The current real estate recession is no secret. How we got here is no secret either. How we are going to get out is common sense.
The Thought ~
I was having a conversation with my real estate partner a few days before this Christmas break. He was chatting about going home to visit his parents in Oklahoma for a few days. Of course real estate always somehow fits into our conversations. He made a great point (no brainer) about how his parents have lived in the same house for basically his entire life (30 years). Then he started thinking about the rest of his family... "You know, of all of my family I think I have an uncle that moved more than once". Then I chimed in and said basically the same thing. Of all of my family I think my own parents are the only ones that have moved more than one time in my life.
Back "in the day" people/families would buy houses because that is where they wanted to be... for a long time. They would buy because they could see themselves raising a family there, and sometimes they could see themselves possibly retiring there.
The Problem ~
Yes, the problem is definitely giving buyers 100% interest balloon notes that maxed out their income. The ROOT of the problem though is A&E TV. Ok, so maybe I am not necessarily blaming the network for the recession, but what I am blaming is the mindset. I am not just talking about "flipping" homes. I know a lot of people who do that successfully (in the current market ). I am referring to the people that bought with the mindset of "I'll just sell it in a few years and make a little cash". ~ This is where we went wrong ~ The mindset is to live in a place just long enough to make a few dollars and move again. In fact, the mindset is what really drove the interest only loans.... "We will either move, refinance, or have better jobs by the time this loan balloons". A home is an investment but it is a place to live. It's a safe dwelling for your family.
The "yeah but" ~
Yeah, but what about people who need to move because of work?
Yeah, but what about growing families that need to expand?
Yeah, but what about people who need to downsize?
Yeah, but..... you get the point. All of these are legitimate concerns and does not apply to this housing market.
The Solution ~
Well, read the above post and just do the opposite. The solution is simple.... STAY PUT. I must admit, my wife bought a house before we were married that has lost value since. The good news is that it was a conventional loan with a great down payment. Sure, the house is worth less than what it was bought for BUT we are happy with the payments and plan on outgrowing the place. The mindset is to keep it... for a while. In fact, we just refinanced with our lender at 4%! Thanks to Lane at
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