Let’s face it folks, we’ve all been affected by the housing market. If you haven’t lost your house to foreclosure, you are probably sick to your stomach over the loss of your equity in the past 24 plus months. This leaves many of us questioning, what should we do? What makes sense? Do we stay or do we sell? These are questions that need to be seriously considered. The outcome is uniquely different for each circumstance.

What I can share with you is a Short Sale or Foreclosure is not just happening to the penniless. Many savvy business people are choosing to short sell their property now because the numbers being forecast-ed  don’t make economic sense for them to “hold on to” their property any longer. Also they do not want to put themselves in a position of looking at a Foreclosure in the future if a Short Sale is an option now.  According to industry experts Metro Phoenix home values won’t recover to pre-boom levels until 2015. The median price of an existing valley home is now at $114,000.  In 2003 the median was $155,000 according to Arizona State University’s realty-studies group. Furthermore home prices are not expected to rise this year, in fact they may actually decline a tad more. As we anticipate an increase of foreclosures to hit the marketplace.

Following is a scenario that may hit very close to home:  Let’s say you have a property with an interest only loan of $350,000.  In today’s market the home value may very well be $180,000.  (This is very common, by the way)  At 4% appreciation it will take 18 years for the property to be even in loan to value.  You may say, “Well I don’t have an interest only loan.  I have a loan where I am paying off the principle every month.”  In this case it would take you 12 years at a 4% rate of appreciation to get to an even point.  Families are positioning themselves for worst case scenarios. Get out a pen and paper and write down your situation in black and white. Then ask yourself this question, does it make sense to ride out this storm? Seek professional guidance from your accountant and an attorney. Just because David and Marge did it, doesn't necessarily make it right for you.

If you need help navigating through the real estate storm, we can help you. We have comprised a team of experts in areas of real estate, law, accounting, credit and lending. Many of our preferred partners offer free consultations. Contact us for more information.