The American Dream is on Hold
Owning a home you can call your own is part of the "American Dream". For many, this dream has turned into a nightmare. The idea that home prices never fall has been shattered. The average American home buyer got caught-up in the hoopla and "herd mentality" of the Great Real Estate Bubble and thought they were doing the right thing. Mostly, through forces outside of their control, their quest for the American Dream ruined their finances and emotional well-being .Greed, fraud, lack of oversight, and ignoring the basics of sound financial investments, has caused a worldwide economic catastrophe that will take a decade to recover from. I hope that we have learned some lessons from this disaster.
The performance of the real estate market, which typically leads the economy out of a recession, can be described as dismal. Unemployment, short sales and foreclosures have caused home prices to drop, on average, 30% from their peak. There has been improvement. Home sales had been anemic, but now they could be considered lack-luster. Home values are being described as "bouncing along the bottom". Appreciation has not yet returned.
In spite of all the bad recent real estate news that has sapped the confidence of Buyers, Sellers, and Lenders, some people are recognizing and taking advantage of the housing bargains that are now available. These people don't think of owning a home as strictly a financial investment, such as stocks and bonds, but as a valuable investment in their personal well-being and self worth. People are still building families and a life together and having their own shelter, their little citadel from the rest of the world, is an important part of that building process. In other words, this is primarily an emotional and personal decision, not strictly a financial decision.
These people also recognize that not all financial advantages of home ownership have disappeared. Mortgage interest is still deductable. Paying rent is just a financial black hole and the profits from a home sale are taxed favorably as capital gains. They also realize that homes appreciating in value will return.
There is a lot of pent-up demand for housing. People do not want to continue paying rent or live with their parents or have two roommates. They want their own place. When unemployment drops and Banks regain their confidence and relax their standards a bit, Americans' will buy and sell homes again and the real estate market will get back to normal. The American Dream is not dead; it's just postponed for awhile.
Wayne Pruner is a Realtor in Tigard, Oregon. My website is Tigard Oregon Homes and I welcome answering any real estate questions you may have. My phone number is 503-891-0795. Thanks.