get the message out. And let's help those who don't 'need' to act, by showing them the benefit of acting anyway. They might be afraid they'll get flamed, but let's get them to say, "What the heck!" -- James Wirth

JAN

Good morning James- That's what I was originally going to name this blog- the Home and Land Security Act.. I was hoping to start getting the message out there.

And if you help me put the "flames" out, maybe we can start a security first movement.

"They have lost the security that their home brings because of the depreciation of any equity in the home. What equity that was amassed is either completely or partially gone."

One if the big problems to hit this market was the belief that taking home equity loans is acceptable behavior. From HE loans many people had no equity left in their homes when the price was peaking. If you are going to say that the home is an investment you need to stress that the only way to get the equity out is to sell the house and move.

Bob- I wasn't talking about the equity they could take out of the house as per a loan, but the perceived equity that the owner has in the home- like knowing he has a money in the bank for a rainy day. Thanks for your comments!

Well we could continue this here, or we could start a new blog with your original title choice of The Home and Land Security Act. We can structure the act right here with feedback from AR'ers. What do you think -- new blog? I think it should be under you. --James Wirth